Just how valuable WAS your Jet Privilege elite status? I mean, literally.

I'm still trying to wrap my head around the finer points of Jet Airways' new announcement on Fare Choices, and how it will affect the Jet Privilege program. So I was thinking of doing a post on exactly what has changed, for each level of JP tier members, when I found this draft post (I'd completely forgotten about publishing it). While the post itself has been rendered rather pointless by these new changes, I'm publishing it in order to get a perspective on how things were (and will be until the changes take effect on 17 August 2016. Note that this post was written about 3 months back, so please do keep that in mind - because I've not tinkered with the language or tense of contents.

There's a lot of chatter around earning and retaining elite level membership with loyalty programs, most of it quite rightly so. Elite tier membership provides certain benefits which can be really useful. Many of us have even done mattress runs or mileage runs, solely to retain or upgrade our elite status. And if there indeed are benefits, clearly we value them. Why else would we go through what it takes to get or retain some of those benefits?  So, what could that value be?

That's the exact question I thought to address, in quantitative terms. While there are many loyalty programs out there, I'm picking my favourite - Jet Privilege - for this exercise. You can also do a similar exercise to value your favourite (or not) program's elite statuses.

So, want to know what value you get by being a JP elite member? Read on.

To be clear, this valuation is only mine - you could value your elite tier differently, because you place a higher or lower value to each benefit. Nonetheless, in the interest of general information and transparency, I thought it would be useful to discuss my approach to valuing individual tiers in the JP program.

So in coming up with a value, there's a methodology that's applied, some inclusions and some exclusions, and finally, a set of assumptions. Brace yourself for some theory here!

Methodology

This entire exercise was fairly simple to figure out, in terms of what benefits are offered. Should you want to consult the official book, refer to Jet Privilege's member benefits section here. 

The problem - or one of them, anyway - is that different users have different usage patterns. So I had to set out some assumptions. I'll discuss these assumptions below, which I think you'll agree are quite conservative. 

Secondly, the calculations are often vary between individual tiers, because the extent of entitlement or benefit is different. For instance, Silver and higher tiers offer additional, but differing, allowances for checked in baggage. Not all of such allowance might be used at all times.

Thirdly, many benefits are available to all JP members (eg, web check in), and some benefits are available whether or not you're a JP member (eg lounge access when flying business class). Because the actual elite status makes no difference in the benefit gained, I have not valued any such benefits.

Finally, there are some benefits that save time (whose value varies by individual), which I cannot put a monetary value to. Some of these (such as priority tagging of luggage) are not guaranteed. I can't count the number of times by checked-in bag has been tagged Priority, yet has been one of the last to arrive. It can be hit-or-miss. So I've not valued these either.

So let us start by discussing the benefits available for each tier, by type of benefit.

Reservations and cancellations

JP offers benefits like guaranteed reservations, seat selection up to 331 days in advance, pre-reservation of seats, and waiver of cancellation charges. Here's how these benefits individually work for each JP tier.

While guaranteed reservations themselves are valuable, how much value is questionable, particularly because it applies only to certain fare classes. So I'm not valuing this. Pre-reservation doesn't equate to check-in, so it may carry varying values for different people. And so I'm not valuing these benefits.

Check-in privileges

JP offers facilities like web / kiosk / tele check in, dedicated counters, priority standby, priority tagging, and baggage tags to users as part of their welcome kit (except for blue and blue plus members). Here are these benefits sorted by tier.

While these are facilities offered, some of these may save time but not necessarily money. So it becomes difficult, if not impossible, to put a value to them.

Baggage allowance

This has by far got to be the biggest set of benefits for JP elite tier members. Not only do they get some generous checked-in baggage allowances (an some of these can be combined with additional baggage allowances for holding specific co-branded credit cards), there are also higher allowances for cabin baggage, for platinum, gold and silver tier members.

Because the additional cabin baggage allowance is not significant between tiers, I've not valued this benefit separately.

Lounge access

Given the quality of airport lounges these days, I'm not sure how much these are used by members. However, I often find lounge access to be useful places particularly in situations like flight delays. Just a place to sit and get some work done, with or without F&B, can be a relief.

To be conservative, I've limited lounge access to an approximate amount for paid lounge access, for economy class travel (since business class anyway comes with lounge access for all).

Earning and redeeming JP miles, using vouchers, etc

While earning base miles and tier points is consistent across all members (isn't that the whole point of the loyalty program membership!), how many miles you earn can significantly vary by your elite status. Same goes with the number of upgrade vouchers you can get when you upgrade or renew your tier status.

Miscellaneous

Finally, there are some miscellaneous benefits earned simply by being a JP member. Because these benefits are commonly applicable to all membership levels, They don't affect the valuation in any way.

One unstated membership benefit of being a JP Platinum member is the availability of a relatively quicker phone line to assist with queries (yes, Plats are served on priority over other members). Again, this has an effect on the time spent on the phone (and hopefully time saved), but one cannot readily put a value to it.

Assumptions

Having determined what benefits actually have a value, I put down the following assumptions, which will apply to all levels of the JP program, for the purpose of my valuation:

• Total of 30 sectors flown in a year (relevant for seat selection, which otherwise costs Rs 500 per domestic sector).
• There are 5 cancellations in a year.
• For excess baggage, I've consistently considered the following excess baggage in a whole year, over an above the base allowance for the booked class of travel (as opposed to the eligible limit for the relevant tier), since that would be the real base-level over which the benefit is earned. Also note, that I've not considered the entire amount of permitted excess baggage.
• 10 kg of on domestic Boeing flights, at Rs 350 per kg 
• 5 kg of on domestic ATR flights, at Rs 350 per kg 
• one bag of up to 23 kgs on flights to USA / Canada, at US$200 (about Rs 13,000) per bag
• one bag of up to 23 kgs to Europe, at US$140 (about Rs 9,100) per bag
• 10 kgs in a year, on other international flights. Because rates vary by sector, I've conservatively used the rates for domestic extra baggage, of Rs 350 per kg.
• Usage of lounges 10 times for domestic travel, and 2 times for international travel.
• A per-mile value of Rs 0.72 (based on our valuation in January 2016).
• A total of 25,000 miles traveled (and base miles earned) during a year.
• A value of Rs 2,000 per upgrade voucher. Note, that this is extremely conservative, because if you used 5 upgrade vouchers to upgrade yourself from business to economy class on BOM-LHR, you could often save the equivalent of Rs 150,000 or more, making each voucher worth Rs 30,000!

And the results...

Here's the outcome of applying the above assumptions on the various benefits. For the sake of convenience, I've only presented those benefits that are capable of being valued, for the reasons stated above. For those very reasons, these are pretty conservative values.

So, being a JP Platinum should earn you a benefit of around Rs 70,000, or just over US$1,000. JP Gold is valued at about Rs 59,000 or about US$880, and JP Silver at just over R 36,000 or close to US$ 540.

And like I said, in reality, it could be worth much more depending on actual travel and usage patterns.

Conclusion

I was quite surprised with the results, myself, because I didn't expect such high values.

At the turn of the new year, I re-qualified for JP Gold and thanks to JP's dynamic tier review, I was able to upgrade to JP Platinum within two months of that. And while most of the benefits don't accrue incrementally (ie, I can't use the Gold plus the Platinum entitlement), I've got a large stash of upgrade vouchers now! I wouldn't mind using them to upgrade to First class on Jet's BOM-LHR service! The price difference between business and first class one-way is in the range of Rs 100,000, which is fantastic value for those vouchers!

[Update: I will now update this for the August 2016 changes and publish a post separately. Please do let us know what you think, in the comments section below.]