United today announced what everyone already knew (or at least expected to a 98% approximation), that the surviving frequent flyer program in the United-Continental merger would be called Mileage Plus, and not Onepass. Mileage Plus was the larger program and significantly more brand value that they couldn’t walk away from. It would have been silly to create an entirely new name, as well.
Lots of little details to be ironed out in the merger, and I provided an update over the weekend on much of what we know.
United’s posting to Milepoint by Scott O’Leary mentions several outstanding issues still to come. Perhaps the biggest unanswered question not listed is whether the new program will engage in Starnet blocking.
For those unfamiliar, this is the practice whereby Mileage Plus programmed its computers to say that award seats weren’t available even when United’s Star Alliance partners were offering them those seats. Mileage Plus did this when it didn’t want to pay for the seats. Roughly speaking, Mileage Plus would set a budget for each partner for the quarter, they would have some blocking of award seats at the beginning of a quarter in order to prevent themselves from running out of planned spend on partners. As they used up their allotted money, they would tighten blocking. Lufthansa was the most-blocked partner, when blocking was in place you could almost never get a Lufthansa premium cabin award seat, despite Lufthansa offering those seats to all of their partners. But it wasn’t limited to Lufthansa. In its early forms, United’s system would usually just not return even the existence of the flight. Which led to surreal conversations with agents like “Lufthansa doesn’t fly to Frankfurt” and “ANA doesn’t serve Washington DC” (and I’d be like, “It’s called ANA Flight 1 and I attended the party to celebrate 20 years of service.”)
For a long time United was the only Star Alliance carrier engaging in the practice. Currently there’s some confusion about what is going on at US AIrways mostly with Lufthansa first class transatlantic award space. Some speculate it’s blocking, though it’s equally plausibly an AVS synch issue with their reservations system. One imagines though that US AIrways rather likes this problem and hasn’t acted to fix it, in fact they’ve instructed their agents not to manually sell the award space (which is a way to circumvent the problem).
Anyway, Starnet blocking led to agents unintentionally (on the part of the agents, though likely intentionally on the part of Mileage Plus) lying to customers. They would tell customers that the partner airline wasn’t offering seats to United, and that each partner allocates a certain number of seats to each Star Alliance member. Neither of those statements were quite true. The seats would be offered to United, United just wouldn’t book the seats. A manual sell of the award space would confirm this, but of course United then began threatening their agents to prevent them from doing manual sells. (Some carriers do offer their own members additional seats, eg Lufthansa and Swiss offer extra availability to Miles & More members and Singapore offers additional seats to Krisflyer members, and also strangely to Miles & More members.)
When Continental joined Star Alliance Scott O’Leary went on the Upgrd Podcast for an interview in which he stated that Continental doesn’t believe in award seat blocking, and promising that they would roll out an award chart which was ‘realistic’ enough to allow them not to block award inventory.
Of course, what we wound up getting for both United and Continental was this new ‘realistic’ award chart. And they recently adjusted the chart again, just a few weeks ago, so hopefully that chart remains one they can live with sans blocking.
Now, I also understand that Continental has seen higher redemption costs than they had expected when joining Star Alliance, but certainly on net the benefits outweigh the costs. And they still believe in being honest with their customers, as Scott promised they would when Continental joined Star.
When I posted on this on Milepoint, Wandering Aramean took issue with my claim that this issue is a big deal for many members and how they perceive the program. Presumably his take is that it’s sufficiently esoteric as to not reach the radar of most of the program’s combined 70 million or so members. I disagree. First, because it materially affects their award redemption experience and that’s the touch point when members really determine their long-term relationship to a program. A good reward experience heightens loyalty and future engagement while a frustrating experience turns them off to the program. Second, because the folks who will base their opinions directly on the issue of ‘starnet blocking’ are thought leaders, are influencers, and are vocal in public fora, and will have a disproportionate impact on the reputation of the program which will reverberate across many more members than their numbers alone indicate.
This is a “big deal.”