United Airlines Starts Rolling Out Cash And Points Awards

United Airlines is beginning to roll out cash and points (‘money + miles’) awards on a limited number of domestic U.S. markets. They want to make it possible for customers to redeem a small number of miles and get some value quickly from the program. This was shared by the ingenious Brian Sumers, based on an internal communication of the airline.

United actually introduced the ability to use miles at 1 cent apiece towards airfare in 2006, but at the time this was limited to co-brand credit card customers and the miles they’d earned via their cards, and you had to use miles for the full purchase rather than just towards part of the cost.

I haven’t seen specific examples of this new option in the wild yet, but I’d be shocked if there’s a world in which United will offer materially more than 1 cent apiece when redeeming miles this way. Although their should be.

Airlines know that when members redeem their miles, they begin to accumulate more at a faster rate. They become engaged in the program. That’s because they’ve demonstrated to themselves that the early investment in the program was a good one. That’s also one of the values of credit card initial bonus offers, beyond just getting a customer’s attention and encouraging action. People don’t trust brands, but if the first award is provided more or less up front the consumer gets that redemption experience quickly.

The challenge is that low value redemptions don’t serve as nearly the same kind of proof point. United gives base members 5 points per dollar spent on base fares. After spending $1000 total with the airline they might have 4500 miles, worth a $45 discount when they buy another ticket. That may not be the kind of wow moment that delivers long-term value to the airline, turning the customer into an engaged member who takes the credit card and shops through the mileage portal in order to earn the currency whenever possible.

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 InsideFlyer.com, 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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Comments

  1. I see Miles + Cash / miles for discounts as the way to go to keep people like me engaged to FFPs going forward. With much more disposable income for travel, buying a ticket is more attractive to me than playing the increasingly corny games for expensive and restrictive award redemptions. With more aggressively priced longhaul Biz tickets practically guaranteed to become a thing, burning 30,000 miles for $300+ off a ticket is a more attractive proposition than using 300,000 miles for limited (and now metered) award space.

  2. At 1 cent a mile they will not get much action from Chase customers. Sapphire card holders get 1.4 on Southwest and 1.25/point on CASH back so they are a little behind the market. If they want a splash considering they are seldom competitive against SWA etc. they might have to be closer to 3-5 cents/mile.
    They are already at a huge disadvantage against AA on international coach awards. 10% in season and 25% higher off season as an example.

    Just maybe they will surprise us but don’t hold your breath.

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