United Is Putting the Final Nail in the Loyalty Coffin

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I am in so deep with my regular airline, I sometimes think nothing would make me switch. There are decades embedded in my lifetime miles. Those miles represent memories: jobs, vacations and countless hours on planes. It means something — or it does to me. Not to the airlines.

United Airlines Holdings Inc. this month joined other major carriers in reducing the importance of frequent flying for its loyalty program. Status on United, Delta Air Lines Inc. and American Airlines Group Inc. now only comes from how much you spend, not how much you fly. The changes are a reminder that loyalty, history and time spent together have less value today — not just for the airlines, but also in an increasing number of our economic interactions.

Obtaining the lowest tier Silver Status on United used to involve spending $5,000 on flights paired with 15 United flights. Or you could just spend $6,000. The highest tier, 1K, took $22,000 and 60 flights, or spending $28,000 (soon $32,000). Now the higher spend is all that’s needed.

A domestic road warrior might rack up dozens of flights but only spend a few thousand dollars — they’ll be lucky to get silver status. Someone who books a single overseas business class ticket might get gold status, just because those seats can cost more than $10,000.

The annual ritual for all points nerds of a year-end milage run (flying to a place just for miles) to keep your status is no longer worth it. Now status seekers can make one big purchase on their credit card to meet the requirements. It’s another nod to our increasingly intangible economy where there’s less incentive to do the in-person things that connect us to each other, even if that’s waiting in security-screening lines.

When I started playing the points game, it was not just about the money (at least not explicitly). Airline loyalty programs considered how much you flew and how long the flights were, or how much time you spent on the planes. Loyalty back then was valuable to the airlines as several low-cost carriers had entered the market and aggregation sites enabled fee comparisons. Getting customers to commit to one airline was valuable. I learned to crave status, the reward for loyalty.

You still earn more airline miles by sticking with one airline and can use those for free flights. But it’s all about status for serious travelers. Status ensures the indignities of flying are a little less painful.

There was once the promise of upgrades, though airlines have become less generous with those over the years (unless you commit to the elaborate all-consuming game like I do). Still, you get to sit in the front of coach (saves time for a tight connection), board early (critical if you carry on) and have a special phone number if anything goes wrong. These little comforts make a big difference as flying gets worse, seats smaller and closer together, and delays more common.

I was recently forced to fly my non-preferred airline to an underserved, small city and boarded last with a seat at the back of the plane. It was horrible; no wonder most people hate flying. Higher status fliers also accumulate award miles at a faster rate, if they want to redeem them for leisure travel or overseas upgrades.

But while status may be valuable to customers, loyalty is not worth as much to the airlines anymore. The business class cabin on a transatlantic flight brings in more revenue than all of coach, despite taking up a smaller fraction of the plane. Credit cards, where the airlines sell miles to their bank partners, offer more stable revenues and higher profit margins. Wall Street lenders value milage programs more than the market capitalization of the airlines themselves. Loyalty still has value, but not as much as an occasional big spender with a credit card.

With higher and less predictable fuel costs and rising labor costs, airlines face thinner margins each year and long-term loyalty doesn’t cut it. Smaller non-hub domestic routes, meanwhile, are being served by fewer airlines. If you fly to Duluth each week for work, you don’t have much choice. Loyalty is imposed like it or not.

It is not just airlines. Loyalty is becoming less valuable for buyers and sellers in other aspects of our more homogenized economy. For consumers, loyalty used to solve an information problem: You knew your vendor, what they sold and the quality of their goods or services. Now with reviews and influencers steering our tastes, this may be less necessary and we seek novelty instead.

Venders used to seek long-term customers to ensure stable revenue. But as larger firms with multiple locations dominate the economy, they have a bigger pool of customers to pull from; they are less reliant on locals. Home Depot Inc. does not need the same relationships as a local hardware store. A national fast casual chain does not rely on you the way a local restaurant does. Airlines used to be more regional, too, now large international carriers dominate the industry and compete for the big spenders.

My airline changing the rules is part of the points game I signed on for. I will update my strategy, as I’ve done many times before. Like any dysfunctional relationship, my airline has my loyalty — even if it doesn’t value that anymore.