United Airlines is following Delta Air Lines, and for flights on or after November 15, 2019, there will no longer be an award chart listing a fixed amount of miles needed for a free ticket to the places it flies using its MileagePlus loyalty program. It will move to dynamic pricing, which is based on demand. An award ticket to Paris might cost 50,000 miles or it might be 500,000 miles depending on when you want to go and when you are ready to buy.
It’s a 180-degree turn from where frequent flier programs started. The promise then was, fly our airline, earn X miles, and get a free ticket to Hawaii. That was nearly 40 years ago, so clearly, times have changed.
United Airlines decision to stop publishing fixed award levels and instead pricing mileage redemption flights based on supply and demand means frequent fliers won’t know how many miles they need for those tickets to Hawaii until they are ready to buy them. Photocredit: Getty
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Back in the early days of frequent flier programs, about 40% of airline seats went unfilled. At the same time, low-cost start-ups like People Express, New York Air and Air Florida were threatening the legacy carriers that were trying to figure out how to re-invent themselves after the industry was deregulated.
The challenge was real. Among the largest U.S. airlines of the day, some of the biggest and best known failed or were swallowed up in mergers. From an industry that had a number of significant players, names like Pan Am, TWA and Eastern went away then with the latest round of consolidation, US Airways, Northwest and Continental disappeared as well.
A million miles away. Award tickets on Delta Air Lines now cost up to a million miles after it stopped publishing fixed redemption levels. At the same time, some award levels are lower than before.
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Today there are only three network airlines in the U.S., and profits and profit margins are robust. In fact, Doug Parker, the CEO of American Airlines said back in 2017, “I don’t think we’re ever going to lose money again. We have an industry that’s going to be profitable in good and bad times.”
With limited competition of significance, the big three, Delta Air Lines, United Airlines and American, have been playing the part. While introducing newer and better seats for customers who pay as much as $10,000 to fly in international business class, they’ve been on a mission to let everyone else know they can pound salt, so to speak.
Sure you can still join their frequent flier programs for free, but if you buy cheap fares, you’ll earn fewer miles, or sometimes none at all. You’ll also pay extra to check your bags, get a window or aisle seat, or a sit near the front of the cabin, and of course, an exit row. For the most part, free meals in coach on domestic flights went away years ago. So did pillows.
Seat rows are closer together and more seats are in the same space. In fact, on some planes, the airlines even found a way to add seats in each row by making aisles and seats themselves narrower. Even the size of those narrow toilets is getting smaller.
While it’s not the airlines’ fault that getting through airports often means long security lines, for the vast majority of domestic fliers air travel today is at best a means to an end, the way to get there and to be avoided if at all possible.
Flights today often go out full, and if you miss your connection at a hub, you might have to wait until the next day to get on another flight.
Yes, frequent flier programs give you more ways to earn miles, and it’s not uncommon to be able to score 100,000 miles by opening up an affinity credit card tied to a frequent flier program, however, those bonuses are less meaningful.
Award prices have been going up for years, however, Delta’s move to go to dynamic pricing for its SkyMiles program four years ago took it to a new level. No longer did Delta publish charts telling you how many Skymiles it would cost you for that ticket to Hawaii.
Every flight and every day could be something different, based on demand. What’s more, the price you see now for a flight next January might be different next week or even tomorrow.
The idea was while some award costs would go up, others would go down. Let’s take the kids to Bismarck, North Dakota in January. It’s a great deal. Supply and demand.
On various blogs, you can find screenshots showing business class tickets to Australia and Asia for as much as a million miles. Even when those aspirational awards went from 70,000 to 90,000 to 110,000, 130,000 and even 150,000, the road warrior whose company mandates cheap fares or even the occasional traveler could imagine sipping champagne and reclining their way to Sydney or Paris.
If you’re flexible, United promises you will have opportunities to fly using fewer miles. That probably eliminates any of their customers who have to plan vacation trips around school holidays. If you need to change your travel plans, you will have to pay the going rate for the new flights, something that could possibly preclude you from making the trip as those alternatives could mean a significant but unknown increase.
For anyone who has ever worked in sales, they will tell you the first thing they look at is the targets for which they earn specified commissions and bonuses. The idea is by providing a goal line, a salesperson will work hard knowing if they move X amount of cars or carrots, they earn Z rewards in return.
The new normal for airline programs if American follows Delta and United will be that you have no idea how many miles you need to go anywhere until you are ready to make your reservation. It could well be that while your dream trip to Greece is now 500,000 miles, Budapest is 100,000 miles, and well, Budapest is a nice place to visit, too.
By minimizing the number of redemption seats on popular routes at popular times, or at least charging an exorbitant amount of miles, the airlines may, in fact, be helping fulfill Parker’s profit prediction. In doing so, they may be making decisions that prove beneficial for both investors and employees who share in the profits.
Airline executives may be right in thinking they don’t need to offer price shoppers anything more than the lowest advertised fare, and they can win their share of business travelers via corporate contracts.
Of course, the pitch for those cobranded credits cards the airlines flog on every flight is still filled with promises of free travel, palm trees, Paris and sandy beaches. Flight attendants get a commission for each passenger they sign up. My guess is they have a specific sales target, not some speculative level.
Not publishing award charts is just another indication why it doesn’t make much sense to love your airline. While airlines will counter more people redeem more seats to more places, chances are if you want to make the programs work for you, be prepared to tell the kids instead of Disney World, Dollywood is also lots of fun. Flexible is the word of the day.