United’s new revenue based miles – Good, Bad or Ugly?

United-787-Dreamliner.jpgAs you all probably know by now, United has switched to a revenue based earning model for miles as of March 1st. This change only impacts how redeemable miles (RDM) are earned. It does not impact how Elite Qualification miles (EQM) are earned. EQM (or PQM as United calls it) earning remains the same as last year and is based on miles flown, with fare and class of service kickers. This change does also apply to partner flights, if the ticket was sold by United, and does not apply if the ticket was sold by the partner airline. You would then still earn RDM based on distance. See details and fine print here.

Redeemable miles are what one redeems for awards – travel awards or upgrade awards. Elite Qualification miles are what one earns towards Elite status, and cannot be redeemed. This is hence a very important distinction to understand. Based on what your mileage goals are, how you earn RDM vs EQM really matters.

Show me the money, and status!

The new revenue based model for United is based on two factors – the dollar amount spent on the ticket, and your status (determined by EQM earned the prior year). Here is an easy explanation:

Every flight earns 5x RDM per dollar spent on the ticket (before fees and taxes)

If you are en Elite on United, you earn additional bonus miles per dollar based on your Elite level.

  • Premier Silver – Additional 2x miles per dollar
  • Premier Gold – Additional 3x
  • Premier Platinum – Additional 4x
  • Premier 1K and Global Services (GS) – Additional 6x

So, for example if you spend a $1,000 on a ticket (using round numbers), before fees and taxes, you will earn:

  • No Status: 5,000 miles
  • Silver: 7,000 miles
  • Gold: 8,000 miles
  • Platinum: 9,000 miles
  • 1k or GS: 11,000 miles

On United’s website, one can see the the dollar amount United will use to determine miles earned under the Premier Qualifying Dollar (PQD) column on your MileagePlus statement page. United introduced this data last year when they introduced a minimum revenue requirement for Elite qualification.

Good, Bad or Ugly?

From the airlines perspective, this earning model makes perfect sense. They pay out more miles if you spend more. They dish out even more miles if you are an Elite. In the older model, the miles payed out were independent of how much revenue the airline collected, which obviously can create issues. I have a personal example to elaborate on this point. Last year I flew from Washington DC to Las Vegas (IAD-LAS) and back. Due to scheduling issues I booked the two and fro trips as separate one-way trips. The pricing for each was drastically different. For the outbound, I payed $680 (PQD), while for the return I payed $283 (PQD) only! As this was before United switched to the new model, I earned the same miles on both segments – 4,130 miles. This was determined by the base miles (2,065) and the additional 100% elite bonus I earned being a 1k. From the airlines perspective, this seems unreasonable – they paid out the same # of miles despite collecting less than half the revenue on the return leg.

Under the new model, I would have earned 7,480 on the outbound segment ($680 x 11, as a United 1k Elite) and 3,113 on the return ($283 x 11). For the airline, this seems more logical – pay out more miles for more revenue collected. From my perspective, total miles earned would have beeen 10,593, as opposed to 8,260. So, I would have earned more too for paying out extra.

However, this would have really hurt me if both segments of my journey had been on the cheaper ticket, I would have earned 6,226 miles ($283 x 11 x2), much lower than what I actually earned last year. But, I would have also payed much (~$400) less.

In my opinion, this works out great for frequent (read business) travelers who are not always looking for the cheapest ticket, and not as much for leisure travelers who are looking for deals. Expensive tickets, coupled with Elite status, will work out better.

In the long run, I think all airlines are going to switch to this approach of paying out miles (Delta already has). Hotels have been doing this for the longest times. It makes more sense. As a traveler, it rewards me for how much I shell out for my travel. My fear is that over the long run airlines will also switch to a revenue based rewards too. Delta is already on that path with their ‘non-published’ rewards chart.

Your thoughts – good, bad or ugly? Leave a comment…

Comments

  1. Much of my air travel is to Asia. Every Asian airline I have traveled on provides better food and service than United. I used to fly United frequently but with the new system I will not fly United again. Ever since the merger with Continental things have gotten worse and worse and frankly, I can not think of a single improvement since the merger. Good bye United.

  2. I agree with Edward. I am lifetime Platinum and have given up in Smisek and crew. I just flew a 447 actual mile segment (SAN-SFO), in the old days I would get a minimum 500 miles plus bonuses. My most recent trip yielded me 463 RDMs with the bonuses. Also, the actual distance in their system is now 235 miles as opposed to 447 last year. Where did the missing geography go?

  3. @DaveO, that is surprising to hear. The website says 500 minimum for Elites. I would love to see what others experience or if this was an error. Was this post March 1st?

  4. @Edward, agree with you fully on the service and quality of the soft product is exceptional with the Asian airlines.

  5. Yes, it was on the 5th of March this year. I got 500 EQM but only 423 award miles for the SAN-SFO segment. Their booking site still shows it at 447 actual miles between the two cities.

  6. I just few from Baltimore to Portland and back and earned 780 miles for a 4700 mile trip. Coupled with the fact that 11 out of 12 segments I’ve flown since January 1 were delayed by at least an hour, United isn’t looking like a great choice for customers looking to be loyal.

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