United Making a Move toward Revenue Based Awards

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Wandering Aramean got “part of an internal memo describing [United’s] plans for the coming year.” It says:

Deliver first phase of united.com 2.0 by 2q 2015, including bundled ancillary offerings;

Some time in this quarter (by June 30), United plans to roll out a new website with new bundled fare options, which sounds like what American Airlines offers. Not that interesting. Moving on…

begin introducing dynamic award pricing.

Uh-oh!

“Dynamic award pricing” would mean that award prices change, presumably based on the cash price of the underlying ticket. The question is: is this a huge deal or no big deal?

No Big Deal

Dynamic award pricing is no big deal if it just means that United gives us a chance to buy any cash ticket on United (and possibly its joint venture partners) with miles at a fixed rate, almost certainly 1 cent per mile.

If we get the option to buy $400 flights for 40,000 miles, and nothing else changes, it’s no big deal.

In this scenario, we can still use our United miles for higher value uses on the award chart like 40,000 miles one way in First Class between Australia and Southeast Asia.

Let’s call this scenario: adding dynamic award pricing. It’s no big deal.

Huge Deal

Dynamic award pricing is a huge deal if it supplants the award chart. If every United and Star Alliance flight is only available by paying 1 mile per cent, awards would go way up in price, especially premium cabin awards.

Let’s call this scenario: replacing the award chart with dynamic award pricing. It’s a huge deal.

My Guess

My guess is that United’s plan for this quarter is the first scenario, adding the option to buy United and maybe a few partner flights for 1 mile per cent while not touching the award chart.

That’s my guess because I don’t think United wants to be the first among United, American, and Delta to go to revenue-based award redemptions. It would crush the value of the program of MileagePlus, and United prefers to copy Delta, which has not gone revenue-based on redemption.

Keep Your Eyes Peeled

We don’t have much to go on, just a snippet of one memo. Keep your eyes peeled to see what form dynamic award pricing takes. Be at the ready to burn United miles if it is an apocalyptic scenario in which the whole MileagePlus program goes revenue-based.

 


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2 COMMENTS

  1. They will definitely get pushback from Chase for this. Lots of people would dump Ink cards (no other good transfer partners except Hyatt) and United cards since they would be better off with 2% cash back cards.

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