Earning airline rewards and elite status will be more difficult this year

When United Airlines gate agents call his first boarding group, Ted Cohen sees something he hasn’t seen in his decades of traveling the world as a music industry executive: crowds.

The “Preboarding” group includes members of United Global Services, an invitation-only status for top customers, and United Premier 1K, the top tier of the airline’s Mileage Plus frequent flyer program.

“Before, there were two or three people, and you said, ‘Who is this?’ And now it’s a small army,” said Cohen, who heads a digital entertainment consulting firm and has elite lifetime status at United. American Airlines.

Welcome to the mass luxury era of air travel.

Travelers willing to spend more on tickets and popular credit cards are lining up at the front desks and airport lounges. Airlines are now trying to manage the growth of big spenders without undermining the appeal of lucrative loyalty programs and the most expensive seats. Not everyone will be cut this year.

The largest carriers in the United States – Delta AirlinesAmerican and United are raising spending requirements to earn some elite frequent flyer tiers, which offer free upgrades, early boarding, discounted or free lounge memberships and other perks.

Executives say the richer demand is a product of the pandemic. Airlines have extended frequent-flier status without requiring travelers to meet the usual annual limits because prospective passengers have fallen out of favor. Meanwhile, customers continued to spend their rewards on their credit cards, accumulating points and bonuses along the way.

“Even though we’re not rich at all, we feel like royalty,” said Damaris Osorio, 27, of New York, who owns a vintage clothing business.

Osorio frequents airport lounges on trips booked with rewards points earned through strategic credit card use and sign-up bonuses. Last year, she and her fiance traveled to Brazil, Chile, Argentina and Italy, paying for all flights with points.

He said he cared little about sitting at the front of the plane, but preferred the American Express Centurion Lounge, which he accessed with one of his Amex cards. Osorio realizes he is not alone.

“You see how crowded the halls are,” he said. “I go as fast as possible to maximize my take.”

Next month, Amex Platinum cardholders will be charged $50 for each guest they bring to the Centurion Lounge. Those cardholders can currently bring two guests for free.

For airlines, the high-spending hordes are a good problem, two years after the pandemic plunged them into a $35 billion hole despite billions in taxpayer aid. Airlines are profitable again, travel is back, and flyers are willing to pay for a little more space or privacy on their travels.

Airlines’ lucrative credit card partnerships have helped them stay afloat in the pandemic. They sell miles to credit card companies and make billions of dollars in revenue.

Now they have a lot of travelers eager to cash in the rewards.

Delta said in an investor presentation last month that premium products and non-ticket revenue will account for 57% of its sales this year, up from 44% in 2014 before the pandemic and 53% in 2019. This category includes premium international business class seats, seats with extra legroom and revenue from other sources, such as corporate partnerships. American Express.

After some customers complained about crowds and long lines at Sky Club airport lounges, Delta said late last year it would raise prices and requirements to gain access to those facilities. In early 2022, it also introduced a three-hour time limit for lounge use and created a VIP line for high-status holders.

CEO Ed Bastian said the recent policy changes are aimed at extending pandemic status and encouraging customers to spend more on travel.

Bastian said in an interview last month: “We have to work it out somehow to be fair to everybody, because as they say, ‘If everybody is special, nobody feels special.'”

Linda Jojo, United’s chief customer officer, made a similar point at a recent industry conference. “If everybody has status, nobody has status,” he said.

In November, United said it was increasing the requirements to earn status and bonuses.

United also opened a new mini-lounge at its hub at Denver International Airport, serving customers flying on regional feeder flights.

Last month, American Airlines said customers would have to spend more or fly more to reach the lowest elite level in its AAdvantage frequent flyer program. Customers will soon need 40,000 loyalty points instead of 30,000 for Gold status.

Delta, American, United and American Express are opening larger airport lounges to accommodate more travelers.

American and its transatlantic partner British Airways opened new, upscale lounges at John F. Kennedy International Airport in November with showers, bars and plenty of work space. The three lounges add up to about 65,000 square feet of the square footage American previously offered at JFK, an airline spokeswoman said.

“It’s in great demand, and we have to make sure we take care of customers,” American Airlines CEO Robert Isom said at the JFK lounge opening.

Several full-service carriers have also moved away from long-haul first-class cabins in favor of more premium economy seats—between business class and standard coach seats—and larger business-class cabins that fit large numbers of travelers, especially on long flights. .

Many of the newer business class seats are more spacious and have more amenities than the first class seats of the past.

American Airlines plans to get rid of separate first class on some older planes used to fly longer routes in favor of a single, expanded, business class that includes new suites with doors.

The airline said it will increase premium seats in its long-haul fleet by more than 45% by 2026.

Henri Harteveldt, a former airline executive and founder of the Atmospheric Research Group, said expanding the cabin risks reducing the premium feel.

“If they call us a boarding school and it’s like the start of the Indy 500 and you have 70 people jostling to get off the jet bridge, it’s not going to be a pleasant experience,” he said.

With demand still strong, redeeming miles for flights may cost more this year.

Michael Calarco, a part-time consultant who helps travelers book travel with rewards points, said it’s become more difficult to find seats recently because planes are so full after travel restrictions, including to international destinations, are lifted.

He advises flyers to be as flexible as possible with their dates if they want to cash in their points for travel and avoid major holidays.

“I can’t do much if someone wants to go to the Maldives in two months,” he said.

Some travelers say the convenience is worth cashing in for parts of their seats.

“I’m not sitting behind the wing,” said Mark Ophaug, 40, who works for an education technology company and has elite status with United’s Mileage Plus program. She and her husband plan to visit her in-laws in Buenos Aires this year and use United PlusPoints to upgrade to lie-flat seats.

“It’s a long flight and I want to lie down,” Ophaug said.