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US Airways’ new policy, by the numbers

As mentioned in [% 2513509 | | my earlier coverage %] of US Airways’ plan to eliminate the 500-mile minimum awarded for short flights, some of the carrier’s customers will be disproportionately affected by the new rule. Specifically, those who frequently fly on shorter routes stand to lose a significant number of frequent flyer miles over the course of a year.

Following are examples of two representative short-haul routes and the calculations that will be made by travelers who are among US Airways’ most profitable customers.

The distance between New York’s La Guardia and Boston’s Logan airports is about 184 miles; a round-trip flight would be 368 actual miles. Under the current policy, 500 miles are awarded for each segment, 1,000 miles for the round-trip. So when the new policy takes effect on May 1, a Dividend Miles member will earn 63 percent fewer miles.

Let’s put the change into award terms. Under the current policy, it would take 25 round-trip flights to earn the 25,000 miles required for a free domestic coach ticket. After the policy change, it will take 68 round-trips to earn the same award.

US Airways isn’t the only option for shuttle service between La Guardia and Boston. Delta operates shuttle flights on the same route. And Delta offers 500 frequent flyer miles each way. Assuming Delta maintains its 500-mile minimum policy, it will enjoy a significant frequent flyer advantage after US Airways’ policy change.

Similar considerations apply to flights between Los Angeles and Phoenix, US Airways’ principal hub. The flight distance is 370 miles one-way, 740 round-trip.

Under US Airways’ new policy, it will take 34 round-trips to earn the 25,000 miles required for a free ticket. Compare that to the number of round-trips required by Southwest, one of US Airways’ primary competitors on the route. Members of Southwest’s Rapid Rewards program earn a free ticket after just eight round-trips.

Even before the change, Southwest had the better frequent flyer proposition. After the change, the competitive gap will be wider still.

Not all US Airways customers will bother to make the above calculations. But those that do will find US Airways on the losing side of the comparison. And many will shift their business to one of US Airways’ competitors.

Stockholders were apparently among those who did the math. On the day US Airways announced the change, the airline’s stock lost 8.4 percent of its value.

Note: The distances used above are between the origin and destination cities and may be slightly different from those used for the calculation of frequent flyer miles.

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