United devaluation: I woke up this morning to an announcement of some really nasty changes to the United MileagePlus award chart. These changes don’t go into effect until February 1, so you will want to issue tickets you may be considering before then (and not make changes to tickets after that).
What United has done is
- Announced an increase in the price of many of its awards
- Bifurcated its award chart so that partner awards will often cost a whole lot more than awards on United’s own flights
There aren’t actually very many changes to awards in North and South America. There aren’t very many changes to awards in coach. The biggest bloodbath is to first class partner award pricing.
Here are .pdfs of the current chart and the new chart.
But to make it easier I’ve put together side-by-side comparisons of the award charts starting or ending travel in North America. I’ve bolded and underlined prices that are changing.
Again, North and South America have the fewest changes.
Europe and Africa is where things start to get bad.
Check out first class changes:
- First class between North America and Europe on partner airlines goes from 135,000 miles roundtrip to 220,000 miles roundtrip. That’s a 63% increase.
- First class between North America and the Middle East on partner airlines goes from 150,000 miles roundtrip to 280,000 miles roundtrip. That’s an 87% increase.
- First class between North America and Africa on partner airlines goes from 150,000 miles roundtrip to 260,000 miles roundtrip. That’s a 73% increase.
I’ve always loved first class awards to Asia, especially on United’s Asian partner airlines.
Check out first class changes:
- First class between North America and Japan on partner airlines goes from 135,000 miles roundtrip to 220,000 miles roundtrip. That’s a 63% increase.
- First class between North America and North Asia on partner airlines goes from 140,000 miles roundtrip to 240,000 miles roundtrip. That’s a 71% increase.
- First class between North America and Central Asia on partner airlines goes from 160,000 miles roundtrip to 280,000 miles roundtrip. That’s a 75% increase.
- First class between North American and South Asia on partner airlines goes from 140,000 miles roundtrip to 260,000 miles roundtrip. That’s an 86% increase.
And finally here are the changes to Oceania and Australia/New Zealand
Check out first class changes:
- First class between North America and Oceania on partner airlines goes from 150,000 miles roundtrip to 220,000 miles roundtrip. That’s a 47% increase.
- First class between North America and Australia/New Zealand on partner airlines goes from 160,000 miles roundtrip to 260,000 miles roundtrip. That’s a 62% increase.
Of course, changes aren’t limited to awards between North and South America. One award I’ve been keen on in the past — intra-Asia business class goes up from 35,000 miles roundtrip to 60,000 miles.
These Changes Compare Unfavorably to the Worst of What Other Airlines Have Done
This is one of the worst guttings of a frequent flyer award chart that I have seen, worse even than what Aeroplan did in 2011 and with negatives on par with what British Airways did two years ago but without the countervailing improvements like discounted short-haul awards (British Airways awards now start at just 4500 points each way).
In fairness, changes to awards on United aren’t nearly as bad as they are to changes to awards on partner airlines. But those partner airlines often have better availability, not to mention a much better inflight product.
And changes to business class awards aren’t nearly as bad (though they are bad!) as changes to first class awards. The crazy thing though is that first class awards can now be even more than triple the price of coach, where once they may have been just double.
If there’s one silver lining, it’s that at some level things could have been even worse (you can always make things worse!). At least they didn’t announce that they’re adding fuel surcharges to award tickets.
An Award Chart Devaluation Was Long Overdue
It’s actually been a long time since United has done anything like this.
- United restricted advance booking of awards on Lufthansa and ANA in the fall of 2004, on the heels of reducing award hold times from 30 days to 14 days to 3 days (now accounts with miles in them are not officially allowed to place awards on hold at no charge).
- They made big changes to their award chart in October 2006 (and introduced close-in booking fees).
- They made big changes again effective January 2009, including the introduction of cash co-pays for upgrades six months later.
There was what seemed like a pattern of devaluing every couple of years. So it was no surprise when they tweake the chart in 2011. At the time though they were more focused on merging with Continental, on aligning their policies with Continental (read: becoming Continental and adopting Continental’s award chart) that the changes were really quite modest.
And it’s easy to forget that the Continental merger brought with it an end to ‘blocking’ of partner award seats. United used to program their computers to pretend that their partners were not offering them award seats, when the partners actually were, because the MileagePlus didn’t want to pay for those seats. Telephone agents would tell customers the seats weren’t being offered to United, which was false.
When Continental joined Star Alliance they promised an award chart that was more ‘realistic’ so that they could afford not to engage in this deceptive practice, and they ended what they internally referred to as ‘throttling’ when they took over leadership of United,
But Continental executives were surprised by how much partner awards were costing them, and in some ways I’m surprised by how long it’s taken them to do something about it. Presumably they figure that the drama and reputational hit they took when actually combining the airlines in March 2012 (creating a very bad airline in the process) has mostly passed, they didn’t take too much of a hit this past summer with the introduction of minimum revenue requirements for elite status and increased change fees on award tickets. Very frequent flyer Un-friendly.
Here’s How Others May Follow United’s Devaluation
The worst thing about this, from a flyer’s perspective, is that with the consolidation in the airline industry there are fewer players and less of a barrier to changes like this across the board. Delta miles are already worth very little. Even with these changes I’d take United miles over Skypesos. And Delta has just increased the price of international business class awards (not that they wouldn’t go even further, and without advance notice, since they consider award charts ‘to be like pricing making it illegal to tell customers about changes in advance; presumably they believe United’s advance notice here is illegal even if the government and indeed the rest of the world disagrees).
It’s been nearly four years in US Airways devalued its chart. American’s chart used to be the most expensive and they haven’t devalued in quite awhile. If a merger between those two airlines goes through my bet has been a period of quiet, no need to push customers away, they’ll “take the best of both carriers’ programs.” But given a little bit of time there’s not much reason to expect them not to follow suit. (Randy Petersen has suggested the opposite, that a merged carrier could do a ‘big bang’ change upon combination; pulling off the band-aid in one go, and a change like United has announced I think makes that more plausible since whatever they do could be spun as not being worse than that).
Here’s What to Do Right Now, and In the Future
I’m issuing a sell recommendation on United miles.
Or, more specifically, burn those that you have already banked now, or at least ticket by the end of January. Earn more for future use with a rational understanding that they will be worth less, so the effort you go to in order to accumulate the miles should be less, and when considering which miles to earn it should take earning more United miles than a competitor currency like American points to get you to choose United.
Finally, remember that miles are not a good store of value. They are a propriety currency with no independent central bank, let alone currency board, no mandate to minimize award price inflation. You should always earn and burn in roughly the same period. Miles are worth more today than they will be tomorrow. Your best hedge, and it’s not true protection since these programs can change too, is to save up currencies that can be transferred effectively to a variety of different frequent flyer programs (Chase Ultimate Rewards, American Express Membership Rewards, Starwood Preferred Guest).
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Maybe StarPesos sounds nicer?
MileageMinus now?
Frequent miler is calling them Star Dust. That has an excellent ring to it.
Thanks to your post, I have 3 months to figure out what to do with 600k miles. But still hard chocies.
I have no room for more vacation time except perhaps a quickie over Thanksgiving 2014. I have 4 trips booked between now and then.
LAX – LHR Thanksgiving 2013. Even if I find good award availability, I”m holding two tickets in J on the new AA flight on 777 non-stop. Even if I get LH F, it will be a two stop. Maybe it’s worth a swap if I get in LH F.
Then I have flights on CX F in 2014. Is it worth cancelling those to fly on UA F? Those CX flights might go up in price.
Can’t change my flights to PPT next year, as I’m going to Moorea at the old HHonors award chart.
Oh well, noone outside our small world of blogs and flyertalk will feel sorry for us.
I love that the Japan – Oceania “loophole” in First class actually went DOWN from 35k points to 30k. Think routings like: NRT – HKG – BKK – SYD – AKL – NOU/RAR
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.
I too am also curious what will happen if you do a change to a booking made before feb in the time period after feb.
My other question is whether or not this change will increase availability of the Star Alliance partners. While I dont like the changes made, if it means that there will be two first class ANA flights to NRT available for my planned flight in 2015, then its at least a consolation prize.
Earn & burn; great advice, Gary.
Just like baggage fees, etc. I don’t see how this is not collusion.
I’m actually pleased with this. My usual award (Central Asia to Central/South Africa) has reduced from 40Y/60J to 30Y/55J. Good stuff!
So, is everyone still rooting for the AA-US merger? If you think this is bad, just wait till Parker takes the reins at the new AA.
@ Mogon post 25
It will hurt you domestic coach travelers too, because with the skyrocketing costs of international premium cabin award, a lot of people who might’ve not booked domestic coach previously will now see it as a viable use of miles.
A lot more people will now be competing with you for those coach seats, which mean fewer for you
The people who ARE benefiting from this are those who have large dividend miles (until they devalue themselves) or other SA currencies which now will have less competition from all those United frequent flyers
Horrible news, absolutely great article.
I’m so glad I took a last-minute opportunity to fly LH First Class and experience the First Class Terminal in Frankfurt this year. I doubt it will happen again at the new rates.
I was really upset at Southwest for devaluing all existing Rapid Rewards points by a factor of 6/7 as of next March 31. Now that change looks good by comparison.
I wonder what the end game is here. If only hard-core gamers will remain interested in redeemable miles, how does that benefit the airline? Why not switch to a program which offers elite travel benefits but no free trips?
@Gary – It may be for another post, and it will vary from consumer to consumer, but what is your two cents on how high redemption levels can go on aspirational awards before folks plumb give up on aspiring to them and abandon ship entirely?
For 260K r/t to South Asia, I sure want to see some SQ availability.
Some of these hikes are unbelievable! Something like LX business to Europe costs more than UA First!!!
As Noted the value of Dividend miles just (temporarily) increased. The SPG card also just became more valuable.
Gary, can you please do a post on the revised strategy given United award chart changes. I will assume it will be cheaper to book directly on the partner as opposed to going through United, unless partners match UA prices. What are the sweet spots by directly transferring miles to partners and booking with them? While I still believe having transferable miles (Ultimate, Amex, SPG, Diners) is the best strategy, this does alter the strategy for points accumulation. Assuming our strategy is still First and business, what are your suggestions, for both temporary sweetspots, and potential longer term plays as well. As we all knew, the game is everchanging.
Hey Beachfan…..I’m looking for 480K UA miles to book a trip to SYD….let me know if you’re interested in trading for AA miles
I’ve spent $20,000 on my Chase UA Explorer card in the last two months. Today it goes back in the safe.
Getting J/F awards on certain UA international flights will now be practically IMPOSSIBLE given the new prices.
Gary or others: I would appreciate advice. For someone who regularly purchases F/C international tickets, and likes to redeem F/C international, what’s the best Star Alliance option going forward? LH, with the 300% F bonus, and swallow the fuel surcharges? Certainly, UA is no longer a viable option?
Does this change the redemptions for round the world trips at all?
So much for the “Friendly Skies”. Has the butt-in-seat earnings rate increased along with all the devaluations over time? Seems to me if that is how one earns miles, that is being penalized as time rolls on. Earning by flying, for that aspirational award will take forever. Perhaps this is a strategy to push more people to take advantage of CC signup bonuses, as that’s the only way most people will rack up a decent number of miles. I guess like any currency devaluation, the mileage-poor will get drowned while those in the know will manage to stay above water.
Funny that nobody mentioned that the coach awards did not increase much. People are complaining that business and first class awards went way up. Didn’t you understand the message hat UA and Star Alliance partners are sending here? They DO NOT want credit card collectors flying in their premium cabin. They are tired of seeing pictures of their napkins, soaps, socks, etc… on blogs. People that pay for those seats probably complained so they sent the message. Got it?
I’m using #switchingtoAA
Fuck United. This is such chickenshit, and I’m SO glad I held out on transferring my Chase rewards.
@Gary,
“An Award Chart Devaluation Was Long Overdue”
So what’s the inflation rate?
How much has the cost of a seat changed from 2002, 2006, 2010 to 2014?
I wonder how this affects something like intra-European flights to a place UA doesn’t fly. If I book a UA first award on the long-haul, am I stuck paying the partner price for the last leg being a partner?
@iahphx I think the one piece missing from your equation is that United makes hefty sums selling miles to partners, especially Chase. So let’s not feel too bad when they “have to pay for those seats!” To some degree this is double dipping: (1) flood the market with miles and make boatloads of cash doing so; (2) reduce the value of those miles after they are sold to reduce redemption costs.
I wish it was April 1.
At first I was pretty angry but then I realized this was not as bad as I thought. Yes, F awards via *A are basically off the table now, but the C awards are not going up much for South America and only 15K for Europe (assuming you can find space on UA). The major downside is the massive deval for *A partners, from 100k -> 140k to Europe (on mostly inferior seats) and from 120k -> 150k/160k to Japan/Asia (where *A often have a better product). I find the changes to Australia rather meaningless as these awards are rarely found though a big minus for those who had success on NZ or flying *A via Asia.
So I think Gary’s advice to burn UA now is a bit overgeneralized. A more useful analysis would be:
* Burn now if you want *A international F seats
* Burn now if you want *A international C seats to Europe Africa, MidEast, Asia or Australia
* No need to do anything if you want to use UA miles to fly domestic USA, Hawaii, Mexico, South America.
* No need to do anything if you want to fly UA (not *A) to Europe.
Keep in mind not everyone is able to burn now – some of us have families and already preplanned trips for 2014. So telling people to burn isn’t always useful. If I want to burn I could easily do it by using 2x miles on many routes, but then that defeats the purpose, doesn’t it?
according to the rules, it seems I could be right about a mixed cabin award…. where an itinerary with biz/F on United aircraft combined with economy on a partner airline is priced as a United award rate…
The partner award chart explicitly says “This chart also applies to Business/First Awards for itineraries that include travel on both United and at least one partner when at least one flight segment on a partner is in Business or First.”.
Thus, if no partner segment is business or first, then UA award rates for such a mixed itinerary should apply.
http://www.united.com/web/en-US/content/news/United-Award-Chart-02-01-14.pdf
Gary – can you seek clarification from United representatives about this? cuz this would be huge lifesaver for us flying to secondary cities not served by United.
Two problems with the “burn now” advice. As Boraxo mentioned, some of us, myself included, already are ticketed with award flights for next summer. Adding a second TATL trip just to save some miles isn’t a reasonable option for me.
Worse, by now the FC availability for next summer is virtually nil, at least for the routes I need to fly. And of course, dates for 2015 will not be loaded before the Feb cut off for the old rates.
Probably most troubling for me is the thought that up to now, many folks wanting to redeem UA miles could do so with a number of partner airlines, increasing the amount of seats available. Now that most of us can only afford to book on UA itself, isn’t the competition for those seats going to be several times as bad as it has been up to now? 🙁
“…with the consolidation in the airline industry there are fewer players and less of a barrier to changes like this across the board.”
Exactly. This is one reason why every frequent flyer should be supporting the DoJ’s attempt to block the AA-US merger. If that merger goes through, we can expect even more changes like this.
The real killer is the inability to access partner space at the same rate. I only want the miles for international business class and unless United is planning to open a LOT more space on its own routes it’s mileage program will be utterly useless, to me anyway.
So can I make an award booking now, at current rates, hope to change the flight dates later with my no-fee elite change benefit, and not get slammed with the miles increase? My million dollar question.
This is what happens when there is less competition, and they don’t feel that you can do anything to fight the changes. UA doesn’t feel it has much competition in the US for large awards (AA and DL aren’t going to give you much F at a decent rate), and thus they are free to do this. The more mergers there are, the less the mile will be worth. My question is at what point does the government get involved as many people have miles saved up for trips, and will now find years of their spending gets them nothing. At SOME point someone from the government will wake up and start to regulate as to how much you can devalue without competition, or EXTREME notice.
Ugh. I just got my Chase United card as a first step towards an eventual LH F TATL flight. There goes that plan. Now I’m wishing I’d gone for the Ritz Carlton card instead. This is making cashback cards look much more attractive as well. $220K spend on the Chase card for TATL F? That’s effectively paying $4400 ($4,840 w/ 2.2% Barclay Arrival).
Come to think of it, this might be motivation to get the Miles & More card. Sure, you’ll pay $800-1K in taxes and YQ, but you can cover that with $40-50K spend on a 2% card. So, couple that with 170K M&M miles and your at $220K spend for TATL F on LH. The difference, of course, being better availability with M&M.
It actually benefits me flying SE Asia to Australia – a reduction from 45k to 30k one way in J or 60k to 40k in F!
Although it clearly sucks, given the massive price difference between economy and first I could never quite understand the relatively tiny premium UA/AA/US charged for F, especially on partners – the partner airlines themselves generally charged a lot more to their own FF members for F. Thankfully I’ve only got just over 50k and am planning to redeem on UA metal but for those saving up for a big F ppartner redemption this must be really gutting.
An added clarification to comments above about mixed airline awards. You can use the United award chart rather than the partner award chart IF THE PARTNER FLIGHTS ARE IN A LOWER CABIN than the United flights. So if you book a United first class award you can include a Lufthansa business class flight without bumping to the partner award chart. If you book a United business class award to Europe or Asia your onward partner flight segment would have to be in coach to avoid being charged the partner rate.
I said this in another blog comment, but I may be the only person here that let out a huge sigh of relief when after reading the chart I saw that Economy class awards had been mostly spared in this massacre. I fly Economy, not because I want to, but because I simply don’t fly enough to achieve elite status every year and I don’t have enough credit cards to accumulate at a fast rate, nor do I have the money to fly Business. I want to get to my destination the fastest way possible and I’m willing to fly Economy to explore the world. Having said that, I fear even Economy will be increased soon, if any United Exec wants to continue to gut the award chart. Why not do that too? So, I’m crossing my fingers that will not happen. This is a huge bummer and bad news, and I hope Economy is not next on the chopping block.
This is the benefits of the merger between United and Continental Airlines that Jeff Smisek promised us. He stood by his words. What a man!
And now, a bunch of American and US Airways’ employees praised another merger.
Look at the % increase for First Class from US to Asia for instance. An increase of 86%!!!!