Reader MEOW asks,
Gary, what do you see as a big risk to UA’s program going forward? They’ve made many redemptions pricey compared to peers, and earning much harder now. Gracias.
United has made a ton of changes over the past couple of years. A few of the most major changes:
- They substantially increased the price of award tickets — especially premium cabin awards and even more so for premium cabin awards on partner airlines.
- They introduced revenue requirements for elite status.
- They moved from mileage-earning based on distance (where they reward the time you spend on their planes) to mileage-earning based on dollars spent (purely transactional). (That’s one reason why I’m such a fan of Singapore Airlines, since you still earn full mileage flown on United on nearly all fares when crediting to Singapore. Another thing I like about Singapore is the ability to transfer points in from American Express, Chase, Citibank and Starwood.)
There are myriad other changes they’ve made — many of which sting. They made changes to lifetime elite status they promised they wouldn’t make. (‘Lifetime means lifetime unless…we change our mind.’) They too Singapore Airlines award inventory off their website and lied to members about why. There are so many more.
There are winners and losers in United’s elite program. United adopted Continental’s practice of privileging fare paid on a given trip over elite status for upgrades so that a Silver on a full fare ticket has priority of a 100,000 mile flyer on a mid-priced fare on any given day. That’s the biggest reason I decided not to be a United customer (living in DC that’s a bigger deal than elsewhere because of the number of government employees flying YCA fares).
United is still good for confirmed upgrades, though internationally there are minimum fare requirements — you can’t just buy the cheapest fare and if your upgrade never clears you’ve overpaid for a lottery ticket and lost.
They’re very generous with same day confirmed changes for elites, more so than Delta or American. I focus on where a given airline is better than average when zeroing in on things benefits that might get ‘enhanced’.
Overall I think the elite program won’t see too many changes. They’ve already taken away economy plus at booking from Silver members (probably what United’s CFO was talking about when calling the airline’s frequent customers over-entitled). Other airlines have made similar moves. Roughly speaking United’s program is competitive, there aren’t many outlier benefits.
What United Still Does Really Well
Nonetheless, what United continues to do best is offer redemptions to Europe, Asia, and Africa without fuel surcharges. They do so with still-reasonable award prices, at least for economy and business class. What they have going for them is:
- Reasonable award pricing (if a little on the expensive side for partner business class awards)
- No fuel surcharges on any awards
- The Star Alliance route network — more partners that can get you to to more places than competitor programs
They also offer the best domestic standard awards. Elites and co-brand credit card members get last seat availability on any domestic flight in economy for 25,000 miles one-way. That’s cheaper than Delta, and it’s cheaper than American on many dates.
What’s more, United’s miles remain easy to earn because they are a Chase Ultimate Rewards transfer partner and because they have so many earn partners.
The Biggest Risk Areas
Here are the specific areas that I see as a risk for further reducing the value of the MileagePlus program.
- United is planning to introduce revenue-based redemptions. We know that United manages by doing what Delta does. The question is whether this would be an ‘add-on’ or if they’d actually introduce revenue-based redemptions as a replacement for current awards.
- United could further increase the price of international business class awards, or add fuel surcharges to some awards (calling them ‘carrier-imposed surcharges’ since fuel is now cheap).
- United could increase the price of economy standard awards.
- United could devalue benefits where they remain more generous than competitors, like same day confirmed changes.
Of these, revenue-based redemptions are both reasonably likey and a very big deal. Higher business class award prices coupled with fuel surcharges would be the death knell of the redemption program’s value as well. Other items, while frustrating and disappointing, would be changes relatively at the margin, things that reduce the special value proposition that remains for the program.