What a United-Continental Merger Would Mean for Their Frequent Flyer Programs

The New Jersey Star Ledger quotes me on the affect of a hypothetical United-Continental merger on frequent flyer.

Frequent-flier customers of both airlines would not lose their miles because they would be combined into one program. However, Continental’s OnePass customers would benefit if United’s Mileage Plus is the surviving program, said Gary Leff, a loyalty rewards expert with Boardingarea.com, a travel website.
“United’s rewards chart requires fewer miles than Continental does,” he said. “So, each Continental mile will go farther.”

However, the combined airline might adopt Continental’s policy of charging for upgrades to business class on international flights, he said.

I leave aside route effects and service levels on domestic flights. I’m just talking about loyalty programs here. Unquestionably, Continental OnePass members would be better off after a merger with United.

  • The combined entity would be a member of Star Alliance. That opens up huge opportunities for Continental members to redeem their awards. Huge new partnerships in Asia. New European partners as well, and most importantly airline partners who offer better award availability than Skyteam airlines do.
  • United offers awards in most cases for fewer miles. Any changes to a combined award chart wouldn’t come immediately, for sure. United just made a major change to its chart about 18 months ago. Post-merger there would be a honeymoon period and a desire not to rock the boat with members.

I also guess that United would adopt Continental’s domestic upgrade policy, eliminating 500-mile upgrade certificates, instead of trying to educate Continental’s frequent flyers about a more complex upgrade scheme. The Continental program’s unique selling proposition has always been its unlimited complimentary domestic upgrades, and it’s hard to imagine a new combined airline taking that away from members.

The reality is a bit more complicated, of course. Unlimited complimentary upgrades mean that top-tier elites are listed for upgrades on most every flight, so a larger proportion of upgrades go to those members. Under United’s program of limited upgrade certificates, United’s top elites will occasionally choose to sit in back, which gives a better upgrade shot to mid- and lower-tier elites. So the 50,000 mile a year flyers actually lose out under Continental’s scheme. And current United Premiers and Premier Executives shouldn’t be excited about this change.

I do worry that the combined program would be affected by Continental’s stinginess with international upgrades. The article referenced my guess about an upgrade surcharge on all but full fare tickets. United has no such charge currently, but they do require the purchase of higher-fare tickets in order to qualify to upgrade with miles (although 100,000 mile flyers receive Systemwide upgrade certificates valid on many lower fares). The Continental scheme, also prevalent at American, will likely be tempting to United. Continental is also known for the difficulty of award redemption under its program. Culturally such changes coming to United make me nervous. Although United has become increasingly fascinated by the ability of their computer software to block out otherwise-available awards offered by their partner airlines — so it’s not entirely a foreign concept for MIleage Plus to begin with.

Continental offers a two-class product, United currently offers a three-class product. It’s hard to know where they’d go with this, but I’m thinking with the slow pace of United’s aircraft re-fit they could easily take their new business class seat and make it the standard across the airline’s international fleet. In which case it wouldn’t be crazy to go all two-class (though this would make me sad personally). United doesn’t fly narrow-bodies across large oceans like Continental does, though, and I’m unsure how the new seat would have to be modified to squeeze enough folks into the cabin in a 757. I suspect many of these questions haven’t been answered, really, and if the airline is smart they’d move slowly towards integration — operating two separate carriers under a single holding company, extending a partnership between the two.

I’m personally hoping against the match-up, but I think I can live with it if it happens (what choice do I have? American’s MD-80s?). Just as I won’t lose much sleep over Northwest-Delta should that deal ultimately close. Those programs are fairly alike already, I prefer Northwest personally but neither is at the top of my list. At least my paltry Worldperks and Skymiles balances will combine well so I’ll have enough miles there for a RuleBusterSkyChoice award to Detroit.

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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  1. ** Unquestionably, Continental OnePass members would be better off after a merger with United. **

    ** I also guess that United would adopt Continental’s domestic upgrade policy, eliminating 500-mile upgrade certificates, instead of trying to educate Continental’s frequent flyers about a more complex upgrade scheme. **

    If your “guess” turns out not to be true — and a fair number of commenters on FlyerTalk think the CO domestic upgrade policy is likely to be scrapped in favor of United’s policy if there is a merger — then it’s not entirely clear that CO frequent fliers would “unquestionably” be better off, especially lower tier elites.

    Indeed, that’s a pretty broad statement (that seems to reflect your personal preferences) . Frequent fliers don’t all have the same preferences (or your preferences necessarily), which is probably worth keeping in mind.

  2. No, as I explain lower tier Continental elites are actually better off under United’s upgrade system than Continental’s — since their upgrade percentage is likely to be higher. That’s because they aren’t competing against every higher level elite on every flights, as even most of those higher level United elites don’t have complimentary upgrade certs to use on every flight.

    I recognize that my prediction about which way a merged upgrade system would go could well go against the grain of conventional wisdom. There IS revenue attached to the sale of United’s 500-mile upgrade certificates, after all, and it’s hard to bet that a company will zero out a revenue stream when they might even predict the merger would bring a larger customer base to INCREASE that revenue stream. So I guess I’m just going out on a limb here!

    But United’s upgrade system is better for lower tier elites. Continental’s domestic upgrade system is better for top tier elites.

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