Wednesday, January 24, 2007

United announces shorter expirations on miles

In case you haven't noticed, last week United Airlines announced that the expiration time for miles in their accounts has been reduced to 18 months (from the previous time of 3 years). The expiration time is extended by any activity related to your miles (earning or using miles in any way) so for most of it it won't be an issue, but people who stop flying for any extended period of time will have to keep an eye on their accounts to make sure they don't inadvertently lose their miles.

This is the 3rd time that United has changed their policies with regards to expiration of miles. Initially the miles were good forever. Later they changed it so that they expired after 3 years, regardless of activity. The last change made a number of years ago, was to extend the expiration to 3 years from last account activity (thus giving you the miles forever as long as you keep doing some form of business with them).

Why has United done this? I think it is because that the millions of miles in user's accounts are a liability to United that has to be carried on their books and this give them a way to decrease that liability by removing miles from people who are not actively participating in the program. It also has the side effect for United that those people who are worried about loosing their miles will be encouraged to do something to retain those miles (and I'm sure United is hoping that it's some way of earning miles since United would make more money that way.

I, of course, won't have anything to worry about given my travel schedule.

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1 comment:

babakh said...

I just received a similar notice from AAdvantage program:

At first, I was a little surprised by this new trend (customer retention, etc), but I don't think it matters to UA or AA...

The fact is that "non-Low Cost Carriers" earn majority of their profit / ticket from business travellers than leisure travellers (pricing model such as discount for Saturday night stayover).

Non-LCCs continue to offer attractive benefits to the business travellers as long as they keep travelling with them. LCCs simply don't offer such services.

Finally, a lot of business travellers have to take these airlines, because corporate travel policies and contracts restricts them - or - these airlines may offer more direct routes than some of the LCC.

So, I don't think "leisure travellers" care much about MileagePlus or AAdvantage stauts. To them, Price is the only determining factor.