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

Frequent Flier Programs, United

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.

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8 comments on “United Makes a Partial Move Toward Dynamic Award Pricing On November 1

  1. “As availability tightened over the years, United responded by creating the Standard award.”

    In fact capacity controlled awards were introduced 7 years after frequent flyer programs were launched. The standard award came first!

  2. Southwest and JetBlue don’t publish award charts either. When Southwest devalued the value of points last year they didn’t announce it. Doesn’t seem any different than what DL does.

  3. Ok, I applaud transparency but I’d be curious as to how many people collect miles with the intent to cash them in on an aware flight soon as they cross the magical threshold for the free flight?

    My point is that I’ve always thought of using miles as an equation of what the cash value equivalent of them are. Perfect example, I flew to YUL on an award ticket that cost 18,000 skypesos r/t yet when I was shopping the flight to purchase it was $500. That’s about 2.7 cents/mile, my best redemption yet. Meanwhile a flight home for Christmas is 40,000 skypesos or $300…there I bought the ticket. So I don’t really mind a moving target as it’s a system that can be gamed effectively if you’re savvy about it.

  4. It is no more logical to think that award tickets should have a pre-defined price than it is to think that one should be able to watch a published fare and then expect it to be there when you want it to be.

    More significantly, there are multiple surveys about award availability and at least some of the most recent show that DL has more availability at lower award levels than AA or UA. While award availability and pricing is as complex as published fare pricing, airlines would not be able to continue with whatever award strategies they use if the public did not accept or use them. If the legacy carrier award systems – one or all – are not acceptable, then customers will go elsewhere if award travel is as big of an issue as some want to believe it is.

    With 9 large jet airlines in the US and dozens around the world, customers should make the choices they believe are in their best interest while airlines will fill seats on the very same basis.

  5. I wish United would stop “renaming” things. God forbid they should keep it simple and just say such-and-such award will now be 35,000 miles instead of 25,000. Period.

  6. I just got in under the wire for a round the world trip with United in business early next year. Two of the awards were saver and one standard. I would have had a pay a lot more miles with the standard now.

  7. United just sucks so bad. I swear flying as a million miler/1K, it feels like everyone has given up. I guess the cargo model at CSX is Munoz’s model for United. They are all the same, but United is eager to join whatever race to the bottom with too much joy and expediency.

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