web Musings of The Global Traveller

Tuesday, November 24, 2009

Emirates Skywards major devaluation

About 6 weeks ago I posted the news that Emirates Skywards will have a major overhaul effective 1 January 2010.

In short the frequent flyer program will be more closely aligned to revenue than it currently is. Earning rates depend on fare basis and the class of service factors for business and first class are higher.

Since the announcement, Emirates has drip-fed more detailed information including the new geographic zones (from 2010 both earning and redemption is zone-based), and new earning & depemption charts. After crunching the numbers on hundreds of routes, the conclusion is unmistakeable - this is a significant devaluation.

Geographic zones

The current program has 13 geographic zones for awards. From 1 January 2010 there will be 18 zones for both earning and redemption. Mostly these are unchanged from the existing zones, except:

  • America split into 3 zones - North America west (which includes Houston), North America east and South America
  • Australia/NZ split into 3 zones - Australia west (ie Perth), Australia east and New Zealand
  • Cyprus switches from Near East to Europe South
  • Cities near to Dubai (ie Bahrain, Doha and Muscat) switch from the Home zone to Middle East

The consequences of the America & Australasia zone splits are to make some awards cheaper for cities closest to Dubai, and some awards more expensive for cities further from Dubai.

Cyprus awards are more expensive.

Cities near to Dubai now have a small extra award mileage cost relative to the equivalent award to/from Dubai.

The new charts have a disclaimer that the figures are based on the most direct route between zones. Since Emirates has lots of tag flights (ie flights between cities other than Dubai), it is unclear how to interpret the new earning & redemption rates on some routes. For example between Asian Sub-continent south and Far East there are some direct flights (Male to Jakarta for instance) but between most city pairs travel would need to be via Dubai (eg Colombo to Seoul). How are the rates determined in those cases?

As the Emirates route map changes frequently, Skywards members will need to pay attention to changes in the zone earning rates. This could be a positive or a negative depending on changes to the routes and how quickly Skywards reacts. It certainly is a nuisance and is a drawback of using geographic zones so heavily in a frequent flyer program (incidentally Air NZ Airpoints also uses zones, but the issue is less relevant for them due to their much more limited route network and less active changes in that network).

Awards relatively unchanged

The good news is that on the whole award costs are the same in the new chart as the existing one. There are some increases (mostly associated with the zone changes) and some decreases.

This is particularly reassuring to those who have a sizeable stash of miles, given the short notice to cash them in on the old award charts if the rates had increased significantly.

The new ability to redeem one-way awards is a genuine improvement.

Upgrades costly

The new upgrade costs are much higher than the old costs. Upgrades from flexible fares are generally slightly higher than the old upgrade cost (with some slightly cheaper and some much higher), and upgrades from saver fares are generally 30-40+% higher than the old upgrade cost.

In most cases the new mileage cost to upgrade from economy saver to business is almost as high as the cost of a business award.

Earning rates slashed

The most significant change is to the earning rates. Emirates spun the changes as being an enhancement to the class of service bonus. While it is true the mileage earned for first class relative to economy class (flexible fares) is higher from 1 January 2010, this has been achieved by reducing almost all the earning rates as outlined below.

The 2009 earning rates are 100% mileage in economy, 150% in business and 200% in first.

The 2010 earning multiples are 50% for economy saver, 100% for economy flexible fares, 125% for business saver, 175% for business flexible fares, 200% for first saver and 250% for first flexible. However the base mileage earning between the zones is roughly 80-90% of the typical distance flown.

The result is marginally higher earning on flexible first and business fares, a 15% drop in earning on saver first fares, a 30% drop in earning on saver business fares and a whopping 55% drop in earning on saver economy fares. Some routes have smaller or bigger changes in earning than these generalisations. Most people fly on saver fares because the definition includes all fares not fully refundable, fares which are available for a limited period or are non-published, and all fares which include other airlines.

Status more difficult to achieve

In more PR spin, Emirates trumpeted that the elite status requirements were unchanged. Of course now we see the detail of the earning rates it is immediately obvious that from next year it will be harder to earn Silver or Gold status.


The changes remove most of the anomalies in the existing program, and at the same time represent a significant devaluation.

With both earning and redemption being fixed amounts based on zone and fare, the earn to burn ratios are relatively constant. The earn to burn ratios on Skywards from 1 January 2010 are generally in the 8-10% range, with some as poor as 5% and some as good as 15%. This represents much worse value than most US-based frequent flyer programs, for example.

These changes are big enough for me to rethink my plans for some premium longhaul trips on Emirates for 2010.

1 comment:

Futaris said...

For example between Asian Sub-continent south and Far East there are some direct flights (Male to Jakarta for instance) ...

There are no direct flights Male to Jakarta on any airline. I should know, since I was looking to travel this route next year. The best is SQ via SIN. Male to Colombo is direct on Emirates.