United’s Leaked Plan for Your Miles and Ticket Sales

While it looks like American plans to follow Delta by introducing Basic Economy Fares (lowest fares that do not come with the ordinary benefits of a ticket on a full service carrier, such as advance seat assignments or the ability to upgrade or even make changes with payment of a fee), there’s some indication that United may follow American’s existing model of selling bundles of benefits with their tickets.

United mentioned plans for ‘unbundled’ (more fees) fares at an industry conference yesterday as well.

The airline may also be rolling out pay with points at a value of just a penny apiece, which one presumes is an ‘add on option’ and not a replacement for flight awards. This could be for airline tickets and even inflight wifi and food purchases.

Via Travel Codex, a United employee who apparently works on united.com, kiosks, and mobile app posted an analysis and mockup of how United could present new purchase options (19mb .pdf) to his personal website.

The worst thing that this individual believes – and he may be right – is that customers don’t treat their miles as a currency with value. They treat them as ‘free’. So paying with miles seems like you are getting something for nothing.

That is the belief that lets Delta offer such little value for its SkyMiles. And it’s how United can offer only a penny a mile towards ancillary purchases (at least in this mockup they are giving miles a penny..!)

Please please do not spend your miles that way. While some members may find value in options like that, and more choices are a good thing, I would hope enough informed customers want to receive value back for their miles.

We’re going to see coach sold as bundles.

I like code name ‘sparrow’…

So when will this happen? It’s part of ‘phase 2’ of the new United.com website. And phase 1 literally took years to launch. So the answer is we don’t actually know.

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. I think it’s smart on their part – especially the pay with miles.

    I’m actually surprised it’s as “good” as one penny per mile (not saying that’s a good value in general – but better than you usual see when you pay for things directly with miles) and I think a lot of people who don’t collect a lot of miles will see value in using their miles earned on previous flights to pay for an extra bag, etc., when they fly for the holidays.

  2. On net, isn’t this a win-win for united and savvy miles-users? The losers (without knowing it) are those who buy the bundles/pay with miles.

    1. Unsavvy customers spend their points on bundles and other inefficient uses
    2. Less miles overall is spent on flight redemptions – more availability for savvy travelers (assuming United don’t change award availability)
    3. United profit off of the inefficient miles use – i) could potentially see this as a subsidy for flight redemptions; or ii) could see that this is such a hit they reduce availability for award flights to push people towards the bundles (that would be bad for everyone)

    Basically, I see this as more optionality offered by United that savvy travelers won’t be using at all (unless they have an account they’re closing out/with few points), but net result is that we’re not affected or perhaps even slightly better off.

  3. my take/hope is that, like with credit cards, a LOT of stupid people are actually quite necessary for my needs. if people didn’t carry balances @ 18% on credit cards, sign up bu not make minimum spend, redeem for poor value, we would not have credit card rewards. if United can get the lemmings to ‘pay with points’ @ .01, perhaps they’ll leave more things in tact for us.

    my concern, of course, is the brain trust at UA will do dumb things. i’m also concerned for MR’s- fearing that UA (and AA) will take the MR fare classes and make it so people with status have their status perks essentially stripped for these lower fares. if so, i’ll become a free agent and UA/AA will not get my money.

    we really need the 3 ME carriers to develop their 5th freedom network in the US. stop at major hubs on the east coast and middle for fuel and then 5th freedom to the west coast. with their hard/soft product and pricing, they’d be welcome competition to the oligopoly. then revamp their FF programs to be more competitive and Delta’s CEO would burst a blood vessel…

  4. bug flyer: 100% correct. This does not affect any savvy flyer, and in fact may be a boon to budget travelers who want lower unbundled fares or to others that can save by packaging E+ & checked bags. A win-win.

    the only cause for concern would be a switch to a cash-based redemption program for flights, a la WN. Or as abby notes, further deterioration in elite benefits. But UA’s new management seems to be in a win-customers-back mode, so that seems unlikely in the near future.

  5. As long we continue to pick our seats I’m cool.
    Was going to book a flight with Delta since United only wants to fly the EMB-145 to STL for Christmas but delta doesn’t give me the option to select my seat. Might as well fly Southwest.

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