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Overnight United unveiled a new MileagePlus award chart with some shocking new redemption rates. They also added an extra award chart so that there are now different redemption rates for travel on United vs. Star Alliance partners, which wasn’t previously the case.
My initial reaction was shock. You know when you see something unfortunate and your reaction is to want to give up on life and cuddle kittens or goldendoodles or something? Yeah, that was me this morning.
But my negative reaction wasn’t because there was a devaluation, but because of how bad it was. I was counting on a devaluation, as I wrote less than two weeks ago. And I was expecting maybe a 15-20% increase in miles required for many markets. Instead in some markets we got an 87% increase in the number of miles required.
New redemption rates on United aren’t bad
The new award redemption rates for travel on United are actually exactly what I was expecting.
- Business class to Europe goes from 100,000 miles to 115,000 miles.
- That’s a reasonable devaluation, given that Delta just changed their saver business class redemption rates to Europe to 125,000 miles.
- Meanwhile 130,000 miles for roundtrip business class travel to Japan isn’t bad either — it’s an increase of just 5,000 miles in each direction.
- The same goes for South Asia, which in business class is going from 120,000 miles roundtrip to 140,000 miles roundtrip.
Actually, I anticipated these rates would be a little bit worse. I figured United would match Delta on their new redemption rates, while in fact United’s new rates are still lower than Delta’s in most markets… as long as you fly United.
So the changes to the United chart represent reasonable devaluations, in my opinion. Ultimately if any “real” currency got devalued by 15-20% every few years, the currency would more or less be worthless, but we know these devaluations are coming when we play this game, and we should expect them. And it makes sense because it’s so much easier to rack up points now than even a few years ago. That’s why “earning and burning” is the name of the game.
Economy class redemptions don’t go up by much in price
It’s worth remembering that most people redeem miles for domestic coach, and the traditional 25,000 mile roundtrip coach ticket isn’t changing. Similarly, international coach redemption rates aren’t going up by much. So really they’re going after those of us that are really looking to maximize our miles, and that’s why it’s important to understand that “our” types of redemptions are the first target for the airlines when they announce devaluations.
But the new Star Alliance award chart… $&@#!
But what on earth happened with United’s Star Alliance redemption rates?
We’re not seeing 15-20% increases in mileage requirements there, but for premium cabin international travel are instead seeing ~50-90% increases. How on earth can they begin to justify that?
From the airlines’ perspective I can in theory see why they’d want to charge different rates for travel on their own flights vs. travel on partner airlines.
- United not only sets their redemption rates for travel on their own flights, but they also determine how much availability there is.
- Largely they’re only releasing award space on flights they otherwise think would have empty seats, so the actual cost of these redemptions to them is next to zero.
On the other hand, they have no control over how much award space partner airlines release. For example, back in the day Lufthansa would release so much first class award space that United began blocking it. They had no control over how much award space Lufthansa released and presumably there’s a fixed cost United has to pay Lufthansa for each seat, so when it exceeded what they were willing to pay they simply began preventing United MileagePlus miles from being redeemed for Lufthansa First Class.
Why these changes are horrible… in United’s own words!
Check out this video clip United put together about the Star Alliance:
In particular watch 0:20-0:50. Can you really beat the quote from United’s Managing Director of Alliances?
“United serves roughly 380 destinations directly. But with the Star Alliance network that network grows to 1,300, which really makes United the world’s leading airline.”
So United flies to fewer than a third of the destinations that are served by the Star Alliance, and that’s what makes these changes so ridiculous.
In most cases you don’t have a choice as to whether or not to fly United. This isn’t an issue of wanting to fly the Star Alliance for a better experience (though that’s a good motive as well), but rather just wanting to get to many destinations not served by United, which is the whole selling point of the Star Alliance.
Just for fun, let’s look at the specific “aspirational” destinations highlighted in the video as great Star Alliance redemption options, none of which are serviced by United:
Now, if you’re looking to fly coach to Fiji you’re likely reading the wrong blog, but at least there’s no price change there. The business class increase is similarly “reasonable” in context, and given that the only Star Alliance carrier serving Fiji is Air New Zealand, the First class price isn’t especially relevant.
The increases to the other “featured” destinations, however, are so bad it’s almost comical. Want to visit Jakarta or Phuket?
There are some great first class products that fly to South Asia, but seriously? 260,000 miles for roundtrip first class to South Asia? 260,000 miles for a saver ticket?!?
Cairo, if possible, is even worse:
It would be one thing if United charged a premium for flying a Star Alliance partner to a destination also served by United (although it would still be terrible for loyal flyers), but in effect United is now penalizing you for their operational choices.
You’ll spend 100,000 more miles to fly to Taipei than to Hong Kong, just because United doesn’t fly there.
The best thing you can do for now
One of the major selling points of Ultimate Rewards points has been the ability to transfer them to United MileagePlus. Chase has several cards that accrue Ultimate Rewards points with mega sign-up bonuses of 40,000-50,000 points.
We have three months till the new redemption rates go into effect, so for now I’d highly recommend taking advantage of the old rates while you can. In a subsequent post I’ll share the “sweet spots” of the United award chart.
MileagePlus is probably the single best Ultimate Rewards transfer partner and if you redeem miles for premium cabins the value of those points is about to go down substantially. 50,000 United miles before February are probably the same as 70,000+ miles starting in February, for example.