We should have known better than to expect an airline to do consumers a genuine solid with positive changes to its mileage program.
United surprised us all by slashing award rates worldwide on partner airlines like Lufthansa, ANA, SWISS, and many more late last month by nearly 10%. After years of charging a flat 88,000 miles each way for a transatlantic business class on a partner airline like Lufthansa or Austrian – compared to 80,000 miles for a United-operated flight on the same route – the airline cut award rates to that same 80,000-mile redemption.
Not so fast. In hindsight, that move was clearly part of its effort to boost co-branded credit card sign-ups by advertising discounted “Cardmembers pay” pricing. Now, those lower rates are only available to United cardholders.
Check out this business class award from Chicago-O'Hare (ORD) to Zurich (ZRH) on SWISS, which is now back up to 88,000 miles in each direction. But look closely, and you'll see the new “Cardmembers pay” pricing of 80,000 miles each way – the same exact price that was showing for all customers just last week.
Paying 80,000 miles for a one-way business class redemption to Europe is hardly the deal of the century, but for loyal United flyers with tons of United MileagePlus miles (and only MileagePlus miles), it was still welcome news.
The same pricing holds true for this business class award from Denver (DEN) to Munich (MUC), flying Star Alliance partner Lufthansa. After United briefly slashed award prices for everyone, the route was bookable for a flat 80,000 miles each way. Now, you'll see the price is back up to 88,000 miles … unless you've got a United card.
But it's not just transatlantic itineraries where we're seeing things revert back to the old status quo. This 12-hour business class award flying Asiana from Seattle (SEA) to Seoul (ICN) cost a more reasonable 100,000 miles each way last week. Now, it's back up to the old 110,000-mile price point for non-cardmembers.
If there's any saving grace in all of this, it's that these lower prices now apply to economy awards, too. In all cases, you'll see a similar 9% savings for United cardmembers, which wasn't true when these lower prices were available to everyone.
Unfortunately for everyday MileagePlus members, the only way to get in on the savings now involves picking up a United credit card. And that's the point.
It's part of a crafty new marketing strategy that could help drive sign-ups (and additional spending) with United credit cards, helping expand earnings from its loyalty program – the economic engine of virtually every U.S. airline.
“We believe that winning brand loyal customers sets up … the potential to double the [earnings] from our loyalty program in the years to come,” United CEO Scott Kirby told investors recently.
These cardmember discounts are nothing new, but this is a new tactic for United to make them even more powerful.
United has offered increased “saver” awards to cardmembers for years. Meanwhile, Delta offers its cardholders a blanket 15% discount on Delta SkyMiles rates.
But United's system is much different – and in some cases, much better.
That's because while Delta offers a blanket discount on all fares, United appears to be offering totally different fare inventory altogether. So while United doesn't offer a blanket percentage discount like Delta, it can offer massive savings like this.
What's more, United is going even further than Delta in offering these discounted award tickets to cardholders booking partner award tickets – something you don't get with Delta's TakeOff 15 benefit, which only applies to Delta-operated flights.
That's a surprise, as partner airlines typically negotiate award rates together in order to determine how much United will reimburse SWISS, Lufthansa, or ANA when a members books those seats with United miles. That means United cut a deal with its partners to offers cardholders these better deals … or, more likely, that United is eating the cost in order to tease and attract more applicants.
When we first highlighted these lower prices, we wrote: “Whether this new award pricing will hold or change again tomorrow is anyone's guess. Welcome to the wild, unpredictable world of dynamic award pricing.”
It wasn't exactly “tomorrow,” but we didn't have to wait too long to find out what United was really up to.
Bottom Line
What first seemed to be a surprising positive change for United MileagePlus members has turned out to be yet another selling point meant to convince more travelers to pick up a United co-branded credit card. Shame.
