United Will Raise Prices of Many Frequent Flyer Awards

The subject line of yesterday’s email from [[United Airlines | United]] may as well have been intentionally designed to send a chill up the spines of millions of members of the airline’s [[Frequent Flyer Programs | frequent flyer program]]: “Mileage Plus announces 2009 program changes.”

Recent history suggests that any changes to an airline mileage program are almost certain to be bad news. And while these three from United are a mixed bag, the overall impact is unquestionably negative.

1. Minimum Miles for Elites

First, let’s consider what United is characterizing as the good news. According to the email, “The 500-mile minimum accrual on United flights will be restored for [[Elite Programs | elite members]] effective January 1, 2009.” And it will be reinstated retroactively, so elite members’ flights for the entire year will be recalculated to earn the 500-mile minimum.

Note the word “restore” here. That’s because all Mileage Plus members routinely received a minimum of 500 miles for short flights until, beginning July 1, United changed their policy to award only actual flown miles. Now, United is reversing that policy change—a reverse flip-flop—albeit only for elite members of its program.

So it qualifies as good news that United is fixing what it now obviously recognizes as a mistake—a sad commentary on what passes for good news in these consumer-unfriendly times.

2. Cash Surcharges for Upgrade Awards

Remember when frequent flyer awards were, almost by definition, free? With these new changes, United takes its place as the latest carrier to undermine that assumption.

Beginning on July 1, 2009, Mileage Plus members will pay cash in addition to the miles they redeem for most [[Flight Upgrades | upgrades]] from coach to business or first class. The surcharges will vary, according to the length of the flight and the type of coach ticket being upgraded. In some cases—presumably when upgrading full-fare coach tickets—there will be no cash collected.

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United has provided an overview of the new upgrade awards, but not a detailed chart showing every surcharge for every fare and route. Overall, the upgrade surcharges closely resemble those [% 2644851 | | imposed by American %]. So, for example, upgrading on a domestic flight from a discounted coach fare will cost 15,000 miles plus a $50 surcharge each way. And upgrading from a discounted coach ticket on a flight to Europe will cost 20,000 miles plus a surcharge of $250 – $500. So a round-trip upgrade could cost as much as 40,000 miles, plus a $1,000 surcharge, plus the cost of the purchased coach ticket.

There is a modest upside to this change. When the new policy takes effect, Mileage Plus members will be able to upgrade from all coach fares rather than being limited to upgrading from the few expensive coach fares currently permitted.

3. Award Price Increases

And finally, there will be price increases for a number of awards booked on or after January 1, 2009. While United stresses that prices of the two most popular awards—the restricted and unrestricted domestic coach awards, at 25,000 and 50,000 miles, respectively—will remain untouched, there are plenty of increases throughout the award chart.

Some examples (all Saver awards, unless otherwise noted):

• Domestic first-class awards will increase from 60,000 to 70,000 miles.
• Hawaii coach and first class will increase from 35,000 and 90,000 to 40,000 and 100,000 miles, respectively.
• Europe coach and first class will increase from 50,000 and 120,000 to 55,000 and 135,000 miles, respectively.
• South Asia coach and first class will increase from 60,000 and 120,000 to 65,000 and 145,000 miles, respectively.

Those increases fall between 10 percent and 20 percent. Comparable increases apply to Standard (non-capacity controlled) awards.

Mileage Plus, Post-Changes

The upcoming changes will be a significant net negative for many Mileage Plus members. Elite members get their minimum miles back for short flights. But that just turns the clock back to June 30, before their minimum miles were confiscated in the first place. The net effect of the cash surcharges will be significantly higher overall costs for upgrades. And the increased prices for awards are exactly that: a price increase.

Bottom line: United has devalued its loyalty program. Instead of Mileage Plus, some program members will feel they’re being rewarded with Mileage Minus.