What are the Biggest Risks to United’s MileagePlus Program?

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:

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.

Elite Program

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.

  1. 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.

  2. 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).

  3. United could increase the price of economy standard awards.

  4. 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.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Those old United colors are so much better than the lackluster branding and colors of today. I assume that if they do go revenue based redption we will get a chance to book beforehand, so at least a years notice.

  2. Thanks Gary, I really appreciate you taking the time to answer my question. I guess my follow up question is what US program is least likely to go revenue based on the redemption side, or at least hold out the longest.

  3. When @Gary is on his on! I wholeheartedly agree with his take on the recent MileagePlus changes and what they mean. I have been a UA 1K like forever and do think that they got conned by DL into squandering the one thing that they had going for them that was light-years ahead ahead of skypeso: MileagePlus. It is still a pretty good program but it is not anywhere near the rewarding program that it was.

    My goal now is to make 1MM next year, walk away with lifetime Star Alliance Gold status and become a free-lancer: fly with any carrier that gives me the biggest bang for my buck, rather being wedded to UA as I have been for the last several years…

  4. @MEOW Alaska is competing pretty hard against Delta at Seattle and thus far sees their mileage program as a competitive advantage in that fight. My view is that our best refuge may be in non-US programs and especially Asian programs (eg Korean, JAL, ANA)

  5. @Gary, totally agree regarding the non-us programs. I earn most of my miles from credit card spend so to me it’s about transferable currency to Asian programs. Currently, I put purchases from any vendor who takes AMEX on my SPG card for transfers to AA,SQ, AC, OZ and JAL. I haven’t switched over to the EveryDay card because I make a considerable number transfers to AA.

    I have two vendors who don’t take AMEX so I end up putting 40K a month on my UA Club Card, lately I have been shifting that spend to my Ink Card. All of my spend is non-bonused. Most of my travel is to SE Asia, and I need to ability to book travel for people who do no meet the “Family” definition as defined by KE, so the Ink has limited value outside of the SQ transfers, Alaska appeals to me for the ability to book EK or CX awards. Anyhoo, I guess I should be trying a little harder to burn my stash of UA miles!

  6. Interesting how you predict that UA will introduce a “revenue based redemption program” but cannot foresee AA copying DL/UA revenue-based earnings. I predict the latter will occur before the former.

    And really, you should always asterisk SQ with a note that their miles expire after 3 years – no extension. That doesn’t work for many people, children especially. Particularly for those expensive TPAC awards in C/F

  7. @Boraxo – If you read the post I write that Singapore miles expire after three years. They ARE extendable, for a short period, with a fee. And I don’t write about American’s future precisely because this post is about the risk to United’s program.

  8. I know United miles aren’t the best way to redeem for first class but they are easily available and no fuel surcharges is a plus. My concern is that we will lose that option. If United is moving towards removing first class from their planes I think that it is likely they will remove the option to redeem for first class. Another way they can copy Delta.

  9. I have stopped flying United when they added a spend requirement to be 1K. I moved over to American. However, I still collect United Miles via credit card, shopping portal, and purchasing miles when my balance becomes too low. (I want to maintain enough in my account for a one way 80K redemption). I also have a United Chase card in case I have to fly United for some reason and need early boarding. If they go revenue based, then there is no reason for me to collect miles. Might as well do a cash back card. Probably should get rid of the United card too, because of the annual fee.

  10. @DCS;
    After flying for many years with CO and then UA, I have 1MM and lifetime *G;
    I also thought I will leave UA but it is hard.
    Getting exit row for free, 2-3 suitcases, lounge on international travel and some degree of priority boarding/check-in makes it difficult/expensive flying coach in any other airline.
    I do buy “up front” tickets with other airlines but coach is still with UA. (Jetblue Mint comes to mind for transcon flights)
    With all the consolidation, ticket prices (once you add the suitcase, priority seating etc….) end up costing the same no matter which airline you fly.
    I don’t count on free upgrades any more and mostly use UA miles (via CC) to get BF/GF tickets on longer trips.
    As I have said before I feel like a “battered husband” married to UA.
    I am waiting for the proverbial last straw before I just cut the cord. I have been waiting since the merger.

  11. @DCS, @Rami –

    Same boat as you two.

    I’ve been a 1k for the last ten years and by year end I will hit 1MM mark.

    I’m only 33 so the thought of hitting 2MM is achievable in my lifetime but even if I still traveled 75,000 a year for work (which I no longer actually do) it would still take 10 more years and I can’t even imagine what United’s loyalty program will look like in another 10 years. It’s somewhat sad and depressing when you strive for various lifetime status when in reality those programs are practically meaningless since benefits and programs will most definitely change every 10 year time span.

    I’m looking forward to lifetime Star Alliance gold mainly for international lounge access, checked bags, and economy plus seating but my girlfrind and I have instead been heavily using the Southwest companion pass and cheap ways to acquire Southwest points at least for domestic and carribean travel (gives me the same flexibility as United to book last minute awards and cancel at random with no fees etc) and buy cheap Southwest gift cards (like the Smart and Final Amex promotion).

    Since most international travel is on award tickets in premium cabins those include many of the same benefits as having elite status.

    So its sad because the airline loyaly program has shifted away from being loyal to a company and product and supporting a company that recognizes my loyalty to a strategy where I use credit cards and promotions to maximize acquiring points in transferrable programs that I can use on multiple airlines that I may fly once every few years.

    Couple this with the fact that the 1st class domestic travel experience really offers little more than extra legroom and a chance to get off the plane sooner…flying the most convenient and cheapest option is where the airline loyalty programs have driven my loyalty. It’s ironic!

  12. As a 3MM, I have lifetime Gold – until, of course, United decides that I don’t. It could happen knowing how they tend to operate.

  13. @blacksheep As a 3MM, shouldn’t you have lifetime 1k?

    I’d be envious of that status even if United does change program in a few years…

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