United’s Perks Plus, the airline’s business incentive program, made changes to its redemptions. Those changes give us a rare glimpse behind the curtain of United Airlines’ current performance.
United Perks Plus
United, like Delta, American, and Southwest Airlines have business incentive programs that run parrallel to their standard loyalty programs. This is to give companies a reason to book those carriers as a platform decision rather thann each traveling deciding on their own.
The points work differently and are valued inndependently of the standard loyalty program both for earning and redeeming points. United and Delta have extremely inflated points earnings and requirements while American is extremely deflated. For example, American’s Business Extra program requires just 4,400 for a coach award to Europe while United Perks Plus requires 175,000.
These programs are incredibly difficult to understand. To underscore that point, here is the United Perks Plus earning chart for customers in North America.
Reward Chart Changes
Unlike most changes to award charts lately, there is great news in these switches with lots of reductions, some of them substantial. At the lowest levels, however, is where prices have increased the most.
North America (excluding Hawaii) domestically, Canada and to the Caribbean
North America to Hawaii
North America to Europe
North America to South America/Micronesia
North America to Asia, India, the Middle East, and Africa
United Perks Plus Business Products
These programs also allows for non-ticket redemption and this may spell out exactly what is taking place for United’s business changes most clearly. It’s really hard to sell memberships to lounges that aren’t open, and when they remain closed even when travel picks back up, some customers will realize they don’t represent as much value as they thought. The carrier also competes with itself with Polaris lounges, then faces Priority Pass, American Express, and soon Capital One and Chase.
What It Tells Us
Applying some logic, we have to look at the whole of the new Perks Plus award chart to gather intel about the United business changes. Lots of increases at the entry-level tiers with reductions in premium awards point us in a few directions.
More Infrequent Flyers Are Traveling
Every United Mileage Plus member got a headstart this year toward earning United Premier status. For example, all Premier 1K members started the year with a deposit of 3,000 PQPs, enough for silver status (plus eight segments).
If the most frequent flyers (usually flying for business) are already Silver and may not qualify above that level for the year, you can add a lot to the ranks. Lower tiers that received a less substantial headstart would need just a few flights – especially at current prices – to qualify for the level.
Additionally, those who have been cooped up for the year are taking back to the skies but in years past, they might not have qualified for Silver or Gold status due to revenue requirements. With those reduced and a little headstart plus much higher fares, now the bottom ranks have swelled tremendously. This causes United to disincentivize Perks Plus clients from redeeming for Silver status by increasing the price of redemption.
Premium Products Are Too Expensive, Plentiful
Flying a 777-300ER with 60 seats in Polaris business class might have been too few when Apple was buying nearly as many seats per day from San Francisco to Shanghai prior to the pandemic. Now, however, the carrier simply can’t fill them. The airline is avoiding discounting these seats to the general public (despite it being named as the key advantage of a dynamic award chart) but is acknowledging the surplus of inventory well into the future to their business clients and most frequent flyers.
Oscar Munoz (now retired), Scott Kirby and the rest of the executive team on Wacker Dr. in United’s Chicago headquarters are wise to avoid slashing prices on Polaris at the moment. There’s no demand and when it comes back, the airline doesn’t want to show just how low they will go to fill seats. That’s a fair strategy. But they aren’t selling many of those seats now, and how could they? The airline operates few premium routes internationally at the moment.
At the lower end of the elite structure, the carrier is flooded with Silver and seeing an uptick in Gold members. Thus, United can charge a premium of up to 50% of last year’s redemption for the status. However, there’s now a discount on Premier Platinum Status (Premier 1K status is not available through the program.) The most frequent flyers for United (and I suspect others too) are just barely returning to the skies.
Many upper-tier elites have likely already qualified (thanks to expedited elite status premier qualifying gifted points) swelling the lower tiers. However, there simply isn’t enough business travel to get them back on track for the rest of the year. That’s led to limited upper-tier elites, and this is reflected in the lower totals.
This is also demonstrated in the reduced cost for drink tickets (unavailable on 800-mile flights and shorter anyway) lounge passes and membership.
What It Means For The Future
United continues to struggle to get business clients back onto airplanes but the leisure market is clearly keeping the airline busy. The changes United Perks Plus outlined suggest that some sort of new approach to the United Club will have to take place. Personally, I love the American Express Centurion lounges but would pick a Polaris lounge over any of them. However, I would pick Frontera Grill, or an airport Chili’s instead of spending any points or money at a United Club. I suspect I am not alone and the data supports this.
As much as all of the carriers would like to pretend that lowered requirements will get business flyers back in the air and that they will hold their ground on elite qualifications, this adds even further doubt. They simply won’t allow a 100,000 mile/year flyer to become a free agent.
This also suggests that when international flights come back for leisure travelers, business class seats should be available for awards with more frequency since they aren’t selling the seats.
United Perks Plus gave us a brief glimpse and plenty of hints as to the United business changes in 2021. I look forward to returning to the skies, but hopefully, now in a comfy seat at the front with plenty of availability.
What do you think? What do these changes indicate to you?