United’s Continued Bogus Excuses for Starnet Blocking

Lucky is briefly persuaded by United’s arguments about Starnet blocking, that they have budgets and if they stopped blocking they would spend more on redemptions and have to cut costs elsewhere.

The insinuation of a tradeoff between *elite benefits* and honest award redemption is a false choice, however.

The former applies to a limited set of Mileage Plus members who are profitable on their own (and elite benefits are judged based on that profitability). It’s absurd to suggest a cross-subsidization, where general member benefits are cut to reward elite members whose profitability doesn’t warrant the benefits they’re receiving. Mileage Plus wouldn’t choose to give these members more than they are worth.

Meanwhile award redemption applies to the general membership as a whole. What benefits exactly would be cut from general members if Mileage Plus spent their budget on award redemption the way every other carrier does? (What other real benefits are there?)

United Mileage Plus sells miles and redeems miles, and sets up the economics themselves to make a profit.

(a) if they can’t manage to redeem the miles they sell, they are mispricing the miles in the first place (this isn’t true — they aren’t undercutting industry pricing and they are profitable and were profitable prior to the introduction of Starnet blocking

(b) they’re just arguing the a ponzi scheme is more profitable than managing Mileage Plus as an ongoing business, it’s absolutely true to say that if they could keep selling miles without having to spend money on redemption then they will make more than if they had to spend money on redemption.

The gamble is whether this works as a logn run strategy or whether they chase away customers frustrated by their redemption experience, and whether Chase loses customers to – say- Capital One.

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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