United published some heavy-hitting changes to their loyalty program over the weekend. In a nutshell, United is following Delta down the path towards a totally revenue-based loyalty program.
United has announced dynamic award pricing effective immediately for flights with travel dates of November 15 and on. This means that instead of having set, published prices for award flights, the mileage price will fluctuate based on the cash price. No more award charts. For future reference, download the PDF of United’s award chart for yourself (hat tip to View from the Wing for saving this before United took it down last October).
MileagePlus already changed how members earn miles (as did American, both in step after Delta) to reward those that spend more as opposed to those that actually fly more. In other words, mileage earning is based on dollars spent versus miles flown. This next step, which Delta took years ago, towards extending a revenue-based model to redemptions is not unexpected but certainly disappointing as it will reduce opportunity to get outsized value from flights that previously had a maximum mileage price despite the cash price. In my mind, getting such outsized value is the best (and really only) use of miles.
Breaking Down United’s Announcement
The First Bullet
There are awards pricing below the published Saver Level price (the current cheapest price available, according to their award chart), effective for travel now. That’s the positive aspect of this change.
The Second Bullet
Their are awards pricing for above the published Everday mileage price, which was previously the cap, effective for travel as of November 15 and on.
The Third Bullet
Woo-hoo! Give me a break. Of course you don’t need to collect a close-in booking fee if the mileage price will be higher close to the travel date, which it certainly will be with dynamic pricing. Just take a look at delta.com for proof.
It’s possible to get around United’s close-in booking fee with this trick anyways. Until November 15, that is, when they will become built into the mileage price.
The Fourth Bullet
There’s always been a flexible award travel calendar available, so I’m not sure why that’s being announced.
Why United (And Some People) Will See This Change as Positive
Some Cheaper Awards
Yes, we’ll see the option of cheaper awards that fall below the prior Saver level price. Take this Las Vegas to Los Angeles flight on May 15 that is pricing as low as 6,000 miles + $5.60 taxes on united.com:
The published lowest award price for domestic flights, according to United’s award chart, is 10,000 miles for flights of 700 miles or less.
But the point here is that it costs just $79, or as low as $49 if you don’t mind basic economy.
I wouldn’t redeem miles on this flight… not 10,000 of them and not even 6,000 of them. That’s getting anywhere between under a cent or a little over a cent of value per mile, depending on whether or not you care about Basic Economy.
Will we see cheaper award prices on Business Class and international flights? No, because those cost more cash. They will cost more miles.
More award space?
Some are saying that there wasn’t enough Saver Level award space to begin with and that with these changes, in general, more award space will open up. I understand that logic, and I hope that it pans out to benefit the majority and not just the super miles/points rich.
We’ll have to wait and see how that award space prices. If there’s more of it for only a marginally higher price, great…sign me up. Awesome award chart sweet spots are hypothetical unless there is award space to make that flight a reality. But if what we get is more award space for an unrealistic award price, then I don’t think these changes are for the greater good.
The fact that United will get rid of its award charts in November does not make me happy for a handful of reasons. With changes like these, the proof is in the pudding. We won’t know how bad (or good? meh) this shift towards revenue-based award pricing is until more time has passed and a clearer picture of award availability and pricing develops. In the meantime, this is where my head’s at:
- When an airline ceases to publish award charts, they also cease being transparent.
- United gave no notice of these changes. Dynamic pricing is already in effect, and for flights starting November 15 and on there is no cap on high they can be priced. This sucks.
- At least booking partner award space with United miles isn’t changing price for the time being.
- Last minute United awards are now less feasible as they will likely cost a lot more miles.
No More Transparency
United cannot be held accountable for devaluations when there is no baseline to judge them from. Saving miles for a specific award becomes a futile exercise if you don’t know how much it will cost.
Southwest uses a revenue-based redemption system for their travel rewards, but the difference is that their points have a more or less set value (right now a base rate of 1.28 cents per point). That is how you remain transparent while being revenue-based.
Dynamic pricing? Who knows how much the awards the will cost.
No Notice? Bad form.
It would have been much fairer to give MileagePlus members notice of the changes before implementing them. United could have let members know that on x date in the future, the award travel calendar from x date and on would switch to dynamic pricing. That would have at least given members that had been saving miles for an award some time to book their goal trip before the rug was pulled out from under them.
United has given notice in the past of impending devaluations, so the fact that they didn’t here is unexpected and makes me think they will keep available award prices constant/close to the prior Saver/Everyday Level award prices for a while to minimize customer backlash. I at least hope that’s the case.
Apparently United Award Prices Flying Partners Will Remain the Same
According to United, all award charts will be taken down and there won’t be any more published award prices (no minimums, and no maximums). But also according to United, they will keep the same current minimum (Saver Level) and maximum (Everyday) prices flying Star Alliance partner awards for the time being.
However, award itineraries that utilize both United and a Star Alliance partner may price variably.
So Long Last Minute United Awards (w/United miles)
This one hurts me personally and will hurt a good deal of people that have a lot travel flexibility. Cash flights tend to jump drastically in price close to the travel date. With dynamic award pricing, that means the mileage price will also go up closer to the travel date.
Thankfully the majority of my access to United miles is through Ultimate Rewards (although I do have a big bonus of purely United miles on the way), so I’ll have the option to book United award space last minute with Singapore miles in many instances. Singapore Krisflyer does not collect a close-in booking fee. I often fly United Business between the US and Argentina, which is cheaper with Singapore miles than United miles anyways.
What all this Means in Regards to Credit Card Stategy
Should I Drop my MileagePlus Credit Card?
You shouldn’t be focusing spend on United MileagePlus Cards to begin with when you could be earning transferrable points like Ultimate Rewards that give you the option to transfer to United MileagePlus as well as various other airline loyalty programs. If your goal with credit card spending is to accrue United miles and not necessarily to earn elite status, and you’re spending on a United Explorer Card reglularly, stop. Open and spend on a Chase Sapphire Preferred, Chase Sapphire Reserve, or Ink Business Preferred instead.
So you’re saying I should ignore United credit cards then?
No, they’re still valuable for their bonuses. But I never would have recommended that anyone focus spend on a United co-branded card to begin with when you should, as I said above, be putting everyday spend on cards that earn transferrable point currencies.
Bonuses from the likes the United Explorer Card and United Business Explorer Card are still valuable, especially considering Star Alliance partner award prices aren’t changing (at least for the time being).
United MileagePlus made a move over the weekend that is not unexpected but also, in my opinion, not welcome. They are dropping award charts and adopting dynamic award pricing, which will be based the fluctuating cash price of flights. Do I think American Airlines will follow suit eventually? Yes. This is the trend. Delta leads the legacies, and they follow suit. Eventually all three will be completely revenue-based loyalty programs, on both the earning and redemption side.
United award charts will disappear from the internet on November 15, 2019. Download it here before they do. The dark side of dynamic award pricing, losing the cap on a maximum award price, is already effective for flights with travel dates of November 15 and later.
What do you guys make of all this?