- Expiring miles were the number one complaint they got
- They were “spending millions” just to notify members about expiring miles
- They would sell members on re-activating their miles, but didn’t make much doing so
- Despite the higher costs to the program, it wasn’t in their long-term interest to antagonize members into earning 20 miles to extend an account’s lifetime (not very profitable to the airline) or to redeem their miles in anger and walk away from the airline (creating a redemption cost and a lost customer).
Now United Airlines has just announced that MileagePlus miles don’t expire, either. According to Luc Bondar, United’s vice president of loyalty, “We want to demonstrate to our members that we are committing to them for the long-haul and giving customers a lifetime to use miles is an exceptionally meaningful benefit.”
United of course has already expired hundreds of millions of dollars worth of miles. They aren’t restoring the miles they expired in the past, reducing their balance sheet liability and recognizing revenue. (Update: United tells me that “customers whose miles expired in July/August of 2019 are having their miles automatically re-stored.”)
MileagePlus has also eliminated award charts and in many cases starting the back half of November will charge more miles for flights when saver awards aren’t available. The two changes viewed together redistribute United’s spending from frequent customers to infrequent ones.
- Awards cost more
- But you can save up miles and hold them for years in order to book those redemptions.
Eliminating expiring miles increases the cost of a mile to the program by reducing breakage. Currently United assumes a percentage of miles awarded will be expired unused, and so they make an assumption that the cost of those miles is lower. United is effectively spending more on infrequent members who don’t have activity in their account every 18 months, and spending less on existing frequent members who no longer have an award chart to rely on.
Engaged members shouldn’t welcome this change. It means there will be incrementally more competition for award seats from other members whose miles might have otherwise expired. And it’s not hard to keep an account active.
Nonetheless infrequent users of the MileagePlus program have one less thing to worry about, and that’s a good thing. The question, then, is whether American AAdvantage will feel they need to match both Delta and United.