Oh man, oh man, oh man. I love weekends, but I hate waking up Friday mornings. Why? Because all the bad news in the airline and hotel industry seems to be announced overnight on Thursdays.
Well, United has just announced a massive devaluation to their MileagePlus award chart, and I don’t think it’s unreasonable to say that it’s unprecedented. I actually think it’s the airline equivalent of the Hilton HHonors devaluation we saw earlier this year.
United MileagePlus award chart changes kick in for tickets issued on or after February 1, 2014. That means you have until January 31, 2014, to issue award tickets at the old rates.
You can compare the old and new charts here:
Not only are they greatly increasing the number of miles needed in many markets, but they’re also separating out award charts — now there’s a different award chart for travel on United vs. travel on their Star Alliance partners. This represents a pretty big change, since up until now award costs have been the same regardless of whether you’re flying United or one of their partners.
Changes to United’s saver/standard award chart
The changes to the United saver/standard award chart aren’t horrible. Basically in many cases they’re just matching the highest rates charged by other major US airlines. In many markets rates stay the same, and mostly we’re seeing increases of 2,500 to 7,500 MileagePlus miles one-way.
The biggest increase we’re seeing on the award chart for travel on United is for first class travel between the US and Middle East, where they’re going from charging 75,000 miles to charging 90,000 miles. That’s basically matching American’s redemption rates in the market.
If this were the extent of the changes I’d consider them reasonable.
Changes to Star Alliance award chart
This is really the worst part of the changes, especially for those that like to redeem miles for first class travel on Star Alliance partners.
The increase in mileage required for travel on Star Alliance partners roundtrip is as follows (I bolded the ones I consider to be especially bad):
- US mainland to Alaska: 10,000 miles economy, 10,000 miles business, 10,000 miles first
- US to Southern South America: 10,000 miles business, 5,000 miles first
- US to Europe: 40,000 miles business, 85,000 miles first
- US to Middle East: 5,000 miles economy, 40,000 miles business, 130,000 miles first
- US to Central Asia/India: 5,000 miles economy, 40,000 miles business, 120,000 miles first
- US to Japan: 5,000 miles economy, 30,000 miles business, 85,000 miles first
- US to South Asia: 15,000 miles economy, 40,000 miles business, 100,000 miles first
- US to North Asia: 5,000 miles economy, 40,000 miles business, 100,000 miles first
- US to Oceania: 30,000 miles business, 70,000 miles first
- US to Australia/NZ: 25,000 miles business, 100,000 miles first
Okay, so on second thought they’re almost all really, really bad.
Some first class redemption rates have increased by almost 100%, which is the highest I think I’ve ever seen. Going from 150,000 miles roundtrip to 280,000 miles roundtrip? Wow!
But the real problem with increasing the number of miles needed for a Star Alliance redemption so drastically is that it’s not like you have a choice as to whether to fly United or other airlines in many markets. For example, say you want to fly to Dusseldorf. If you book United from Chicago to Frankfurt roundtrip in first class, it would run you 160,000 miles under the new United chart, while if you wanted to include the tag flights from Frankfurt to Dusseldorf (which makes it a Star Alliance award) you’d suddenly pay 220,000 miles.
The whole benefit of an alliance is that that they take you places that “your” airline can’t take you, and by creating a separate award chart for travel on Star Alliance carriers, they’re massively jacking up the cost of reaching all the destinations they don’t serve on their own.
Overall implications of the devaluation
On one hand I’m really not surprised by the devaluation. I wrote a post less than two weeks ago predicting a devaluation was imminent. In the past year hotels hugely devalued their award charts, while now it’s the airlines’ turns, given record profits and load factors.
Ultimately these changes reinforce what we already know about miles. First of all, they’re not a currency you should ever “invest” in long term. They’re extremely valuable and lucrative, but it’s best to have an “earn and burn” mentality. The quicker you can cycle through them, the better. Also, while these changes suck, in absolute terms our “buying power” with miles really isn’t decreasing. It’s so much easier to earn miles now than even five years ago. This hobby is always about staying ahead of the curve, and we’ve been ahead of the curve with the old award chart for a while. Now it’s time to get ahead of the curve on the new chart.
Now the questions is when American and US Airways will match. Delta has already announced a devaluation for international premium cabin travel as of June 1, 2014 (kudos to them at least for giving tons of advance notice).
The question now is whether American and US Airways will match — I shared my thoughts on that in this post.
Anyway, it’s a sad day for the mileage world…