DansDeals Exclusive Look Behind The Scenes: Here Are The Details On El Al’s Reimagined Matmid Frequent Flyer Program!

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Background Information:

In January 2021, I met with El Al’s new CEO Avigal Soreq in New York. Mr. Soreq had just taken over for the airline under brand new ownership and he asked for my thoughts on how to fix the airline.

I shared those thoughts here in April.

The number one tip was,

• Burn Matmid to the ground and start over.
  • Yes, I understand the program makes money in Israel, but with a revamped loyalty program denominated in regular miles and competitive elite status levels, it can make orders of magnitude more money across the globe, as has been demonstrated to the tunes of billions of dollars by many highly successful airlines. I suggested that having someone familiar with US loyalty programs working in tandem with the Israeli team would be a winning combo.
  • As part of fixing Matmid, create a US co-brand credit card with a value proposition that makes sense for customers and the airline. Pro tip: This isn’t it.

Or as I put it in 2020,

“El Al’s Matmid loyalty program is nothing short of a dumpster fire.

The points system used makes comparing the requirements to any other airline a massive headache. You need a PhD to understand the intricacies of the program, likely to hide how poorly it stacks up to the competition. There are fuel surcharges to redeem for awards. Points expire without any ability to extend them. There is no co-brand credit card for North American users. The latest website redesign removed the ability to easily search for classic award tickets. Etc, etc…”

The airline is now run by Dina Ben Tal Ganancia, whom I met in June at El Al headquarters at Natbag/TLV on a whirlwind day of meetings with various El Al department heads.

In the CEO’s office:

I told her that I loved El Al’s business class product, but wondered what the airline could do to make Matmid have a competitive advantage so that Americans would fly it over US carriers and to open an El Al co-brand card. That’s a tough ask, as Americans can spend their way to elite status on co-brand credit cards and can enjoy those benefits flying US carriers to Israel and everywhere else in the world. Or they can open other banks cards that offer very high reward rates for spending and redeeming on any airline.

Our conversation ranged from outsourced call centers, website improvements, to US airline bailouts, Boeing struggles, El Al vouchers, gift registries, United’s PassPlus program, the Fly America Act, codesharing, alliances, competitive advantages, secure transit in Natbag/TLV, and more, though that’s a post for another time.

There was a lot of talk of upcoming positive changes and cultural changes, but what piqued my interest the most (aside from going to the rooftop of the new and old Air Traffic Control towers!) were the proposed changes to El Al’s Matmid program.

I met with Ronen Galperin, new CEO of Matmid and his deputy, Dvora Butra for a session on the frequent flyer program.

Those changes were shared with me under a non-disclosure agreement and we debated several aspects of it, but overall I came away with the impression that it was a good start for a long overdue turnaround.

They told me then that Israeli law requires them to give 9 months warning before changes are implemented. They had hoped to announce changes in September, with the new program launching in June, but that slipped during the tweaking of the program details.

The New Matmid Program:

I spoke with Shlomi Am Shalom, Head of Communications and Government Relations at El Al, and Dvora Butra again yesterday to learn the details of the new program. Dvora is very knowledgeable about all of the competing programs in the market and wanted to design the new program with as much simplicity as possible, while creating a good value proposition for passengers from other countries where El Al faces increasing competition.

That’s a big improvement from the 2019 devaluation which made a complicated program even more complicated.

With the program changes being announced on December 1st, Israeli law requires that it not go into effect for 9 months, so it will launch on September 1, 2023. Until that date, the current program does not change at all.

I was thrilled to hear that El Al will finally move to industry standard numbers, which makes it easy to compare how generous their program is compared to the competition.

I’ve long said that El Al made their program complicated in order to obfuscate that it offered a poor competitive value proposition, so it’s really great to see things improved here.

Until 2020, AMEX points used to transfer to El Al at a 50:1 ratio, and indeed, El Al will be using that ratio to multiply everyone’s existing point balance by 50 on September 1st, to make their numbers comparable to most other mileage programs across the globe.

But just don’t call them miles. Ms. Butra is aghast that airlines still call their currency miles when the industry has long since shifted from anything measuring a mile towards revenue based accrual. Miles are no longer earned based on a flight distance, so why are we still calling them miles?

Fair enough!

So the new program will still be called Matmid and the new currency will still be called points. I do think it’s a missed opportunity to rebrand the entire program and call points something else to avoid confusion, but I’ll just call them old points and new points to solve that problem in this post.

Earning Points From Flying:

• Currently point earnings are as follows:
  • Non-elites earn 1 old point per $10 spent
  • Silvers earn 1 old point per $7 spent
  • Golds earn 1 old point per $7 spent, plus a 10% tier bonus
  • Platinums earn 1 old point per $7 spent, plus a 40% tier bonus
  • Top Platinums earn 1 old point per $7 spent, plus a 60% tier bonus

That’s pretty confusing and only the base points count towards earning elite status, the tier bonuses do not.

For example with the current program:

• If you’re a Gold member buying a $1,000 flight you need to calculate that a $1,000 ticket divided by 7 is 142.86 old points, which will round to 143 old points and then you’ll get a 10% tier bonus on top of that for another 14.3 old points, which will round down to 14 old points for total earnings of 157 old points, of which 143 count towards earning status.
• If you’re a Platinum member buying a $1,000 flight you need to calculate that a $1,000 ticket divided by 7 is 142.86 old points, which will round to 143 old points and then you’ll get a 40% tier bonus on top of that for another 57.2 old points, which will round down to 57 old points for total earnings of 200 old points, of which 143 count towards earning status.

• The new program certainly simplifies things, and it’s more generous than the previous program and compared to competing airlines.
  • Non-elites earn 6 new points per $1 spent
  • Silvers earn 8 new points per $1 spent
  • Golds earn 9 new points per $1 spent
  • Platinums earn 11 new points per $1 spent
  • Top Platinums earn 12 new points per $1 spent

Points will be earned on the fare and fuel surcharges, thought not on airport fees and taxes. Rounding will apply, so a $1,000.40 earns 1000 diamonds and a $1,000.50 ticket earns 1,001 diamonds. You will only earn diamonds on El Al or El Al codeshare flights, not on partner airline flights that aren’t sold with an El Al codeshare.

For example with the new program:

• If you’re a Gold member buying a $1,000 flight, you will earn 9,000 new points. Easy as pie. If you multiply the old program’s 157 old points by 50 you would get 7,850 points, so you’ll be earning 1,150 more points under the new program compared to the old program.
• If you’re a Platinum member buying a $1,000 flight, you will earn 11,000 new points. If you multiply the old program’s 200 old points by 50 you would get 10,000 points, so you’ll be earning 1,000 more points under the new program compared to the old program.

United is the 2nd largest carrier between North America and Israel after El Al, so let’s compare how many miles/points they award per dollar with El Al by status level:

El Al awards 1 or 2 more points than United, per dollar spent for equivalent elite levels. American and Delta award miles at similar numbers to United.

Earning Status From Flying:

Currently, Matmid has some points that qualify towards status and redemptions and other points that are only redeemable miles. In the new program, points are exclusively for redemption purposes. You’ll earn diamonds that count towards earning status. Diamonds are what El Al calls your total spending on the airline, similar to United PQPs and Delta MQDs.

• Currently you need to earn the following to qualify for El Al Matmid elite status:
  • Silver status requires earning 400 points and flying on 10 segments in 12 consecutive months. That’s equal to spending $4,000 of flights at 1 point per $10.
  • Gold status requires earning 1,000 points and flying on 15 segments in 12 consecutive months. That’s equal to spending $7,000 of flights at 1 point per $7 if you requalify or more for new elites.
  • Platinum status requires earning 2,500 points and flying on 20 segments in 12 consecutive months. That’s equal to spending about $17,500 of flights at 1 point per $7 if you requalify or more for new elites.
  • Top Platinum status requires earning 6,500 points and flying on 40 segments in 12 consecutive months. That’s equal to spending about $45,500 of flights at 1 point per $7 if you requalify or more for new elites.
• Under the new program, you’ll earn 1 diamond per $1 spent:
  • Silver status requires earning 3,000 diamonds in 12 consecutive months. That’s equal to spending $3,000 on flights. Alternatively you can earn Silver with 2,000 diamonds and 6 flight segments. That’s equal to spending $2,000 on flights.
  • Gold status requires earning 6,000 diamonds in 12 consecutive months. That’s equal to spending $6,000 on flights. Alternatively you can earn Gold with 3,500 diamonds and 10 flight segments. That’s equal to spending $3,500 on flights.
  • Platinum status requires earning 12,000 diamonds in 12 consecutive months. That’s equal to spending $12,000 on flights. Alternatively you can earn Platinum with 7,000 diamonds and 20 flight segments. That’s equal to spending $7,000 on flights.
  • Top Platinum status requires earning 28,000 diamonds in 12 consecutive months. That’s equal to spending $28,000 on flights. Alternatively you can earn Top Platinum with 25,000 diamonds and 40 flight segments. That’s equal to spending $25,000 on flights.

It’s significantly simpler to understand than the current program and it’s much easier to earn status in the new program.

El Al will award status for 12 months from when you reach a tier threshold, based on activity within the previous 12 months. That gets renewed for another 12 months when you hit another tier threshold.

Here is how many flight segments (PQF) and/or dollars spent (PQP) that United requires for status:

United doesn’t publish the requirements for its secret Global Services tier, though $50,000 per year (or 4 million lifetime miles) is considered the general benchmark to earn that status. You can also earn Global Services by purchasing a $50,000 PassPlus prepaid airfare card.

Here is how those spend requirements line up, side by side:

El Al’s lower 3 status levels are significantly easier to achieve than United, though that makes sense given their much smaller footprint. United also requires status to be earned in a calendar year instead of in a rolling 12 months period. However that also means that United status may last for a longer time than El Al, depending on when you qualify and when you hit El Al’s tier thresholds.

El Al considers Top Platinum to be competitive with United 1K, though with benefits that attempt to compete with Global Services. Some Top Platinum benefits are actually better than Global Services, though in other ways it’s more like United 1K. Either way, it’s a whole lot easier to earn Top Platinum than it was before!

Mr. Galperin told me that they considered adding another tier to compete directly with Global Services, but as a small carrier, the number of passengers that would qualify for that level would be very small and they would rather focus on making Top Platinum the best it can be.

Top Platinum members receive a plethora of benefits, including a dedicated account manager for a single point of contact for all of their flight needs. That’s a benefit that hotel chains like Hyatt offer, but isn’t something that airlines offer. El Al says the account manager is a costly benefit, but they have heard loud and clear from their top customers how valuable of a benefit that is and they will continue to offer that level of service, even if the program expands with lowered thresholds for Top Platinum.

On September 1st, El Al will convert your old status points into diamonds by multiplying by 10 for old status points earned before you earned elite status and by 7 for old status points earned once you earned elite status. Old status points earned from spending on the Fly Card Premium will be multiplied by 2.5 into diamonds.

Earning Status From Credit Card Spending:

El Al is a non-player in the US credit card market due to poor agreements signed by previous management. Sadly, that means there is no way for Americans to earn status from spending.

For the Israeli market, Fly Card Premium cardholders will earn 1 diamonds for every 80 shekels spent. You can earn up to 12,000 diamonds from spending, good for Platinum status. El Al doesn’t like the idea of giving away their Top Platinum status just for credit card spending without flying on the airline.

Earning Status From Ancillary Purchases:

Currently, El Al does not award status qualifying points for ancillary spending.

Under the new program, you’ll earn points and diamonds for spending on space seats and baggage fees. You won’t earn points or diamonds if you buy a lite fare and pay for a standard seat.

Fuel Surcharges:

Fuel surcharges are an inherent part of many mileage programs outside of the US, but charging a fee for loyalty is a bad business plan, which is why US programs avoid charging them.

I have long called out El Al’s fuel surcharges as being non-competitive compared to US programs, so I was thrilled to hear that they will be eliminated under the new program!

You’ll just pay the mandatory airport taxes and the like as charged by US programs.

Points Expiration:

In 2015 El Al went from expiring all flight points after 3 years to expiring all points, including points earned from credits cards and transfers after 3 years, with no way to extend them. After I wrote that 2015 post I got a call from former Matmid deputy Gal Egozi who spent 2 hours explaining to me why I was wrong about the changes being a devaluation and why the expiration changes were actually a good thing for passengers.

But I’ve long derided it.

Sure, expiring points is a lucrative business. El Al can collect revenue and then write it off the books as breakage to pad their bottom line. An average of 10% of Matmid points expire after 3 years without being redeemed.

But anyone who has lost points knows that it’s a major turn-off compared to other programs that don’t expire points. That’s not loyalty.

Under the new program, if you fly on a paid El Al flight or credit a paid partner flight, such as Alaska or Qantas, to Matmid, you’ll extend the validity of all your Matmid points by 18 months.

You can also extend the validity of your points for 18 months by spending 5,000 shekels on the Fly Card in Israel.

This is an improvement of course, but it’s wildly uncompetitive with US programs. Delta and United have eliminated expiration altogether and American extends your points for 24 months with any earn or burn activity.

I asked why El Al was insisting on only allowing earning points to extend validity and not burning points. After all, if someone flies on El Al for an annual trip to the holy land, surely not an uncommon occurrence for Americans, after a while they will have enough for an award flight. However, in between their paid flights they will exceed the 18 month points validity and lose their points due to taking an award flight one year. They can credit an Alaska Air flight to El Al to avoid that, but that’s an onerous requirement to keep your points alive.

Mr. Galperin said that the cost to do that would simply be too expensive for the airline, but that it might get there with time. They’re especially concerned with making things too generous upfront, as they don’t want to be put into a situation where they need to walk back improved benefits and would rather deliver those in time if possible. And given the lack of competition in the Israeli market, do they really want to be that generous when they can get people to use their Fly Card to accomplish extending their points validity?

Ms. Butra notes that another concern they had was that customers would book and cancel award tickets in order to extend their points expiration. I said that I understood where she was coming from, but that it wouldn’t be hard to have the expiration date revert back if it was cancelled or to only count the redemption to extend activity after the flight is actually flown.

I also suggested that especially considering the lack of a credit card offering abroad, that they allow redemptions to extend mileage validity for members living abroad. US airlines have done this over the years, with United and Delta waiving some status requirements for members living outside of the US. Here too they were hesitant to do that due to increased complexity and fraud concerns, though surely there are ways to require proof of an actual residence abroad.

In the end, El Al said they heard my concerns here and will continue to study options to make their expiration policy more competitive. I’m hoping to hear better news here, as accumulating points in a program that makes it too difficult to keep them from expiring is a poor value proposition.

Award Chart:

Airlines like Delta and United have eliminated published award charts, though they do maintain them behind the scenes and update them as they see fit.

Other airlines like American and Air Canada continue to maintain award charts for saver awards, while also offering dynamically priced awards.

When I met with El Al in June, they were planning on going fully dynamic with their award pricing, but promised that rates would be 26-40% less than they are now.

I pushed to keep some sort of saver award chart.

Ms. Butra says that maintaining an award chart has become untenable due to the requirement to provide a 9 month advance notice of changes in an era when Delta and United can change their rates overnight.

However, they have come up with an award chart that can be searched via a calculator that will allow you to type in any route and get the current saver (classic) award pricing. That pricing will be updated every 3 months for pricing for the next year. Members will get notified about new pricing 2 weeks before the next change. Partner airline redemption changes will be updated every 6 months.

Fly Card members will receive additional award discounts off award prices, but with the new program, these Mega Saver cardholder specials will have a variable discount between 5-25% off the saver/classic award price.

She also says that they will be able to display the saver award availability even if you don’t have sufficient points in your account, so that should be a nice improvement.

Overall, the jury is out on this one. I’d certainly rather see award charts like American and Air Canada, but perhaps this will indeed be better than Delta or United.

Upgrades:

El Al will upgrade their upgrade experience from one that is only available for elites on higher fare classes and has to be done through their service center to one that is fully available online and on the El Al app, starting from the time of booking until 6 hours before departure. Once you request an upgrade, you won’t be able to cancel the upgrade request without cancelling the entire ticket.

In the new program, all members will be able to upgrade from all fare classes.

Points and cash and points upgrades will be vary based on the member’s status, fare class, etc.

Your status and the fare class will determine how early the upgrade can be confirmed, which will range from the time of booking to 60, 30, 14, 7, or 3 days before the flight, or even day of flight upgrades.

When you register for an upgrade the system will let you know what the upgrade will cost and when it will start trying to upgrade your ticket, based on your status, fare class, and whether you are a Fly Card holder.

The higher your fare class and status, the earlier your upgrade can be confirmed and the cheaper the upgrade will be. For the cheapest fares, that means you won’t be able to get upgraded until the day of the flight, while on mid-tier fares your status or lack thereof will determine how far in advance you will be able to have your upgrade confirmed. On higher fares you will be able to get upgraded far in advance or even at the time of booking. The payment of points or points+cash will be processed only once the upgrade clears.

Lounge Access:

Airlines across the globe are dealing with lounge overcrowding, and El Al isn’t immune to that. The King David Lounge is by the far and away the best lounge in Natbag/TLV, offering fresh mehadrin food, wines, and many amenities than the subpar Dan lounges, though there are still no current plans to reopen the lounge’s spa that was shuttered over COVID. The former first class section of the lounge will be accessible by Platinum and Top Platinum members.

Alas, El Al is cracking down on their generous lounge access policies.

Gold members flying El Al are currently allowed to bring in 5 guests per visit, from a annual nomination list of 10 guests. Under the new program they can bring in 1 adult guest and 4 children under 21, with an annual nomination list of 10 guests.

Platinum members flying on any airline are currently allowed to bring in 5 guests per visit, from a annual nomination list of 40 guests. Under the new program when they are flying El Al they can bring in 1 adult guest and 4 children under 21, with no annual nomination list required. When flying other airlines, they will be able to access the lounge just twice per year and without any guest access.

Top Platinum members flying on any airline are currently allowed to bring in 5 guests per visit, from a annual nomination list of 60 guests. Under the new program when they are flying El Al they can bring in 1 adult guest and 4 children under 21, with no annual nomination list required. When flying other airlines, they will be able to access the lounge with one guest.

I’d say those are some tough changes, but US airlines have long since stopped allowing access when flying other airlines and have you seen all of Delta’s harsh lounge access changes? These changes are downright merciful compared to that, and if it works to limit overcrowding, it may not be the worst approach.

Dan’s Quick Thoughts:

That’s a whole lot to digest!

I’m more optimistic about Matmid than I have ever been, though a lot will ride on the rates charged for award tickets, the availability, etc. which are all opaque for now, other than assurances that they will be lower than they are now. And I’m curious to see if the expiration policy can be improved, at least for those who live abroad.

The bigger issue here is the lack of point transfer options to El Al. Without that and without a lucrative credit card offering in the US, they will still remain a bit player in the US loyalty scheme.

I’m heartened to see the amount of thought that went into these changes and I’ve loved seeing new friendly changes, like a mehadrin steak entree (KBML) and halachic zmanim being added to El Al flights.

These mileage program changes represent steps in the right direction and if you do want to earn miles and status from El Al flights, they are all massive improvements over what was offered until now.

I always enjoy talking inside baseball with mileage program executives and have done so with several airlines to date. I’m happy to offer suggestions, while retaining my ability to remain a critic. Frequent flyer programs, my inbox is always open!

What are your thoughts on these changes? Will they make you more or less likely to fly El Al?