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This year has been a tough one for frequent flyers with big mileage balances. Delta, United, and Southwest have each increased the price of many popular rewards, hurting their most frequent flyers.
But it’s not the first time this has happened – far from it – award chart increases happen regularly, though not always in such dramatic fashion.
One of the biggest changes to the price of award miles happened 25 years ago…in the ‘good old days’ of 1988. And United led the charge, including more than doubling some first class award prices.
We don’t usually write on the history or background of mile programs (this is a credit card site), but with the recent large increase in the cost of United awards a visitor passed on interesting articles talking about United’s big changes in the late 80s.
The airlines had inflated mile balances by offering triple mile promotions on many flights, while mile credit cards were introduced, along with the bonus offers to accompany, all surging the balances of accounts and stimulating demand beyond what the airlines expected.
United led the way with increases on premium awards…
In January 1987 United raised the price of a number of awards, like 2 first class tickets, unrestricted, to Hawaii from 75,000 miles to 90,000 miles. It also stopped allowing upgrades from discount fares, and limited the validity of award vouchers to 6 months from 1 year.
It tried to hide it…
Its 1987 change was “tucked away in the fine print of monthly frequent flier statements” in late 1986, while its recent 2013 change was only announced via posts on niche frequent flyer program websites and the uploading of a new award chart to United.com.
Frequent flyers raised a ruckus.
Attorneys general threatened involvement, flyers filed class action lawsuits, the Hawaiian legislature passed a resolution against United. But Jim Goodwin (who ran marketing but later became CEO) noted the fallout from that, and they relented with a grace period for the old mileage levels in April 1987, though kept restrictions on upgrades and expiration dates. The United class action was settled in 1989, with people who redeemed between January and May 1987 getting some refunds.
But United turned unfriendly fast…with the ‘Saver’ award
By 1988 United’s ‘friendly’ rollback changed. A lot.
United announced it would more than double the cost of 2 tickets to Hawaii in First Class to 160,000 miles from 75,000, among other increases, effective July 1989!
To blunt the impact of a massive increase in the price of unrestricted award tickets, United introduced the concept of the Saver award, a 2nd tier with limited availability in the same way as discount airfares, at a lower mileage price.But back then they promised Saver awards would be allocated to at least 50% of seats. And they gave over a years notice before the price increase on the other awards.
Today, fewer than 10% of seats are made available at the Saver level, and changes are made with just a few months’ notice.
And they made no bones about the program being complicated. John Zeeman, United`s executive vice president of marketing in said in 1988:
Not so friendly then, either. Though they did add the ability to ticket awards in the name of friends and family. And all miles earned before July 1, 1989 could be redeemed under the old rules.
Mergers hurt too…
United wasn’t the only culprit then. Delta Airlines bought Western Airlines in 1987. Western charged 50,000 miles for 2 round-trip tickets to Hawaii. Delta promptly raised it to 80,000 miles.
Airlines like to match…
United’s 2013 increase came two months after an increase by Delta. And it’s expected American and US Airways may act soon. Back in the late 80’s the New York Times noted “American plans to introduce a new award for for domestic travel that matches United’s offer.” And that gave birth to capacity controls on award tickets across the majors.
The lesson is the same…
Award prices always go up, generally faster than ticket prices. So don’t hoard them saving for a trip years down the line. Use them for trips you can take in the next year or so, especially if you have a big balance and can afford the big first and business class awards that are at risk of the biggest price increases. For domestic awards, you’re probably pretty safe, those haven’t moved around much over the years.
And not all miles are created equal. Airlines have strengths and weaknesses that make some better for getting awards to Europe than others, and some better for Hawaii than others. You’ll be rewarded if you know.
And as much as mile prices go up, and people 25 years ago called the pending destruction of programs, they remain more popular than ever.
Then and now for some rewards 1980s vs today…
Hawaii in Economy – American Airlines – 2 tickets – any seat
US Domestic in Economy -United Airlines – any seat
US Domestic in Economy – United Airlines – restricted availability
Hawaii in First Class – United Airlines – 2 tickets – any seat
More on changes to United miles
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