United Makes a Partial Move Toward Dynamic Award Pricing On November 1

Happy 4th of July to all my American readers. There will be no post tomorrow since I’ll be busy stuffing myself with hot dogs. I’ll be back as usual on Thursday.

—
For bookings beginning November 1, United is rolling out a change to the MileagePlus program that, well, you may or may not like. While the cheapest “Saver” award will remain at a fixed rate, the highest “Everyday” (formerly called Standard) award will now vary as United sees fit. Until we see what United actually does with dynamic pricing in practice, we won’t know if it’s good or bad for the traveler, but chances are it’s a mix of both. For the airline, it’s likely to be a good move, and one that strikes a balance between what other programs do. Right before this was rolled out last week, I spoke with Praveen Sharma, VP of Loyalty for United, to learn more about the airline’s thinking.

United has two award levels today. There is the Saver award which requires the lowest number of miles. Saver awards are highly capacity-controlled, so you won’t have an easy time of finding availability. (That being said, United says that recent changes to the algorithm mean there are 11 percent more flights with Saver seats available.) Saver awards are the only ones you can redeem on partner airlines. That combined with the low mileage cost makes them the most desirable by far. And in this new system, the Saver award mostly stays the same except for some minor increases on some international awards (eg business class one way to Europe from the US on United goes from 57,500 to 60,000 one way) and minor decreases on short-haul international flying.

As availability tightened over the years, United responded by creating the Standard award. This was double the miles required by the Saver award, was only valid on United flights, and originally, had no limit on the number of seats that could be sold at that level. Over time that changed with now only top elites and some credit card holders having true last seat availability. Standard awards may not be available on all flights to all people, but they’re still much more widely available than Saver awards. That was a crude nod to the idea that when there is higher demand for flights, people should pay more… whether with cash or miles.

But now, the days of the Standard award are numbered. On November 1, it gets replaced with the Everyday award. The name change itself is just marketing fluffiness, but it’s the way these awards work that is the meat of this move.

United will now no longer have a flat mileage amount for the higher award level. It will float depending upon demand for that particular flight. There is some nuance here that makes this a better mix of both American and Delta’s approach to this type of award.

American has 3 levels for its so-called AAnytime awards. The cheapest, Levels 1 and 2, are fixed amounts that are published on the award chart. The third is a magical, mythical beast. As American describes it, “There are select dates that require a higher number of miles (in addition to Level 1 and 2 awards).”

That unpublished garbage is frustrating… but it’s nothing compared to what Delta does. Award chart? Nah, you don’t need that. Delta’s SkyMiles will be priced at the rate the airline wants. There is no maximum (nor minimum, I suppose), but travelers have absolutely no sense of what it will be. Or even what it could be. Here’s Delta’s “award chart”:

Within and between the Continental U.S., Alaska and Canada, One Way Award Tickets start at 10,000 miles (plus taxes and fees).

This is not only light on information, the little it does say is wrong. There are awards for less than 10,000 miles. But let’s not get stuck on Delta here. This is about United.

Praveen was emphatic in pointing out to me that there will continue to be an award chart for United. And on that award chart, you’ll find one Everyday award amount posted. That is the upper bound of what United can charge, but it’s entirely possible you’ll be charged less.

Here’s a handy-dandy table to explain what the heck I’m talking about using a simple Los Angeles to Indianapolis one way flight in coach:

Award	Old Level	New Level
Saver	12,500	12,500
Standard/Everyday range	None	Between 12,500 and 32,500
Max Standard/Everyday	25,000	32,500

It’s not hard to see what’s happening here. At the very worst, United is raising its Standard award levels and giving them a new name. The key is that there’s now this ability to float within the range to help stimulate demand on flights that could use some more assistance. Praveen was very clear that these won’t be directly tied to the selling fare amounts. If you think about JetBlue or Southwest, that’s not what’s happening here. But the airline can vary the levels, likely in multiples of 100 to avoid getting too into the weeds, to move demand around.

And now you can see why this may or may not be good for travelers. It just depends on how much variation there truly is. When I asked Praveen how likely it would be to see awards for levels below the maximum amount, he said it will be “more common than exception.”

From a business standpoint, this is certainly a sensible way of doing it. There is still that aspirational Saver award at a fixed rate for which people can save up miles. On the Everyday award, having that upper bound sets customer expectations well, and it could very well result in a surprise-and-delight scenario when rates are lower. In a sense, this is what Delta has been doing. I’ve been surprised to find some mid-level awards on the airline that were priced fairly. The problem is, Delta won’t tell you what it’s doing. The secrecy and tone of arrogance make you always feel like you’re getting ripped off. With United, the airline is putting more cards out on the table, and I applaud the company for that. It does mean awards will be more expensive on that peak Sunday after Thanksgiving, but depending upon how the inventory is managed on other days, this could be a nice new option for people to use their miles.