United dropped the heartbreaking news on Friday afternoon that they will move MileagePlus from an award chart based redemption system to dynamically priced awards.
Like a paid ticket, the price for the award will be whatever United says it is when you search for it. For now, partner award prices haven’t changed, but when Delta switched to this system 4 years ago they started devaluing those awards without any notice.
Instead of being able to save up for an aspirational award with a fixed price, you’ll just have to hope you can find a sale.
Some bloggers reported that the “bright side” of the news was that United will get rid of the $75 close-in fee for booking an award within 21 days.
Sadly that is a fallacy. Many people were happy when Delta got rid of their close-in fee, but they more than made up for it by charging more miles for tickets within 3 weeks of travel.
In other words because Delta dynamically changes award prices, the miles needed for travel within 3 weeks is higher as the paid price for the ticket is higher. The greatest mileage values in an award chart based system are often for last minute travel as prices go up, but mileage rates stayed the same. A $75 close-in fee was a fair trade-off for that.
Plus United Club cardholders and higher tier elites don’t pay that close-in fee.
With American’s scarce award availability and Delta’s higher rates within 3 weeks, United has been an excellent option for close-in travel. I fear that will go away when United gets rid of their award charts.
Allow me to demonstrate what I mean.
I find that paid airline tickets are typically cheapest between 3-9 weeks before the flight. More than a couple months into the future you’ll often pay more than what you would if you wait. Less than a few weeks until travel and you can start paying more with each passing day.
Let’s say I want to fly from Cleveland to NYC.
Here is what a one-way nonstop paid ticket will cost on any airline this month from Cleveland to EWR, JFK, or LGA:
Sure, Delta doesn’t charge a close-in fee. But Delta’s dynamically priced awards cost much more in miles than $75 for close-in travel. That takes away from the potential value of Delta Skypesos as the cost in miles closely mirrors the cost of a paid ticket.
Delta close-in availability, nonstop CLE-NYC:
American charges a close-in fee, but their close-in availability is often blacked out. I haven’t been an AA fan since USAirways took them over.
AA close-in availability, nonstop CLE-NYC:
On the other hand, United’s close-in availability is excellent, which is one reason why I’ve always prized their miles.
United close-in availability, nonstop CLE-NYC:
The same applies to other routes:
Delta close-in availability, nonstop LAX-NYC:
AA close-in availability, nonstop LAX-NYC:
United close-in availability, nonstop LAX-NYC:
Delta close-in availability, nonstop NYC-London:
AA close-in availability, nonstop NYC-London (BA flights that have fuel surcharges are excluded from this search) :
United close-in availability, nonstop NYC-London:
United MileagePlus has a lot going for it. They are part of Star Alliance, which means they have tons of great partner airlines with good award availability. Hopefully they don’t kill that with higher pricing.
They still allow free stopovers. They even have Plan B awards when there is no saver award space.
And as you can see, their close-in availability is fantastic.
I sure hope I’m wrong, but my guess is that #MileagePlus will slowly morph into #MileageMinus with these new changes.
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63 Comments On "This Is Why United’s Elimination Of Close-In Award Booking Fees Is Devastating News #UnitedUnfriendly #MileageMinus"
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I have 175k United miles. Are they now worth less?
Should I sell them now ?
Yeah, it’s not the best, but let’s chill out a little. ‘Devastating’ news is when someone gets hurt, for example. I fly nearly every week on United. It is what it is. Let’s all remember what really vital in this world.
Right, nothing can ever be terrible news again because 9/11 happened.
What does this mean for booking domestic UA flights with Krisflyer or Aeroplan miles?
Unclear as of yet.
Delta has different saver award space that they release to their own members from what they release to partner members
So we lost SPG and now United. Maybe these companies just don’t care. Perhaps they’ve proven that the old model just isn’t conducive?!
They can do this because of mergers. Old airlines like Continental and Northwest are gone.
SPG and Fairmont are gone.
The old system was highly profitable, but now they think they can wring even more profit from it as there is little competition. I think it will hurt them in the long run as people stop using their credit cards.
Actually, the “old system” was highly UNprofitable. Are you too young to remember all the airline bankruptcies? Obviously, desperate companies are more likely to give better customer rewards than profitable, stable companies. That’s really all that’s going on here. Overly generous awards are slowly being eliminated. Think about the rest of the company’s you do business with: are their award programs this lucrative?
Bunch of malarkey.
United has this system now and they have never been more profitable than they are of late.
It’s a win-win-win system. They make money selling seats that would otherwise spoil, passengers get a great value for their loyalty, and banks make profits selling those miles.
This is short-sighted greed to try to wring more profits from the system, but it won’t work. Passengers won’t be as loyal (just look at what elites are saying on FT). Credit card users won’t lock themselves into United, costing them revenue. Many may switch to cashback cards. United won’t sell as many seats that would otherwise go out empty. It’s a losing cycle.
Segregating business passengers who will pay a lot for last minute seats from mileage passengers who will not, has helped airlines command top dollar for last minute tickets while still moving seats that would otherwise spoil. Moving to revenue based redemption will come back to bite them.
Would you suggest focusing on either Chase and/or Amex?
Porque no los dos?
I hear you. For the average dude, I would assume it’s confusing to work both since when do you go for Amex when do you go for Chase …
Just fyi, it’s “¿Por qué no los dos?”.
“Porque no los dos?” means “Because not both?”
Heartbreaking is right. There’s no other way too describe it.
Apparently there is. The headline says ‘devastating’ not ‘heartbreaking’.
UA can do whatever they want, and while it stinks you can’t really do much. Just change spending to CSR cards and the like and use that flexibility to not be loyal to one airline or hotel brand.
As a 1K, I probably will be hurt the most by this as I can currently book these last minute award tickets without paying any fees. Now, in all likelihood, these last minute awards will rise in price and I’ll get the same bad deal as infrequent customers. That said, I have PERSPECTIVE on this. I know that the old rules were very unfriendly to the airline, and that customers (including me) could take advantage of it. Basically, these cheapo last minute redemptions were a loophole. At the end of the day, UA is a business. It’s not a charity. They’re not “screwing” their customers by making these changes. Rather, they’re acting rationally. If I were running their business, I’d make the exact same changes. I think “outrage” should be limited to circumstances where airlines make changes that truly are unfair to their customers. This is not one of those times.
Saver awards are available when airlines don’t think they can sell all the seats on the plane. That is a pretty much free way of rewarding your frequent flyer members. Which promotes loyalty. That’s win win.
Removing much of the value from your loyalty program decreases the loyalty of said members
That’s lose lose not rational
Just repeating the life lessons I’ve learnt from you, Dan 🙂
Well done padawan 😀
Very unfriendly? They make billions of dollars of profits with these rules. Now they want to make more, but it’s actually short sighted.
They think they can get away with it as they have bought out all of the competition. But they don’t seem to realize that people will stop being loyal if loyalty is not a 2 way street. People will stop using co branded credit cards if it doesn’t make financial sense for them to do so.
Airlines will kill the golden goose if they continue down this path.
I fly on saver awards on full flights all the time. A smart airline can pretty much find the “right price” to sell all the seats if they want to.
I challenge you to find ANY industry other than travel where customers are better rewarded for “loyalty.” It doesn’t exist. I know because I’ve taken advantage of these travel industry loyalty programs for decades. There’s nothing else like it in the world. What has happened in recent years is that the airlines and hotels have shifted the cost of these loyalty programs to the credit card companies, who can afford to be generous because people are so bad at managing their credit card debt. If not for the credit cards, airline frequent flyer programs would now be far less lucrative. That’s reality. Don’t you think it’s a little rich to complain when you’re taking advantage of someone and then they take steps that allow you to take advantage of them a little less? You can pretend in your own mind that this is not what’s happening, but I am certain a knowledgeable, objective person would say it is.
Airlines have hotels have a unique challenge.
They have lots of spoilable inventory and they want to charge more at the last minute because businesses book last minute and are willing to pay more than leisure passengers.
The bifurcation allowed by miles has enabled airlines to continue to command top dollar for revenue seats while allowing leisure passengers to get a great value for their miles on those seats. That creates loyalty and makes consumer keep earning miles. If they get rid of those outsized values for miles then consumers will switch to cashback cards and airlines will lose out on that revenue and have more spoiled inventory.
Please show me another industry that is able to segregate groups like that while making big bucks off of each while avoiding having inventory spoil.
There is a reason every industry dreams of having highly profitable loyalty programs like airlines and hotels do. Typical stores are not able to copy that success with their own credit cards and loyalty programs as they don’t have that kind of pricing ability or that kind of daily spoiling inventory.
the prices of tickets going up and down is just a game what the airlines are playing – so if the airline give some seats for cheaper it cannot be called “charity”
Just booked a last minute RT ticket from Ohio to Toronto through United for 25k, flying on Air Canada. Gladly paid the $75 fee as tickets weee running over $1,000.
When is this change taking effect?
The value of miles across programs is going down steadily. I find most ‘miles’ tickets I can get now are only at 1.3-1.5cpm, so chase sapphire generally does better. So basically 2.25% cash on travel (when using freedom unlimited for miles) is the most you can realistically get. Puts into question the value of miles cards vs just plain 2% cash back.
As long as their is an aspirational option, 2.25 or aspirational will be better. But if they kill it then you are correct.
Even with Delta though, they do have aspirational award sales. I booked A350 suites to Europe for 98K round-trip.
Awful for consumers. Well said. .. here’s another way to put it..
If you’re into economy, don’t bother transferring UR to MileagePlus. Just use CSR.
It’s always worth comparing, but things will likely shift that way.
Or transfer to Southwest to get refundable travel at nonrefundable fares. Unlike cash, points are not locked to one passenger and will not expire in a year. Value is about 1.4 cents per point but your travel will not earn points.
I’ve been struggling to use 300k UA for an while now, always deferring to some other redemption at better value (typically UR). This might actually make it easier if I can find some domestic short hauls below 12.5k.
Dropping the price of a $60 ticket from 12.5K to to 5K miles doesn’t add value for me, but I can see why some people may see it that way.
Totally understand, and years ago when I really had the time and energy to generate lots of extra UR it wouldn’t for me (not to mention cheaper avios short hauls). But now I’m sitting on hundreds of thousands of UA with no oversees travel in sight and I often find myself paying cash for hotels. Long term I’m sure this is a negative but it will help me dig out of my UA hole.
So the only question is when will American join DL & UA? Time to go cashback
Right, matter of when, not if.
But I don’t think the jump to cashback is that obvious.
Not cash back, but maybe hybrid. That had been for a long time.
There are comments in DoC that indicate that having a Chase Mileage Plus card connected to your account doesn’t just increase availability, it also reduces the number of miles needed for some flights. I just hope that that’s the case for the no-fee version I currently have.
In a dynamic pricing environment, increasing saver award availability means that you’ll see lower prices.
Just compare the award calendar when logged in and when not logged in.
So now its even more worthwhile to have the credit card? Maybe within 3 weeks the rates still will be decent with the XN fare…
And we can hope. TBD!
Dan does matrix pick up fares from priceline and Expedia? In my experience I saw fares on priceline that ITA matrix didn’t brought up.
You don’t know how to search. It’s the same price. On a rare occasion, they have their own net prices, but in general, the prices are the same.
The very definition of First-World Problems. “Woe is me. I’m going to have to cough up more of my practically free miles to get to the Maldives now. Life just sucks.” lol. Get a grip people.
Right, the rest of the internet should not talk about anything else going on in the world, because kids are starving in Africa.
Wow. Quite a reach there. Feel free to discuss how terrible this is all you want. Just pointing out, 99% of the people out there would love to have this “terrible” problem. Perspective.
You are reading a deals and travel/miles blog.
Did you expect to come here to read about 3rd world problems or life and death issues?
Dan, I don’t understand everything going on here. The bottom line should I sell my United miles asap or not? Thanks.
Use them and enjoy them when you can as they don’t appreciate with time.
I plan on selling them . Should I do it asap. Or I would be able to cash it in a few months for same amount? What do you recommend?
I don’t recommend selling miles as it can get you booted from their program, but I’d imagine the grey market value will drop from here.
Is there a formula to this dynamic pricing? Has anybody figured out, does it go according to ticket price in money etc?
Are there ever any Aa milesaver business awards from jfk to lhr on AA flights/planes?
Yes. Search for AA flights only using advanced search.
Question about Motzei Yom Kippur EWR-TLV flights. To Dan or anyone in the know: October 9th UA 90 and October 10th UA 84 do not appear on United’s website. These are the two possible United flights shomer shabbat folks can take between YK and Sukkot, between Newark & Tel Aviv. Any ideas? Thank you! Jonathan
All fully booked.
Airline seats and hotel rooms are like farm produce. it’s all supply and demand, yet the product has a shelf life. You can’t store strawberries until winter when the price is high, you can’t sell seats on a flight that’s departed.
I agree with you Dan… this doesn’t bode well for the UA program. I’ve already migrated most of my spending to the CSR and Amex Blue. I don’t see that changing in the foreseeable future.