Wandering Aramean notes that United plans to “begin introducing dynamic award pricing”.
He quotes a United spokesperson as describing this as part of their strategy of “giving customers a broad set of redemption options” and the spokesperson also notes United’s “focus on ensuring saver-award availability in general” which seems to suggest that this would be an add-on offering rather than a replacement for award charts, at least in the near-term.
Delta is clearly preparing to move towards more revenue-based redemptions so it should come as no surprise that United is trying to do the same, since United’s modus operandi is to ‘manage by doing what Delta does.’ I’ve heard several airline executives say that revenue-based is clearly the way to go “since Delta is doing it, and Delta is profitable.” (Nevermind that the history of profitabiltiy came from not being revenue-based, and that Delta’s business is different – with different routes, customers, and revenue – than other airlines’.)
My guess is that United will offer an additional option to spend miles on any paid United ticket (although conceivably extending to their joint venture partners), with the number of miles based on the cost of a paid ticket.
In other words, they’d basically make the ‘Choices’ program available to all members, bookable through the website instead of as a credit card statement credit.
See, this idea isn’t at all new. United, Delta, and American have already offered some version of this.
- For three years American offered revenue-based redemptions as an option for elite members only. It was called Dynamic Air Awards and it was run by Switchfly. The offering was discontinued April 1 of last year.
- Delta introduced a Miles as Money feature where you could get a penny’s worth of value towards airfare back in 2008. It was open to all co-brand cardholders with a US address.
- Around the same time United introduced the Choices program which allowed MileagePlus co-brand cardholders to use the points earned with their Chase credit card as money towards airfare.
People seem to like ‘miles as money’ for cheap tickets — “I can get a $150 roundtrip ticket to Florida for just 15,000 miles instead of paying 25,000 or even 50,000 miles for it!” Of course they’re still only getting a penny a point so assuming they have some number of miles that’s below infinite they’re better off if they can pay cash and then use the miles later for a trip that would have cost them more. Under any and all circumstances one cent per airline mile is a terrible redemption.
I imagine United is looking at making this option more prominent. The question is whether they’d retain one cent per point in value or whether the value itself would be ‘dynamic’.
Clearly United would like to stop offering value, something their award chart still does (at least for awards which aren’t in partner first class cabins).
While planes may be flying full, and lower fuel costs turning around the financial position of the airline, and so they don’t need to be as rewarding to put butts in airline seats at a profit, moving to straight revenue-based redemptions (rather than as an add-on option) would undermine the allure of their points and destroy their program which is otherwise worth billions on a standalone basis. They wouldn’t be that stupid, would they?