US Airways Devalues Dividend Miles

Frequent Flier Programs, US Airways

There’s really nothing surprising in the announcement that US Airways has taken a couple steps to devalue its Dividend Miles program. I mean, every airline has been doing this, but US Airways has come up with a unique and seemingly logical way to make it happen – making people only earn the miles they fly.

There were actually two changes. The first one involves eliminating the minimum mileage. So if you fly that 214 miles from Washington/National to New York/La Guardia, you’re going to earn, well, 214 miles. Until this change, anything below 500 miles still got you 500 miles. As you can imagine, people flying short flights aren’t going to be happy about this one, so that primarily impacts those flying in the Northeast. But for me, this change makes sense. Sure, it sucks that you used to earn more miles and now you don’t, but logically I can understand it.

I shouldn’t say that. Let’s be honest. Frequent flier programs like these don’t make sense at all. They reward people for flying miles and not for being profitable. So someone who pays $200 every week to fly roundtrip from LA to New York gets 250,000 miles and top tier in the frequent flier program while someone who pays $200 to fly every week from LA to Phoenix doesn’t even reach 40,000 miles, enough for only Silver status. The person flying to Phoenix is definitely more profitable and therefore more valuable so why aren’t they rewarded that way? If you can forget about that problem and assume that the programs make sense, then handing out miles as they’re flown should make sense as well.

The second change is the introduction of a fee for award travel booked within 14 days of travel. They’re actually charging less than others, but that doesn’t make it any better. Personally, I really hate this one. I mean, for the airline, this is a toss up. On one hand, you can be relatively sure that someone who books within 14 days isn’t going to take a seat away from a paying customer, so you’d think you’d want to reward that type of behavior. On the other hand, someone who books within 14 days is more likely to need to take the trip, and they’re more likely to actually pay the higher close-in fare for travel. You know airlines hate when someone uses their miles instead of buying an expensive last minute ticket. This is a way for them to get some of that money back, even if it shouldn’t be theirs to take.

So there you go. A couple changes that shouldn’t be a surprise to anyone, no matter how much you dislike them.

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8 comments on “US Airways Devalues Dividend Miles

  1. The type of change I hate the most is miles expiration! Delta does it now in two years. I want to save them up and travel the world when I’m retired.

  2. Bryan, surely they only expire if you have no activity in your account for two years? There are countless ways to trigger activity. I usually use my car rental miles (50/day) to keep miles in secondary accounts alive that. That said, while I don’t know how far you’re from retirement, consider that miles tend to lose value over time (and not gain you any interest), so saving them for a long time may not be a wise strategy.

  3. Why do you assume that if US charges $200 for LA-NY and the same $200 for LA-Phoenix that US makes more money on the shorter flight $200 passenger. Sure, if everyone on each flight paid the same amount the shorter flight would cost less in terms of fuel, labor and maintenance. But most seats on the LA-NY flight cost more than $200 and US probably only offers that fare if it is afraid the seat would otherwise be empty. I can see the logic of airlines offering miles on the basis of dollars spent rather than miles flown, but any system will have arbitrary irrationalities.

  4. jonathan – I’m not talking about overall profitability of the whole flight but rather of that particular seat. The cost of flying someone 300 miles vs 2,500 miles is less, so if the revenue is the same, then the profitability of that person is higher on the flight with lower costs.

  5. Quote:

    Why do you assume that if US charges $200 for LA-NY and the same $200 for LA-Phoenix that US makes more money on the shorter flight $200 passenger.

    because you can go LA-NY via a stop in Phoenix.

  6. This is really good for long distance or multileg fliers. I don’t see how giving people miles for the distance actually flown is devaluing the program.The days of generous FF perks are over.u

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