Why United Had to Devalue it’s Award Chart

I’ll warn, you may not want to hear it.

I for one have done posts claiming that United is the best frequent flyer program. Well, I’ve done tons of them. Plus, I’ve done who knows how many posts on United Stopover Rules, and United Routing Rules. But maybe I’ve misled people in how I view my own miles.

Before I say how I’ve misled everyone one, let me back up and give my stance on what’s going on here. This is important groundwork for my point about my opinion on burning miles, this devaluation, past devalutions and upcoming devalutions. And why it’s right on schedule…

Once upon a time…

The game has changed a lot. Never has it been so easy to earn miles, period. One time I signed up for an Amex card that gave me 100,000 Amex points. By the time they posted, there was a 50% bonus transfer to British Airways. After the spend requirement, I got 160,000 BA miles from one card!

At the time, 40,000 miles was enough miles for a ticket to Easter Island and at the time there were unlimited stopovers. It was basically enough for me to fly us and two friends to Santiago, Easter Island and Lima (to/from NYC).

And around that time Chase really made a point to say they have the best cards for travelers. And they did and do. And do you remember that before the merger Continental was a transfer partner to Amex?

Chase made exclusive deals with Hyatt, Marriott, United, etc…

The money to buy the points from the hotels and airlines is too tempting. It’s too good. Especially in the struggeling airline world. They need that stimulous package from the bank.

And yet it devalues their program

This pimping out of miles from the airline programs is exactly what wound us up here. On one hand I love it, because I benefit by getting the miles.

But the other day I got an email from a friend/reader Julie. She had three trips planned to Europe next year. Three different locations three different months and she found basically no business class availability.

I looked myself, and this is what I saw (yellow means there is no premium cabin award space):

In her words, I’ve never seen such sparse availability.

A year ago this chart would have been green. Now, nothing premium is available on any of the routes she’s looking for. Nothing.

If availability is this bad right now, and the amount of miles given out continues to increase dramatically compared to the number of new flights, imagine this chart next year. With no change, Star Alliance availability would be hopeless.

If I’m a United flyer, I’m earning at the same rate. And all this credit card shenanigans has just taken up all my award space to Europe next year! Bummer for United flyers, great for us. Bummer for Star Alliance flyers!

I wonder what percentage of the premium Star Alliance awards were United? I would have no way of knowing if there was pressure from the greater Star Alliance community, but certainly, something had to change. And it did.

Not only did United need to change, and Star Alliance need it to change, but I kind of feel there is incentive now to devalue. Think about it. Even if your favorite award went up 50% or more, I doubt the pay out from Chase has changed much, if at all! I can’t say that for sure, I really have no clue. Honestly. But I assume it’s mild.

Same thing with Hilton. Their prices double, but their income from Citi? I doubt it halved. Seriously. They take a good income stream and make it better by devaluing the points.

Although I think United is completely motivated by the first points, it probably doesn’t hurt.

But then again, free market rewards the best product. So if people stop transfering to United, Chase will surely devalue them. It’s how this type of business works. Perform or get cut, or at least get paid less.

 

I don’t claim to know who will get devalued when, but the biggest pimps of miles/points, are in the biggest danger. Hotels, I don’t feel have hit a wall yet. Their availability is still strong. And ultimately, two Hyatt nights, or Platinum status for someone who stays 2 nights a year, is extremely minimal in the grand scheme of things.

Also, the most popular programs (which is nearly the same thing as biggest pimpers) are in danger. They can step back and take a look at their rewards programs and quantify value. Well, they can look at how much they sold the points for to the bank, and for how much you redeemed them.

But programs that aren’t pimps to credit card companies are hoping for something not as easily quantifiable – loyalty. They want loyal customers, and it could be well within their plan to give free nights or what not. So I don’t think programs like IHG are on the more likely end.

But like I said, I don’t know who is next, but it probably won’t surprise me.

Thus, miles are about burning

Since Carrie and I post every single spend we make here, you may notice that we use points that are unaccounted for at this time. Except here’s the thing, we are almost out of miles and points completely.

Shocking? Yet, it’s true all the time. We never keep large stashes of millions of miles waiting to be devalued. We earn and burn. So for instance right now we’re nearly out of Club Carlson points. If we earn any more it will be posted.

And the big thing is, almost all of our hotel points are from promotions and bonuses. So you can actively see what promotions we’re going for. That’s the intention here.

What’s my point?

The point is, last year if you looked at the stats, you would see us going all in on a Club Carlson promotion. But it’s dead now. While I may have raved about that promotion and said how awesome it was, it is gone. I sure hope they bring it back, but it’s been over a year now and there’s no sign of it (still crossing my fingers).

Right now I’m raving about the Big Win promotion.

Okay, really what’s the point here?

For the last year I have raved about United’s routing rules. Post upon post calling them the best program. And they were.

What I failed to communicate

All these programs are in danger of devaluation and I never save points for years. My miles account is this: about 90k AA, 50k Lufthansa, and 130k United. That’s it. Before the devaluation starts in February I will likely burn all the United miles.

That’s it. Earn and burn. This devaluation is not the end of the world to me. Why? Because I’ll go earn and burn somewhere else.

If Club Carlson never does another big 50k promo again, it doesn’t matter to me. I will go earn and burn somewhere else. It should be pretty apparent where that somewhere else is (IHG). And when that train slows down, I’ll hop on another taking off.

If you have 1 billion United miles because of me. 1) Burn them all when you can, on what you want. and 2) I’ll still be teaching you how to maximize your United miles.

Best use now?

Here’s the thing, First Class prices went up across the board. It sucks. Business Class prices went up. And economy, barely went up and not everywhere. Since my head fits in economy class, I’ll be fine. I’ll complain all the way to Thailand (ask Carrie), but at least I’ll get there.

The big bummer, is that Southeast Asia went up. It went up a lot – from 65k to 80k. This is seriously a bummer as it’s one of the most powerful regions and thus is crucial to many tricks.

However, I’ll be showing tricks, work-arounds and the new best use of United miles soon. So stay tuned.

Conclusion

In my opinion, United had no choice. They will not be undoing this as it’s gone too far. This devaluation is a product of their success in having a good booking site and alliance. And ultimately, it is the product of selling lots of miles.

They did this to themselves. You have no one to blame but United – this is where the road they chose led them. But you have no one to thank but United and Chase.

This is the road for other programs too. If programs were smarter, they would innovate into a new system that is simpler and yet rewarding. This will happen. It won’t be all good, but the road we’re on is all bad except for the fact that you didn’t do anything to “earn” your miles in the first place.

Again, don’t get me wrong, I’m not happy about this. And I’m not saying it’s anyone’s fault but United. Instead, simply that the actions they started taking years ago led to this. The more miles given out, the more this has to happen. Still, it was a rock and hard place. Lose money, lose availability… or devalue.

There’s really nothing good about this change. But I will still be showing great uses especially in economy, and in business. Next week.

I’ll also continue the series on United miles to specific places. I figure people are going to be burning a lot of United miles in the next 3 months anyways.

To me this is a lesson on how “the best” program can fall quickly. Therefore, it’s a lesson on earn and burn. My philosophy is so burn heavy a devaluation can only really catch me but so off-guard. I mean, despite all my talk about how I do all my spending with United miles… I don’t have that many. Enough for my next trip (coming up soon).

Did you think these miles are for collecting? If I’ve misled about this, sorry.

Later I’ll have more posts on the New Best Use Of United Miles and another on why I think the airline industry’s backwards business tactics of increasing fees and devaluations will ultimately pave the way for a great, honest and rewarding airline to come to the top.