Yesterday, I reported that United would make a number of changes to its MileagePlus program in November. I had a chance to speak with Luc Bondar, United’s Vice President of Loyalty and head of the MileagePlus program.
We spoke for 35 minutes and our entire conversation was on the record and covered a wide range of topics. I wish I would have recorded the call and could just post it instead of summarizing it, I’ve detailed below what we spoke about.
The Objectives
Bondar stressed four objectives in the upcoming changes to the MileagePlus program.
- Simplify the program
- Better reflect how our customers travel today
- Engage the wider member base (not just premium members)
- Continue to reward most loyal customers in the most meaningful way
Fully Dynamic United Awards
Simplify is typically a codeword for devaluation. Rather than a fixed award chart, the number of miles required for a United flight will fluctuate based upon demand. Some flights may be cheaper than ever before, as we’ve seen recently with one-way awards as low as 5K miles, while others will “better reflect demand.” Bondar gave the example of flights around Thanksgiving and Christmas which “may” (meaning will) see increased prices.
I asked him about flights to Australia in business class over the holidays. Will we see one-way business class pricing for 400,000 miles like on Delta? Should customers expect massive increases in price?
The answer is likely. Bondar stressed how United still wanted to keep pricing competitive, but again mentioned how pricing would better reflect demand for flights.
To use that Sydney example, look at the difference between United and Delta right now on 12/26/19. United’s 200K one-way to Australia is the current ceiling on one-way awards in business class. Meanwhile, Delta is charging 365K for its nonstop from LA to Sydney.
Pricing on United’s current “Anytime” awards became more dynamic in late 2017, but have remained a great value compared to flexible awards on American and Delta. For clients who require a specific or direct routing, these “Anytime” awards have become a valuable option. But with the ceiling lifted, expect cheaper prices on some days but far more expensive prices on others.
Capacity Controls Continue
Award travel on United will not be tied to any price point. Furthermore, these awards will still be capacity-controlled. Thus, unless you have earned MileagePlus Premier status or hold United co-branded credit cards from Chase, you still will not necessarily have access to last-seat availability no matter what price United is charging.
Booking United Awards Through Partner Miles
I know that many readers have miles with Aeroplan or LifeMiles and are interested in how these changes will impact Star Alliance partner access to United award space. So I asked Bondar how this new dynamic award space would be mapped. Currently, “saver” space is X in economy class on I in business class on United. Anytime awards book into a different fare class: HN in economy class and ZN in business class.
Since the concept of “saver” and “Anytime” awards will disappear, I asked if there will be some sort of cutoff price point for when an award is offered to Star Alliance partners. For example, will any domestic award in the Continental USA pricing at 12,500 miles or less available to partners as X class?
I was only told that partners would still have access to MileagePlus space as before and that X and I classes would still be used. Thus, we’ll have to wait and see.
Bondar also confirmed that additional “discounted” award space would continue for Premier members and credit card holders. Expect this to work like United’s recent Tahiti award sale. For that sale, pricing depended upon your MileagePlus Premier status (prices ranged from 42,000 to 56,000 round-trip) although everything booked into the same “X” fare class.
Bottom line, the price you see is the price you’ll pay.
On Partner Awards
I pushed Bondar hard on the issue of devaluing partner awards. Why remove the chart if the price won’t change? Why not have a separate fixed award chart for partner awards? After all, United already charges a premium for business and first class redemptions on partners. Isn’t United laying the groundwork to increase, or at least greatly fluctuate, the cost of mileage awards?
Bondar told me that is not the objective. He stressed the “simplifying” goal once again and told me that partner awards, at least for the foreseeable future, would remain at a fixed level. Furthermore, he assured me there “no plans” to increase pricing on these awards in November.
Instant Posting Of Miles
Mileage credit for United flights will post much quicker than before, sometimes within minutes of stepping off a plane. Bondar stressed this will allow members to redeem miles and enjoy earned elite status quicker. I’ve found that flights are already posting much quicker than in the past.
I asked about whether this would occur for partner flights as well and was told not yet. That’s not a surprise, but I asked because of the alliance-wide initiative at Star Alliance to post miles much more quickly.
> Read More: Star Alliance Rolling Out Extremely Useful New Services
No Close-In Processing Fees
Starting on November 15th, United will no longer charge a close-in processing fee for bookings made less than 21 days prior to travel. Currently, that rate is $75 for general members, $50 for Premier Silvers, and $25 for Premier Golds. The fee is waived for MileagePlus Premier Platinums and above as well as for United credit card holders.
In the short-term, this will be a great value for booking last-minute partner awards.
Chase Reaction?
I asked if Chase was onboard with these changes since it might greatly impact consumers’ use of the co-branded credit cards.
Bondar said that Chase has been made aware of these changes and is onboard with them.
Basic Economy On Economy Award Tickets
United has no plans to book economy class award tickets into Basic Economy.
Married Segment Fare Logic
Married segment fare logic will become even more critical in establishing price. This will not mark a sudden change in the program but a continued evolution of what has already begun. Gone are the days when each flight either had award space or did not. Now availability is often determined by markets and connections. For example, Denver to Sydney might have cheap award space via Los Angeles (LAX-DEN-SYD). But the same LAX-SYD flight might be more expensive if booked alone, since many are willing to pay for the convenience of a non-stop route.
> Read More: A Primer On Married Segments
Singapore Airlines Award Space?
I took the opportunity to ask if United had a fix for the ongoing Singapore Airlines award space issue. Bondar said that the “technical” issue remains and United is working to fix it, but provided no timeline for resolution.
> Read More: United Restores TAP And Thai Award Space But Leaves Out Singapore Airlines
CONCLUSION
On Monday, I’ll offer my commentary, some positive but mostly negative, on these changes. These changes are hardly a surprise and there’s no need to panic (just yet). Don’t rush out and burn all your United miles this weekend. But do be aware that changes are coming and this news constitutes a devaluation.
So essentially United is giving a big fat middle finger to their most engaged customers.
Not yet, but it is probably coming.
There’s no problem with Singapore awards. They’re just not willing to pay for them.
I asked him that. He denied it.
Ask Donald Trump.
Poor Luc…
@Matthew — So, is UA going to sue members that use throw-away ticketing on one-way awards?
Doubtful. Didn’t ask that specifically.
On one way awards? Why would they care?
UA sued skiplagged. It seems to hate throw-away and hidden city ticketing.
But that’s for cash tickets. Why would they care about awards tickets.
The disparity in price points for economy awards on Delta and United is striking. Especially considering how the Delta flight is almost certainly a far more comfortable ride – on their own metal or Virgin Australia’s. If United is able to bring the price for economy awards on par with Delta (or better), then this won’t be as painful. But if the prices increase across the board with no tangible improvements elsewhere, then it’ll be a much more bitter pill to swallow. For now UA will still remain worth it for me due to their partner network, lounge access rules (especially for guests), and premier benefits. Though I imagine those will be chipped away at in short order.
I didn’t include AA, but AA was also cheaper in both categories. I also think we’ll see economy class awards come down in price in some markets. But premium awards will go way up.
I think it’s Saver and “Everyday” Awards, not “Anytime”.
Correct.
“…X and I classes would still be used.” What about XN and IN? If they go away, is there any reason to remain Elite (Platinum and up)?
XN and IN will remain, although at variable rates.
There is virtually no IN>I inventory, ever – if they want to give it some teeth, make it a true 1K benefit and something to strive for
Sometimes;
EWR EZE UA UA979 Boeing 767-300 20190731 21:55 J9 JN9 P9 PN9 PZ8 IN4 I0 Y9 YN9 W9 V9 G0 XN0 X0
IAH EZE UA UA819 Boeing 777-200 20190731 22:20 J9 JN9 P9 PN9 PZ9 IN3 I0 Y9 YN9 W9 V9 G0 XN0 X0
And similar on some LHR-SFO
Before, the trick was to maximize the value of miles by redeeming an award if the airfare was too high. That may soon be a thing of the past.
My biggest concern is that last-minute partner awards will go way up in price. Imagine a Delta-like system where if you book more than 21 days in advance you still get the “saver” rate but within 21 days the price goes up.
In which *A program would you now value elite status most? I am almost 1K through 2020 but figure now’s a good time to start crediting flights somewhere else.
I’m sticking United. I personally don’t think we are going to see the true pain till the end of 2020. I’ll cover that on Monday.
This is a good thing. Allah is making it more difficult for you all to fly. Stay home and stop risking your lives unnecessarily.
Twat
technical issues my balls and dick
Could you please ask why there was no notice? Part of a loyalty program is trust, and no notice devaluations are the worst breach of that loyalty system trust.
The changes take effect in November…
My impression is the guy appears too ‘corporate’ to be concerned about customer loyalty. Probably has a revenue KPI instead. Anyway all in all this may not be too bad if it takes the air out of the inflated system. The remedy of course will not work if they continue discounting their miles to CC companies.
If that whole CC circus could stop and people would have to fly for their miles the devaluations would be over. Such would create a more level playing field as well.
It’s the beginning of the end. The writing is on the wall. In some ways I think we created this backlash. Things were so much better back in the day. When butt in seats actually mattered and status meant something. At this point Southwest is starting to look pretty good. At least I can get a companion pass.
They don’t even promise to potentially have lower prices for international award travel, only for travel within the USA and Canada, according to their email.
What losers.
Carriers are doing well so no reason to make it easy to fly free. That’s to be expected especially when the business is basically an oligopoly. Customers may complain but they don’t have other options. I suspect AA will make a similar change soon.
My question is two-fold: what happens during the next recession? Do carriers make changes to these programs making them more appealing or just adjust the ticket price?
Also, carriers make a lot of money selling miles to credit cards. Is that business model broken? Are the credit card companies learning miles do not equal more profit for them? He said Chase was on-Board which I find the most interesting comment he made.
I was thinking this as well, Mike. What is happening now is that if we have another crisis like 2008 the Big Three are SO big compared to 12 years ago that we as taxpayers will end up bailing them out as…”too big to fail.” We basically allowed this monster to grow and it leaves a lot of questions for the future.
I have predicted that one of the first things would be the devaluation of miles to the point that years from now people will look back at the mileage game as a distant memory of a bygone era. Like when we wore suits to fly. I think the handwriting is on the wall and the game is essentially on its last legs. The new generation of bean counters do not even see the value of loyalty or status anymore. Mabel from Des Moines who gets an airline credit card is more valuable than a butt in seat 200K a mile a year flyer.
This is also my theory as to why Premium Economy is on the rise and true premium cabins are getting better but with less seats.
Just another marketing shyster trying to spin a massive devaluation with weasel words.
Cancel your Case MileagePlus cards when the annual fee comes due. Sends a clear signal.