United Just Destroyed Its Frequent Flyer Program as a Way of Rewarding Travel on United

United announced today that they are moving to revenue-based frequent flyer earning next year.

They say this is part of making their program better. More faux changes you’re gonna like.

Here’s how many miles you will earn for flying United flights and crediting miles to United’s frequent flyer program starting March 1 of next year — based on the cost of your ticket.

It’s not actually that simple, of course, since

Actual mileage posting will be determined by the actual ticket price, purchased ticket routing, fare class, Premier status, residency and ticket issue date. For tickets purchased in a currency other than US dollars, we will convert the purchase to US dollars and then calculate the number of miles you will earn.

Got that?

United already devalued their award chart. This change is earning only, the redemption side has already been gutted. So here they’re making changes to earning by flying.

Should You Care? What Does This Mean to You?

The only people who should care are those who fly United and earn elite status.

Here are the key things to know, if you are not a United elite frequent flyer:

  • This doesn’t affect credit card earning. All of the United miles I need I will get through partners, like transfers from Chase Ultimate Rewards or through hotel stays with Rocketmiles.
  • This doesn’t affect the occasional United flyer who pays attention to their miles. Just credit miles earned from flying United to partner airlines.
  • This doesn’t change anything for flights on partners when the partner issues the ticket. Buy a partner airline ticket and fly that partner airline, credit the flight to United and you’ll still earn miles based on distance flown.

For United elites flying mostly international, this shouldn’t matter a whole lot

  • Premier status will still be earned based on miles flown (just as it still will be at Delta)
  • You can earn miles flying on partners, so fly the limited number of United flights required to earn status and do the rest of your flying on partners. Buy your tickets on partners and mileage-eanring doesn’t change.
  • If your address is outside the United states, then United spend (partner tickets don’t count) won’t apply to you. If you’re in the United states, $25,000 spend on the United Visa still exempts you from the spending requirement for elite status up to Platinum (75,000 mile status).

United elites living in the U.S. and flying domestically need to understand that they will earn fewer miles unless their average airfare is 20 cents a mile. (Like at Delta, short haul high fare flyers will benefit, paid international premium cabin flyers will also benefit somewhat.) That’s double the fare level required to earn elite status under the new revenue-based requirements for recognition. For many of you, it’s time to dump United as an airline.

    You may think, where do I go? American has said they won’t be making major changes until they complete integration with US Airways. Switch to American (or Alaska, which has considered a revenue-based program) and tell them why you are doing it. If American can make money under the current model they won’t have a reason to switch. And integration with US Airways gives them a reason to wait and see.

Why is United Doing This?

United CEO wanted the MileagePlus program to become more revenue-based. And so it is.

The usual arguments in the industry for revenue-based programs is “Delta is doing it and Delta is really profitable.” There’s tremendous Delta-envy. Although Delta has been profitable and has not had a revenue-based frequent flyer program. Revenue-based at Delta doesn’t start until next year. And Delta knows well that while they have been running the best airline, going down the list of things and how they rank against other carriers, they are at the top of US airlines in almost every category but would concede (and have conceded to me) not in Skymiles. Still, ‘Delta see United do.’

(Just like Delta, United is even capping the number of miles you can earn per ticket to 75,000 — so not really rewarding the highest spend; members can game this on expensive tickets by buying one-ways instead of roundtrip, but still perverse.)

Delta introduced revenue-based elite qualification. Then United followed.

Delta then went to revenue-based mileage-earning for flights and then announced a new five-tier award chart both to begin in 2015.

Delta’s program means less mileage will be earned from travel. And in some sense, that makes flying less important in the program. Meanwhile, United’s earning structure — nearly identical to Delta’s — will mean fewer miles from travel too.

Delta didn’t go all the way — scared off by how it would hurt them with their most valuable customers.

For an airline losing $600 million last quarter, this is management by ‘doing what Delta does’. Even though United knows darned well the downside risks.

Revenue-based earning does not unequivocably reward the right people. Rewarding based on spend is often misguided, what you want to do is incentivize more spend not give people more who spend a lot.

  • A flyer may buy one expensive ticket with you because you are the only airline who flies non-stop on the route. Does it make sense to reward them? You’re essentially just lighting money on fire if they’re going to pick your airline anyway.

  • The same hold holds for business travelers who are part of managed travel programs, if they aren’t choosing their airline then what are you rewarding?

  • A high fare passenger may trade off with another high fare passenger (for instance they both buy the last seat available on a flight). That high fare customer wouldn’t actually be profitable in an economic sense (opportunity cost basis).

  • On the other hand a low fare passenger may fill empty seats and be pure profit — or they may ultimately displace a high fare passenger and be very costly if the airline didn’t get their revenue management right.

  • Low fare customers may also engage with an airline’s ancillary products. Base airfare isn’t the only contribution to revenue that matters, and other products are often higher margin than the actual airline seat.

  • Meanwhile third party partner customers are profitable too. A member who carries an airline’s credit card and uses it, credits points for their non-air travel to the program, and uses their shopping portal may be a profitable customer.

  • And ultimately the program needs to try to influence incremental business. You may reward a high spend customer but not get additional business from them than you would otherwise have gotten. But you might be able to move the needle with some of your other customer segments.

What Other Changes Were Announced?

Revenue-based mileage earning wasn’t the entirety of the announcement. They’ve also let you know that they’re providing more ways to waste your (harder to earn) miles.

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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  1. Meh, it’s a race to the bottom. AA is probably happy to see this so they can join the club and not be the odd man out. Once Doug gets his way and makes AAdvantage “competitive”, we’ll all be scrambling for TrueBlue points and the WN companion pass.

  2. Very sensationalist header but as you note later the latest changes doesn’t destroy MP for everyone, simply reduces the earnings for those flying on cheap tix. However to the extent your headline weeds out credit card churners with manufactured spend I am grateful as that will leave more award seats for those of us who earn through BIS flying.

    I do think you conveniently ignore the fact that UA awards are still cheaper than DL because DL chart is a lie – you can’t get the lowest level savers like you can on UA and UA generally doesn’t surcharge like BA. I also think you are absurdly optimistic about USdbaAA – you well know US management will gut the program at the first opportunity. You already railed at the last program modification.

    Really the tough question for your non-elite readers now is where do they credit UA and *A flights? The *A programs with hard expiration dates are not a good choice for occasional flyers. I don’t see this answered above except “fly AS, AA, etc.” but that isn’t the solution for many who are locked to *A

  3. Q: Does this further encourage IRS involvement in tracking the value of miles, thereby marginally decreasing their value? (When the IRS steps in, it will massively devalue points for earners; encouraging the IRS would therefore be a marginal decline in value.)

  4. I think this just goes to show, Smisek has to go. The man has no talent and no new ideas. He’s just copying Delta and others, probably hiring the same consulting companies that came up with the initial proposal. He’s really brought NOTHING to the table from an airline/FF program CEO standpoint.

  5. @jamesb2147 I must admit, yours is the most interesting of the newcomers.

    So do you believe that the IRS are a political tool that can be employed to accomplish your secular goals ? Or do you just fantasize about “getting” somebody ? Lol what in the world does the IRS have to do with any of this?

  6. If AA eventually matches revenue based programs like United and Delta. United still has a problem as American and Delta are better airlines. Not to mention those pesky foreign airlines that fly from Europe and Asia and cause lots of competition for UA internationally.

    For all of us there is a major silver lining. Everything is available a la cart these days. So just fly the airline that works best, pay the fee, and enjoy freedom from any one program.

    United will continue too loose in that scenario as their frequent flyer program used to be quite sticky.

  7. @Boraxo wrote “Very sensationalist header but as you note later the latest changes doesn’t destroy MP for everyone, simply reduces the earnings for those flying on cheap tix.” Actually I tried to make the headline clear that it gutted MileagePlus as as a reward for flying United only not for other things you mention.

  8. @WhoMe – Avianca’s LifeMiles is the only other Star program with no fuel surcharges at all. Aeroplan has then only on about half of carriers.

  9. All these changes, including Southwest’s recent devaluation, increase the advantage of credit card users (and gamers of signup bonuses) over customers who actually buy tickets and fly the airline.

    It’s as if airlines view air travel as a loss leader for their real business of selling points to banks!

  10. I already wrote to Mileage Plus and so too should every member on this site (especially 1K and Global Service folks). I doubt that they will go back on the overall change, but an overwhelmingly negative response may at least prompt minor improvements.

  11. Would these changes be happening if Continental and US Airways (or even Northwest) were independent entities? I doubt it because you really would have a choice of who to fly…whereas today…its not really the case.

  12. Gary- “That’s double the fare level required to earn elite status under the new revenue-based requirements for recognition.” I thought this change does not change how you earn elite status?

  13. @John – it does not change the elite status requirement. My point is that you have to spend 10 cents a mile to earn status ($10k for 1K status, $7500 for 75,000 mile status, ec). But you have to spend 20 cents a mile to earn as many frequent flyer miles as you did under the distance-based program. That’s out of whack. And it’s why fewer miles will be awarded under the new program.. even to business travelers.

  14. I wish AA would come out with a statement with regard to whether they are going revenue or not. They stand to gain a bunch of frequent fliers…

  15. This change seems to apply for both US and international based MP members correct?

    It’s only the PQM revenue requirement that doesn’t apply to international members?

  16. @Nick they can’t do that because even if they don’t plan to now, remember they’re focused on integration, what happens if in a year Delta and United are blowing them out of the water? They’ve boxed themselves in. I don’t think there are any plans now to do it, that would be great for them to say, not sure the lawyers would let them. But for sure that would be a strong offer they could make…

  17. @montyhall “If you’re making business decisions, the decision is the same. Spend your money where the company receiving it appreciates your spending. End of story.”
    you, sir, have a lot to learn about business (and perhaps rainbow, unicorns and santa claus). “well, Board, we could have gone wit company A and saved a shit ton of money, but we just didn’t feel they appreciated us enough. so… we went with company b who raped us on price but really really seemed to appreciate us.” “end of story”, as you would say.

  18. Better check out a certain Greek airline that is a Star Alliance member, and gives three year Gold for 19k miles flown. My 18 yr old daughter happily waltzes in to all lounges, even United…as she has a foreign gold card.

  19. Just coming off another great biz trip with Turkish it seems to me that UA is just given up on being an international carrier and hoping to get by with their crappy domestic product. If only they could find leadership who knew something about generation business then they might get some where. This cluster will go down in the books.

  20. United flyers just got Smiseked, and the 2015 Mileage Plus program is all Jeff’d up! Perhaps the appropriate response is for UA loyalists to book either Delta, American, or foreign carriers for their travels.

  21. Yes MP is quite a sticky program, that is why so many tolerate the dirty and uncomfortable birds they fly. How does Delta with its 20+ fleet manage to look newer than UA??? But devaluing UA MP will only make us biz flyers more independent. I welcome UA move so that now the world of airlines opens up and I await the day Emirates arrives to our cities so that we can have some real choice with real 5* service.

  22. The announcement leaves me with a question that I haven’t seen answered anywhere else. Since the new rules don’t go into effect until March 1st, does qualifying for a status tier prior to Feb 28th going to be honored? For example, I know I need to do 2-3 trips from the east coast to Asia in the fist 2-3 months of the year.

    If I have both the 50,000 miles flown and the $5,000 in spend by Feb 28th, am I gold for the year? I

  23. @Gary:

    Did you find information somewhere that $25K spend will still bypass the $2500,$5000,$7500 tiers for silver/gold/platinum for 2015? The United website only indicates that to be true for 2014.

  24. Another MP devaluation. I can’t wait for the next change Jeff thinks I’m going to like!

  25. @Paul – this announcement changes redeemable mileage earning only, it does not change anything regarding status. Yes you could fly 50k miles and spend $5k by Feb 28 and you will be Gold through end of the year and the following year. But that’s true now, and true if you do it after February 28 too.

  26. @Larry Abamson – it’s lifetime gold under current rules, they just send out 3 year expiration cards (and sometimes different expirations on cards). That’s because you have to keep your account active with a flight..

  27. Gary, This definitely screws up international travelers in coach. So if flying LAX-EWR-DEL today in coach in UA you get 19556 miles (if you’re 1K you get 39112 miles). Under the new rules assuming a coach ticket is $2000, you’d get 10000 miles (if you’re 1K you get 22000 miles). That’s pretty bad for international travelers. I would think a savvy business traveler will no longer pick UA for international flights. Why would they do that to so many GS and 1K’s who fly internationally on UA?

  28. Can you elaborate this part? Thanks.

    A high fare passenger may trade off with another high fare passenger (for instance they both buy the last seat available on a flight). That high fare customer wouldn’t actually be profitable in an economic sense (opportunity cost basis).

  29. Gary, I (think I) saw Jeff $. at ORD last week on Wed, waiting for his order at Rick Bayless restaurant. I mean I am about 99% sure that was him. If it had happened this week tomorrow, I would have absolutely asked him “Dude, what the heck are you smoking? I thought you lived in Chicago, not Denver!!”

    Then I thought more about it and read some FT posts and thought.
    Credit card bonuses, shopping, dining and bank offers arent going anywhere. Of course. They bring in hard dollars.
    What UA and Delta are doing is trying to take away Mileage Runners. period. The effect on leisure travelers is a side effect.
    Case in point. LUV annouces sale, Big 3 have to match and bunch of people buy $49 ow tickets all over the rest of year to run for miles and collect RDMs.
    They are indeed displacing tickets that would be sold at a later date for $79 ow.
    A leisure passenger would also jump on the same sale buy couple tickets and I don’t think UA wants to penalize them. But I think they have seen enough people buying fat fingered and sale fares and walking off with bunch of RDMs and EQMs.
    And I am on the same boat as others. But I have seen them asking for volunteers on flight I have purchased for < $200 6 months in advance.
    So I tihnk your theory about MRs filling empty seats is flawed atleast in this economy.
    There are hardly any empty seats these days.

  30. Gary, is there any way to know what the RDM & PQM earning will be on Star partners? There is nothing on the site now that states whether the RDM bonus for 1Ks on LH & LX flights will continue.

  31. I doubt this change will financially benefit United. Typical GS will do well out of it and many 1K will as well. But mostly these guys will be faithful anyway.
    I am currently UA Gold, I should be 1K next year but for 2016 unless American does something wacky with their awards program I will probably switch to them.
    This devaluation from United is a perfect example of why you shouldn’t be over-loyal to an airline. At least United gave a heads up over the change.

  32. @chitownflyer – we have no indication that anything changes traveling on partner airlines when booking the ticket through a partner.

  33. I’m a United 1k (and Million Miler but if you’re still flying a lot that doesn’t matter) and I just did the math on my last four flights. I’m averaging $5.74 per mile now so if MP is going to start giving me 11 mile per dollar, why is that bad for me?

  34. I am a UA Premier1K flyer, using the Houston/Newark hubs mostly, traveing to Newark, Norway, and South America, and in the last year or so, have seen:
    -far less complimentary upgrades.
    -far less ability to redeem Regional Premier/Global Premier upgrades.
    -continued utilization of planes with no/archaic entertainment systems, poor food choices (but, to be fair, improvement of service/attitude from the onboard staff, and some seating improvements).
    Under the current 2014 scheme, my PQD totals are way behind last year’s mark at midyear, and thus it becomes clear I will only reach Platinum level for 2015. And, in the end, I think that’s what United wants, right? in effect, create a large gap between the Premier levels.

    So, fellow UA customers, what should I do? Abandon the most convenient airline for me, just to do better on points/Premier type levels with another airline? Could go with SAS or Aegean, as some suggest, or switch to Delta or American. Or stay with convenience, and view the MileagePlus program as simply a less generous, sometimes useful ‘bonus’?

    I appreciate being loyal in business, but feel United is whittling down things to a point where it’s at the cusp of losing me and a lot of others like me, who do look for less costly fares on business trips, but fly very frequently and/or go great distances with them.

    Thoughts? Thanks.

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