United announced big changes to their award chart which will go into effect February 1. But why did they do it?
United’s Explanation
United left the following on my Facebook page.
Hi Gary. We are increasing the number of miles required to redeem some Saver and Standard awards – the first time we’ve made such changes in several years – to offset the increased cost of providing award travel, particularly premium-cabin award travel and award travel on MileagePlus partner carriers. In some markets, we have reduced the number of miles required for award travel. Customers who book MileagePlus awards, especially premium-cabin travel awards, will continue to get great value and options, with the most saver-award availability among U.S. global carriers and the greatest number of options for booking United and partner carriers online. ^Rob
It’s true that this is the first time they’ve made major changes to their award chart in several years. In my post on the changes I suggested that, simply given past patterns, United was ‘overdue’ not for a correction (suggesting that the award chart was uneconomical as-is) but for a devaluation (because the pattern is to do that every few years).
Now, the number of miles outstanding has been increasing. Meanwhile the number of award seats available has not been. Airlines want to make those seats available as awards that they won’t sell for cash, but with planes full there aren’t really that many of those.
The most basic formula of monetarism (and miles are a currency) is MV = PQ, the quantity of money (miles) * the speed at which they’re redeemed has to equal the quantity of seats times the price of those seats.
Since M (miles outstanding) is going up, and Q (award seats available) is not, unless people slow down their redemptions P – the price of an award – can be expected to rise.
None of this is shocking.
But United’s explanation, that this is “to offset the increased cost of providing award travel, particularly premium-cabin award travel and award travel on MileagePlus partner carriers” seems likely only to be true from a certain point of view.
The total cost of redemption is certainly going up, as the total number of miles printed (for which United is compensated, at an amount above cost!) goes up. The total number of members of the program has grown, both organically and as a result of the merger with Continental. Of course redemption costs rise, but revenue rises faster.
It’s unlikely to be true that even as the retail price of a first class award seat has gone down (airlines are discounting those more than they used to), that the cost to United to buy a given partner first class award seat has gone up substantially — let alone anything like 85% as some awards have risen.
What’s more plausible is that since United’s partners have better award availability than Untied does on its own aircraft, and as United’s website has gotten better for award redemption on partners, that the mix of redemptions have shifted towards partners relative to redemptions on United, and partner redemptions are more costly.
None of which actually means, as United would appear to imply, that they were losing money on their mileage program or that the program has become anything but exceptionally profitable.
One Commenter Uncovers the Real Reason for United’s Devaluation
The increased award chart prices are the most extreme for the best international first class products (i.e. first class products other than United’s).
This isn’t about the cost to United — it is because the airlines collectively are trying to keep people like me out of their cabins, or so says Shafik:
This is a shut up response to all bloggers that keep bragging about flying Star Alliance first class when they can barely afford a coach ticket. It is clear that airlines want first class people on their first class cabins and not point and miles hoarders that get into their first class cabins and start taking pictures of even a paper napkin. That is what all airlines will do and they are only protecting real first class customers hat pay $15k+ for that seat and do not want to share the cabin with people that do not belong there.
Or Maybe This Reason is More Plausible…
“Because they can.”
United’s MileagePlus is profitable, and they aren’t scraping by. This was the major part of their business that remained profitable even when the airline was in bankruptcy.
And want to know how significant it is? United’s most recent SEC 10-Q filing lists the loyalty program as one of its three major assets along with aircraft and route authorities. It lists the frequent flyer program as having nearly $5 billion in short and long-term deferred revenue.
Increasing the prices of some awards by nearly 90% wasn’t a move made out of desperation to save a program.
Miles are accumulated, members are stuck with them, they cannot simply exchange their miles for gold or cash at a fixed exchange rate. United’s future expenses related to miles have just fallen.
Their bet is that they can give their members less, without those members defecting and reducing future revenue to the program (and thus reducing program profits) and without reducing future ticket purchases. They may be right, it’s an empirical question we’ll learn the answer to as they disclose financials in future periods.
Even though blogs, frequent flyer forums, and twitter was alive with this move and though it got limited media coverage as well the median member is certainly unaware and likely will remain unaware of the changes at least until it comes time for redemption (and most members do not in fact know how many miles awards are ‘supposed’ to cost). What’s more there isn’t a sense amongst members at large that other programs are different, so it may well be that case that a program doesn’t get full value out of being ‘better’. Again, probabalistic but that likely explains something about United’s bet.
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I agree I don’t think the general public knows, but the frequent fliers do. As a 1K who stuck with United, Mileage Plus was the redeeming factor in what has been a pretty bad 2 years. But these changes seem aimed at the frequent flier. So for this 0.75 million mile United flier the evidence is piling up. Time to move on. Really.
I agree with the 2nd point. I think bloggers and the show off mentality of taking pictures of everything has contributed. When you have college students flying first class and taking pictures of every little thing in the cabin then there is a problem. UA wants first class people in their first class cabin, not kids who found flyertalk.com.
What about a 4th explanation. Blogs like this one have increased the ability for average Joe’s to rack up tons of frequent flyer miles while doing very little flying. There has been inflation because of it. A revaluation occurs from time to time in response to inflation. Hate to say it, Gary, but you may be partly to blame.
The real reason is usually… money.
Maybe LH/LX want their J/F YQ so they want more from UA for those award seats. Instead of making UA customers pay the YQ they’re offsetting it with higher prices in miles. Extrapolate this to other increases in the chart.
Everything a company does, assuming they are rational actors, is to increase the profits of the company. They don’t raise prices of awards (particularly on partner airlines) because they’re irritated by college students on Flyertalk. They raise the prices of the awards to serve their bottom line. As Gary indicates
The beatings will continue until morale improves.
Delta is showing the way how to run a loyalty program. Proof? Look at DL’s latest financial results.
AA/US big changes are definitely coming.
The other interesting question becomes:
How will bloggers deal with this now as the sex appeal of drinking champagne and eating caviar in first class is just not going to be there to “attract” viewers (and cc clicks)?
Exit Row seat is the new Flat Bed.
Time for more coffee!
Gary, posts like this make this reader keep reading. Reading about your industry insights.
I miss the Andaz pancakes pics, been so long 😉
@What about – there’s just no evidence of that, but I’d be open to something concrete if you’d like to offer it I would be happy to share
@ Gary – are you claiming there is no evidence that you have been able to increase the earning opportunities for the average Joe? or that you aid in the redemption ability for the average Joe? or you help to get people who can’t afford first class tickets into first class cabins? gosh, if there was no evidence of these things then what would the point of the blog be? it would mean you’ve been unsuccessful at doing precisely what you claim to try to do.
you can’t seriously claim that you haven’t aided in the miles inflation, can you?
@ James: The “because of money” argument is both obvious and uninteresting. Anything a company does can be explained away because of profit. The question is why UA feels that this move will make them more profitable (versus other potential moves they could make).
Chase can’t be happy about this. They will lose business.
United’s Newest Customer Unfriendly Campaign: Increase the Cost of Award Tickets,raising the mileage redemption levels for some awards over 60%. We don’t have to take this sitting down!
-Retweet my Tweet here and send your own tweets to @United with the hashtag: #UnitedUnfriendly
The more you post the quicker mainstream media will pick up on this story. Let’s get it trending!
-Express your displeasure to Chase (Twitter: @Chase, @Chase Support) about these changes. Chase buys billions of dollars of United miles and isn’t likely to be happy that they’ve been devalued. They’re especially not going to be happy to lose customers to cards like the Starwood AMEX. If anyone has the power to put pressure on United it’s Chase.
-Contact United CEO Jeff Smisek and let him know how these changes will affect your travel patterns and credit card spending. He can be reached at jeff.smisek@united.com
-If you feel that an 87% increase is just flat-out unfair you can also file a complaint with the US DOT. Sure United is free to do what they want, but this devaluation simply doesn’t happen if Continental and United were still competing. Delta and Northwest miles have gone from being worthwhile to being worthless thanks to their merger. Let the DOT know that you feel an 87% increase in the cost of some awards is unfair to consumers and that you want to see the DOT keep fighting the American-USAirways merger in court. If that merger goes through you can be sure we’ll be seeing more painful changes like this one. To Europe
Business class increases by 7,500 miles to 57,500 miles each way on United flights and by 12,500 miles to 80,000 miles each way in First Class.
Business class increases by 20,000 miles to 70,000 miles each way on Star Alliance flights and by 42,500 miles to 110,000 miles each way in First Class.
This is clearly designed to get you to stop redeeming for First Class awards on partner airlines!
4. To India
Coach award increase by 2,500 miles to 42,500 miles on United flights. Business class increases by 10,000 miles to 70,000 miles aeach way on United flights and by 10,000 miles to 90,000 miles each way in First Class.
Coach award increase by 2,500 miles to 42,500 miles on Star Alliance partners such as Lufthansa etc. Business class increases by 20,000 miles to 80,000 miles each way on Star Alliance partner flights
And increases by 60,000 miles to 140,000 miles each way in First Class. It used to be 160,000 miles for a round-trip!
This is clearly designed to get you to stop redeeming for First Class awards on partner airlines!
5. To South Asia (Thailand, Singapore etc.)
Coach award increase by 7,500 miles to 40,000 miles on United flights. Business class increases by 10,000 miles to 70,000 miles each way on United flights and by 10,000 miles to 90,000 miles each way in First Class.
Coach award increase by 7,500 miles to 40,000 miles each way on Star Alliance partners such as Lufthansa, etc. Business class increases by 20,000 miles to 80,000 miles each way on Star Alliance partner flights.
And First Class increases by 60,000 miles to 130,000 miles each way. This is clearly designed to get you to stop redeeming for First Class awards on partner airlines!
6. To Australia or New Zealand
No change to coach awards (40,000 miles) on United flights. Business class increases by 2,500 miles to 70,000 miles each way on United flights and remains the same in First Class.
Coach awards remain the same (40,000 miles) each way on Star Alliance partners such as Lufthansa, etc. Business class increases by 12,500 miles to 80,000 miles each way on Star Alliance partner flights.
And First Class increases by 50,000 miles to 130,000 miles each way. This is clearly designed to get you to stop redeeming for First Class awards on partner airlines!
7. To Japan
Coach award increase by 2,500 miles to 35,000 miles on United flights. Business class increases by 5,000 miles to 65,000 miles each way on United flights and increases by 12,500 miles to 80,000 miles each way in First Class.
Coach award increase by 2,500 miles to 35,000 miles each way on Star Alliance partners such as Lufthansa, etc. Business class increases by 15,000 miles to 75,000 miles each way on Star Alliance partner flights.
And First Class increases by 42,500 miles to 110,000 miles each way. This is clearly designed to get you to stop redeeming for First Class awards on partner airlines!
I agree with nun. These types of decisions are almost always about money. If bloggers were a problem then the best way to deal with it would be to ask cc companies to stop handing out commissions and most blogs would disappear overnight. Airlines are looking for more and more revenue and mileage programs are a juicy target. The beatings will continue until the next recession.
@ what the: There has no doubt been miles inflation and I agree that programs have to revalue their miles accordingly. But let’s not blame Gary for that.
It’s money, fair and simple. Miles are a liability on the balance sheet, and it’s BIG. So, the faster you can reduce them or devalue them the faster the balance sheet math starts to work more in your favor. COdbaUA has hit many UA loyal flyers with a double whammy. First, 1P (PremEx, *G, whatever you call it) got whacked with a 50% reduction in bonus mileage earned – so probably their largest pool of elite flyers now only earns HALF as many miles as they used to. Now, they devalue the real rewards (I don’t care about the 25K domestic ticket since noone can essentially ever book one!) the premium cabin flights that those flyers saved up those miles to use. BOOM, turn that 50% reduction into a 65% reduction, or worse.
Since making 1MM a couple years ago, I’ve moved on. VX gets my money as does AA and DL (of all things)..I buy what works for my schedule, pocket book and not loyalty at all anymore. The games a changin’.
But I have to say, I have bought the UA stock and it’s been a winner this year. It funny though, all my stock proceeds are going to other airlines though. 😉
Take that Misek!
on this very page there are 5(!) advertisements for credit card offers to get you a ton of miles without doing any flying at all. that’s all the evidence you need that this blog contributes to mile inflation and the subsequent devaluation. you can’t have it both ways Gary – you want to be able to get people more miles while also arguing that airlines should not devalue their miles in response to said inflation. you are contributing to the problem, not the solution.
@Fred, why not?
@ABC
I highly doubt that Chase will lose much business. I have no doubt that the vast, vast majority (95%+) of passengers will not be dramatically impacted by this change. The majority of people redeem their miles for domestic trips and probably some do economy/business redemptions international, but those rates haven’t been hit too hard. And it wouldn’t surprise me if United consulted Chase before the change.
Long story short, most of the people on here will probably be impacted, but this sample size is basically nil compared to the MP program as a whole and is far from representative of the program as a whole.
I think something else you’re also missing is that the average MP member isn’t looking towards those high-end redemptions that saw the greatest increases. These are more the domain of points junkies (who are obviously rightly annoyed at the change) and people who might already be accustomed to flying business/first as so want to do the same on their rewards.
Your average family of four from Texas, though? They just want free flights! Economy, so the whole family can get there together. For them prices have come up for a few redemptions, but overall not a drastic change.
I’d vote for #3. While I believe the cost to UA has gone up in those areas, their implication that they’ve eaten that for years, just because they’re nice, is ridiculous. And that makes me skeptical of their story in general.
I also don’t believe that more than maybe 5% of flyers get anywhere near what us FT-types do out of the program… or that UA (or any airline) gives a crap *who* is in their seats!
That leaves #3, which makes the most sense.
@Kris, we are all speculating here. Nobody ha any numbers to support any claims here, including Gary.
I speculate that the growth rate for Chase’s CC business will be great impacted (unless they increase bonuses). It will be harder to get folks to sign up for the United explorer card, getting folks to spend $125 to renew the Sapphire card and sign up or renew the ink cards. United is at the heart of their major cards. AMEX is looking better. There are choices out there and the value of UR has been greatly decreased.
They meant to reply” hi gary, because of stupid greedy bloggers, we realized we can increase the redemption levels and get away with it”
@what about – my suggestion is that my modest readership, a smaller percentage of which does anything about it, a smaller percentage of which focuses on United, has a material affect on the MileagePlus program. They’re ~ 90 million members, they’ve got ~ $5 billion in deferred revenue from the program on their books, I’m a flea to them.
How about an ulterior motive. To try to prevent the AA merger. UA is showing its strength and not adhering to customer wishes. Justice Dept sees this and uses it to bolster its case. Just a thought.
Whether it’s due to over-supply of UA miles, protect the prestige of 1st class, or Because they can, I am not sure it quite explains why the increase for UA vs alliance premium seats are so different.
@bbd
That was exactly my first thought. United knows that AA will be the big dog if they are allowed to merge with US Airways. They may just be doing this to give the DOJ some more ammunition to block the merger. Might not be the only reason but I think the issue was discussed.
I disagree with the second point reason. Shafik assumes that those who can afford first class tickets are more classy than points and miles hoarders. That’s simply not true. Case in point: http://richkidsofinstagram.tumblr.com
Most of us frequent travelers are working professionals who spend a great deal of time in airplanes, and so when our loyalty is rewarded and we’re upgraded of course we’re going to appreciate the things that provide more comfort. Yes, when you spend a lot of time in an airplane (away from home), even a paper napkin makes a difference and is appreciated.
And although first class customers put a lot of money into these airlines, by the time someone gets to to Premier 1K they too have paid a lot of money to the airline and should be properly rewarded…especially because of all the options there are to fly these days.
@Gary, 90 million members, most of them are passive participants with few points. Most of blog readers probably have >100k UR or United points each. >0.5M points in all programs. We’re talking about a significant segment of the earn and burn space. This is probably a good chunk of UA award business. Nobody has real numbers.
It is unquestionable that the number of printed points have increased in the last few years, predominantly driven by CC applications (more newbies applying for these type of CCs than ever) and manufactured spending. All promoted by bloggers. Bloggers have done a fantastic job of promoting the traveling experience to newbies and benefited greatly from it as well.
@Gary, you discuss the hypothesis of the “Blog Effect” whereby people have improved knowledge, which leads to earning more miles, spending them more wisely, perhaps less breakage, etc., etc.
I reject the Blog Effect. I just do not accept the hypothesis that the blog followers make up a sufficient segment of the market to drive decisions. I am pleased to have a good number of friends. They are intelligent and want a deal as much as the next person. But even your well written blog does not rank on their list of priorities. Nor does schlepping dollar coins from the mint to the bank, vanilla reload arbitrages, etc., etc. I just think the “faithful” are in too much of a minority to be able to kill the goose that lays the cheap redemption egg.
Is there empirical or anecdotal evidence about this?
– Jim
@Chister
Were the issue protecting the prestige of F, I would suggest, first, that they close that cabin to sullen NRSA employees.
I’ve mentioned it on this board before, but will repeat my anecdote about waiting, in F from LRH to IAD, for a grouchy dragon to complete her conversation about labor strife with an NRSA, before she could bring me water.
It’s not surprising that a company looking to cut costs — the kind of company that counts the olives in salads — would see something as large as the expense of purchasing miles from partners and not go after it.
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The original theory behind frequent flier programs is to give customers something (free flights) that costs you next-to-nothing (because it’s excess inventory). Regardless of whether that cost has gone up or not, the tens- or hundreds-of-million dollars on that expense line must be enticing.
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And I think that bottom line number almost _has_ to have gone up on a net basis as the ease of finding and claiming partner redemptions has increased.
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I don’t know the internals but it wouldn’t surprise me if the premium, in standard value-per-mile, for partner awards is roughly the same as the cost of purchasing the award from the partner — thus bringing the cost of servicing partner awards into the same ballpark as servicing a United award.
The upshot of all these devaluations will be seen in 1-3 years. As I read the economic tea leaves, we are in for some more 2007-2008 or worse economic SHTF. When occupancy at hotels and loads of 90% at the airlines plummet like a stone, and elites have been thoroughly pissed off, and brand loyalty is in the toilet, what will the hotels and airlines do then? We will get the last laugh as airlines give us a crap load of miles so we can burn them on their devalued award charts.
Brand loyalty, United? You are going to pay dearly to have it again.
My two cents. 🙂
@ Tom, if I had a nickel for everytime someone said they were leaving United, only to not do it, over the years I would be a rich man. You boys have cried wolf a few too many times.
Fred I did. Started with Pan Am, shifted to UA when they bought the asian routes. Been with them since 1986. Was flying 100k+ miles before 1k even existed. Loved the airline. Made 1MM sometime in the early 90’s.
But things really went south. Nasty stuff where they refused to follow their own rules in a deliberate effort to avoid their obligations. Sued um. Won. Left. Never looked back. Haven’t flown a paid mile on UA for years and years. Burned off a couple of million miles flying LH after a flight from Australia where one of the F cabin crew boarded deathly ill rather than doing the right thing and stay home.
So bad decisions do have consequences. Domestically almost 100% of my $$ goes to AS. Great airline. Smart people. Honest people who treat you right. I’m happy to give them my money.
Airlines can’t make it on discount Y sales. They need the high value customers. Those are the people this decision is going to affect the most. Rather than threatening, or writing or emailing anyone they can best deal with this by taking their business elsewhere.
Why?
Because if AA and US see their premium ticket revenue skyrocket they’ll get the message. Don’t do what UA did because what is happening to them can happen to you.
Personally, I’m satisfied with coach travel. I find the obsession with airline status, booze on planes,etc. somewhat silly. So, as an economy class traveler, this devaluation doesn’t affect me much, and I’m not too upset about the relatively modest changes for coach redemption.
Having said that, however, I’m displeased with the gouging that is planned for business and first class travelers. To me, it is indicative of the attitude the airline has for its customers – coach travelers included. Their inflight product has degraded since the merger (I miss Continental!) and the gate personnel are sometimes rude and surly.
I fly United when it makes most sense to do so. When there is not a clear advantage, I fly with some of their competitors who offer a better product.
I would encourage those who are upset about the award devaluation or who dislike the product on offer to vote with your feet.
@ Gary: “@What about – there’s just no evidence of that, but I’d be open to something concrete if you’d like to offer it I would be happy to share”
Search ‘Vanilla Reload’ on google. 8 of the first 10 results are bloggers like yourself who pimp cards and miles and glorious trips through manufactured (aka fake) spend.
Search ‘Manufactured Spend’. Bloggers are not pushing this (fake spending) strategy? Right…
Gary – this is not a ‘VFTW”, or even a Boarding Area specific phenomenon.
But to claim that bloggers / mile pushers have no impact here is naive.
Summer is the only blogger I have read who is actually taking a rational view of this. And of course, read her comments, she is getting attacked by your and other bloggers acolytes…
(and, by the way, I still enjoy reading your blog and commentary! I just think you are missing the boat on this one.)
On “Because they can”:
It will be interesting to watch. This devaluation brings them much closer to Skypeso values. Comparing business redemptions (b/c DL doesn’t do first… ugh), my planned trip from central america to southern south america in 2015 costs, at a minimum, 15,000 miles more per person RT with United miles. Interestingly, the Skypeso/AA charts have the same business redemption rates. (Economy is substantially cheaper on AA.)
I strongly suspect this devaluation will change the calculus for enough of those who pay attention that United will begin to notice. If they offer an inferior product (as I understand it AA and DL are superior in different areas of operations), and a substantially similar points valuation, what reason does a flyer have to pick United? Like I said, it’ll depend on each person’s travel goals, but I suspect a small, but statistically significant, number of people will shift spend away from United. Will that be enough to compensate for the lower costs associated with the KM+ program? We’ll have to wait to find out.
Small note: Much as United is being deservedly bashed right now, let’s appreciate that they gave us notice about most of the changes.
Thank you, that is all.
Here’s just one example of where the rubber hits the road.
If I’m buying a ticket SF0-FRA why would I ever choose UA over LH now? Multiply that by every other route where UA competes with foreign carriers for the high profit business traveler.
This isn’t about how many customers or tickets they lose, its about the profits and where they come from. The travelers who paid top dollar for their tickets are going to be none too happy with this change and they are the ones who UA needs the most.
There are so many other ways UA could have handled this that would have kept them but unfortunately management just didn’t know enough or care enough to try.
@Fred: I don’t fly United. I haven’t in years. There product sucks. For me, their schedule sucks. So, I’m not switching. I’m already gone.
My indictment in my comment was of ALL the airlines. I like AA right now, but if US gets hold of it, I may not be so happy. I don’t do Skypesos, so what will my options be? Simple: fly whatever airline gets me where I want to go in comfort and for a good price. Accumulate miles with Chase and AMEX and spend them wherever there is the most value. And be another statistic on the “airlines blew it with their long time elites” studies that will happen in a few years.
One thought about “the money” aspect of this devaluation: it isn’t not about “the money” per se. It is about stock price. Yes, revenue and costs are factors in valuation of stock price. But most management in the US is highly incentivized to focus exclusively on short term stock appreciation to score big gains on stock options, etc. There is no long term commitment to company, brand, customer, etc, the things that drive long term profitability. So, Smisek and Co make decisions like this devaluation almost exclusively from the “how do I profit the most” perspective. Sad.
@ James. Its even worse then that. Some bloggers make their living (allegedly) by selling services to help people use miles. So they dont only pimp cards to increase miles, they sell services to help people burn them. Consequently they make a living off of inflating the number of miles out there and then complain when the airlines respond. Gary wants to call them MileagePoo all while making a tidy profit off of that poo.
sounds like they check the miles customers have saved up, when the overall mileage of all customers reach a certain point, they raise the “payout” limit some customers will continue to save miles, while others ( the airlines best hope) will simply give up and never use the miles.
Maybe it’s a combination of all three reasons.
@Lark The missing piece of evidence is how manufactured spend — remember that United gets paid by Chase — factors into all of this. What is the magnitude relative to the total miles issued by United? What is the magnitude driven by bloggers? What is the magnitude driven by this blogger in particular? You have a theory I’m just suggesting it isn’t sufficiently developed to be a claim yet, let alone an argument. I’m open to hearing it, but just want some evidence backing it up.
Any thoughts as to why they eliminated comp upgrades out of Guam? I have been on these flights quite a bit and they are purely domestic service and duration. My favorite memory was GUM-KIX and the F cabin half empty while Y was full, implying no premiers on the flight. Same on the return.
There is certainly no denying that by far the hugest devaluation took place on ‘aspirational’-type travel: F and C on non-UA star carriers.
That aligns with lots of theories, including UA’s explanation that they are paying more for F award seats on LH, Swiss, etc. It also aligns with the theory that those promoting aspirational-type travel via cc churning and manufactured spending helped drive this devaluation.
In any case, if you want to do economy domestic, or stick to UA metal, you are annoyed but not devastated. If you are into aspiration, you are pissed.
Either way, points are worth less to MP members.
But what I would really like to see some fact/analysis about is how the devaluation in the customer direction affects the price of mile to companies like Chase that buy them and give them away as incentives. Because if that price goes down we can expect cc bonuses, etc that are much higher and it’s still game on. But if the price of a mile sold to Chase stays the same then it seems like it may be game over for churning and manufactured spending for UA, same as it is for DL’s sky pesos.
@kokonutz – the price that United is charging to Chase isn’t going down. On the contrary Chase has been burning through the cheapest of its miles. Remember that Chase pre-purchased half a billion dollars worth of miles to provide United with liquidity. It did so at a deep discount and structured the arrangement as a secured loan. As that block of miles runs out, and as United is in a stronger financial position, best case for Chase the price stays the same but more likely goes up.
“Maybe LH/LX want their J/F YQ so they want more from UA for those award seats. Instead of making UA customers pay the YQ they’re offsetting it with higher prices in miles.”
Interesting hypothesis, but it’s not consistent with the relatively low increase in coach award prices. YQ tends to hit coach customers much harder than F customers percentagewise. If LH were charging UA extra $ in lieu of YQ, coach award prices would have doubled.
I would have preferred paying fuel surcharges on award tickets rather than the drastic devaluation of United Miles in Premium Star Alliance cabins. Increasing A Star F award from the US to Europe from 135,000 to 220,000 is absolutely awful, even more ridiculous is the rise in US-Central Asia Star F awards to 280,000(from 160,000).
The United Mileage Plus program now needs to be renamed and rebranded as Mileage Rubbish! If they want to create a mass exodus of elites to other programs or disincentivize airline loyalty, this is a case book study of changes no one likes.