Hunting for "Status": here's why having the card is important

When airlines first thought of the loyalty card they thought they were rewarding the most loyal customers; today this is no longer the case since points are earned in hundreds of different ways and the "loyalty card" has become a key revenue-generating, cash flow generating asset.

In the recent crisis caused by Covid-19, one of America's three sisters, United Airlines, put up its own loyalty program as collateral for a $5 billion loan.

But how do companies make money if they "give away the miles"?

First of all, no one is giving anything away to anyone, it should be made clear. To get an idea just think that American Express in renewing its partnership with British Airways signed a deal worth just under $1 billion, money that in the midst of a pandemic is lifeblood for the company's survival. Included in this deal are Avios which Amex will then turn over to its customers and all other existing and future partnerships.

It is clear, therefore, that when we book a car with AVIS and earn miles, these have been bought from the car rental company by Alitalia or Air France, the same is true for hotels and all the other ways in which points can be earned.

While those who fly earn miles and therefore for the company they are an extra cost on the ticket. And in the end as you can read in black and white on United documentation, the airline makes a lot of money.

Why does status matter?

Each company has its own name and levels, but more or less all offer a minimum of 4 to a maximum of 6 levels of membership, the higher the level the more exclusive the club and the greater the benefits.

The basic level is for "new entrants" or at any rate those who fly little or nothing with that company; the second level tends to offer few benefits (priority boarding and some bonus on mileage accumulation).

Things start to get interesting from the third level, in Alitalia it is called Winged Arrow, in Lufthansa Senator, others use more simply names like Silver, Gold, Platinum, etc.

Generally the third level is reached by flying at least 3/4 intercontinental in the 12 months at premium fare, in other cases accelerators can be taken advantage of with credit cards and other promotions.

The world of frequent flyers is constantly evolving and will certainly have to adapt to the new post-Covid-19 normal. For example, U.S. airlines are increasingly tying status to the amount "spent" on tickets rather than the amount flown, the major European airlines on the contrary have different ways of accumulation but still tied to a mix between distance flown and class of travel, although Lufthansa first seems to be leaning toward the "made in USA" solution. Needless to say, having a Gold Star Alliance card brings benefits across the entire network, whether flying from Hawaii to San Francisco or taking a Rome-Frankfurt.

Access to proprietary lounges, priority boarding, the ability to change flights without penalty, up to upgrades in biz or first if there are available seats. These are some of the amenities that make travel, cheaper and more comfortable.

The thing to know is that you have to fly to get these statuses, and award tickets bring neither miles nor benefits. That's why you should always weigh costs and benefits when you have to book a flight. Making an extra stopover can help you earn more points/miles, but at the same time you are extending the length of your trip.

The class of flight should also be evaluated; sometimes a ticket with a slightly higher cost can allow much higher mileage accumulation. In some cases, it is also advisable to avoid overdiscounted tickets that do not generate miles or allow paltry percentages to accumulate relative to the distance flown.

Are there shortcuts to get the status?

Yes, but few. Alitalia offers the possibility of obtaining the status Ulysses to the holders of American Express Alitalia Gold for free for the first year and then to have a discounted renewal from the second year onward. With theAmerican Express Alitalia Platinum you gain rightful access to the Winged Arrow Club, and again there is facilitated renewal of status from the second year.

Then there are strategies such as the one recently launched by Finnair, which sells passengers miles and status, in an effort to cash in fresh money.

Or you can take advantage of initiatives by Status Match that allow you to have your status recognized by another company as well.

Pursuing a particular level is recommended only for those who plan to fly a lot with a particular airline; for an occasional traveler it is absolutely not recommended and could become unnecessarily wasteful.