On a similar note...
On a similar note...
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United Airlines has announced a change to its frequent flyer program that’s likely to have a big impact on everyone who books a reward flight departing after Nov. 15, 2019.
The airline’s award chart — the system long in place for determining how many United MileagePlus miles you need to get a free flight — is going away. In its place will be a new pricing system that “will now fluctuate based on a variety of factors, including demand,” as the airline puts it.
As it's stated, that’s not necessarily bad. But there are two reasons to believe that this isn’t good news for travelers who collect MileagePlus miles, those who hold United credit cards, or even people who participate in partner programs such as Chase Ultimate Rewards®.
» Learn More: Find the best airline credit card for you
No more predictable pricing
First, no chart means you have less information about how much your next reward flight will cost. Historically, you were guaranteed a price. Round-trip economy flights in the continental U.S., for example, were priced at 25,000 MileagePlus miles off-peak and 65,000 miles at peak time. Round-trip coach itineraries from the mainland to Hawaii were 45,000 miles off-peak and 90,000 during peak times. And some short flights to places less than 700 miles away were at times 20,000 miles round-trip.
Similar tiered pricing for travel to South America, Europe and pretty much every place else in the world guaranteed consistent, predictable pricing.
NerdWallet values United miles at 1 cent each.
Consider the valuation when looking at the price of an award ticket to decide if it's better to use miles or pay in cash. For example, if an award ticket is 15,000 miles, based on a 1 cent valuation, the award is worth $150. If you see that same flight for $110 on Skyscanner, you're better off booking the flight in cash and saving your miles for another redemption.
» Learn more: Travel loyalty program reviews
Of course, there will be some winners in this new system. Seats with the lowest demand will require fewer miles than previous award charts allowed. In fact, that’s already begun for a few itineraries — such as Newark to Fort Lauderdale in mid-May, when you can find seats starting at just 10,000 United miles round-trip.
Miles may be worth less
The second reason to be less than thrilled about these changes is that it’s a safe bet this amounts to a devaluation of miles. Because prices over the long term move up and not down, any new pricing structure is likely to benefit the airline overall because it can charge more points for travel. Known as devaluation because it means your points are worth less, this is basically the travel rewards equivalent of price inflation.
Peak times, such as around the holidays, will mean pricier flights. For example, round-trip economy from Newark to Honolulu over the Christmas holidays would have cost no more than 90,000 United MileagePlus miles under the old system. Now those seats cost up to 110,000 miles.
» Learn more: Is the United Explorer card worth its annual fee?
For anyone who holds a United-branded credit card, this means that the miles earned by conducting transactions will likely be worth a little less than they are now, though with no published chart it’s impossible to say how much less.
And anyone who participates in a rewards program that partners with United, like Chase Ultimate Rewards®, will pay the price as well. That’s because Chase lets members transfer Chase Ultimate Rewards® points to United MileagePlus miles at a 1:1 conversion rate. If United miles are worth less, that means you’re getting less value for the Chase points being transferred.
How to Maximize Your Rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2020, including those best for:
Airline miles and a large bonus: Chase Sapphire Preferred® Card
No annual fee: Wells Fargo Propel American Express® card
Flat-rate rewards with no annual fee: Bank of America® Travel Rewards credit card
Premium travel rewards: Chase Sapphire Reserve®
Luxury perks: The Platinum Card® from American Express
Business travelers: Ink Business Preferred® Credit Card
Planning a trip? Check out these articles for more inspiration and advice: Pros and Cons of United’s Huge Premier Status Changes 6 Things to Know About United Lounges Why the United Explorer Card is great for practical travelers