As United Records Windfall Revenue from Expiring Miles, Will Their Practice of Blocking Available Partner Award Seats Continue Under New Airline Management?

Nicholas Kralev echos my major concern about a United-Continental merger in his Washington Times column this week: Starnet blocking.

United is the only Star Alliance carrier known to block otherwise available partner “award” seats. When Continental joined the 26-member group in October, it not only vowed not to filter other airlines’ inventory, but it also helped make United’s blocking more transparent by showing actual availability on its website, though it doesn’t have all Star carriers yet.

But will a merged United-Continental continue to block partner award seats that are being offered, more often than not falsely blaming the partner for not offering the seats?

Indeed, Continental specifically promised not to block partner award seats — a practice engaged in only by United and no other Star airline — and to have a ‘realistic’ award chart such that it made sense to offer all partner seats that were available. And then they rolled out an award chart that looked very much like United’s!

While the Continental folks will be in charge at the very top of the combined airline, it’s likely that (1) the Mileage Plus architecture will remain in place and (2) that the top senior executives aren’t focused on this issue in any case (regardless of whether they would want to continue blocking or not).

If United continues blocking, United members are no worse off than present. But Continental members are significantly worse off as a result of the merger.  My experience a couple weeks back was that pretty much every available Lufthnasa or Swiss transatlantic flight, every day, was being blocked by United.  (Blocking comes and goes during a quarter based on United’s redemptions on each partner relative to budget, I’ve never personally seen any blocking of Turkish, EgyptAir, Air Canada, Continental, or US Airway for instance.)

My own hope is that at a minimum, if we can’t get a public pledge from the combined entity not to block award seats, that once the merger closes they follow past practice of Delta-Northwest and US Airways-America West and allow members to transfer their miles back and forth on their own between the two programs until the mileage balances are combined into a single account by the programs themselves. That would allow United members access to the full set of Star Alliance award inventory, simply by transferring their points on their own to Continental Onepass.

As Kralev observes, there are some advantages that United has over Continental for frequent flyers — more confirmed at booking upgrade instruments for top tier elites, one-way awards (though currently online only and on United metal only), for instance.

On the other hand in addition to not blocking partner award inventory, Continental’s award routing rules are much more generous than United’s. They allow both a stopover and an open jaw on an international award for instance, compared to United’s one or the other.

Ultimately Kralev asks how United can continue to justify blocking partner awards to save money (when their awad chart really isn’t more generous than other programs that don’t block…) when it’s claiming an additional $64 million in revenue per quarter than they had even expected from expiring miles. And when miles are made artificially harder to use by this practice.

It’s also “making an improvement to the accounting model for Mileage Plus,” which “will result in the recognition of approximately $64 million of incremental passenger revenue in the first quarter of 2010, reducing the net amount of revenue that we otherwise would have deferred to future periods. The company expects a similar incremental impact in the remaining quarters of the year,” it said.

My own view is that non-transparent business practices are hard to sustain over the long-term without damaging profitability, that as more customers understand the practice they’ll tend to favor other programs and that Mileage Plus will lose revenue as a result. So it’s ultiamtely to their detriment to engage in award seat blocking. But we’ll see if the combined entity adopts that view!

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. I’m usually against too much government regulation. But this practice of award blocking by UA and the accompanying lies by its agents is unethical, anti-consumer and bordering on being fraudulent and make me long for government intervention (gasp!). I’m surprised there hasn’t been a class-action lawsuit by an enterprising lawyer. Gary, please continue to highlight this problem. And kudos to you and Kralev. Like you said, “as more customers understand the practice they’ll tend to favor other programs and that Mileage Plus will lose revenue as a result.” I’m hoping that day is now.

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