United Airlines sent out an e-mail last week that trumpeted the news – “It’s Official: Miles No Longer expire.” For the longest time, United Airline miles would expire after 18 months of no activity. But, now, they will not. Is that good news for us, overall?
If United is Not Expiring Miles, How Are They Going to Make Up That Revenue?
Here’s the thing with miles expiring – it is actually a nice, lucrative thing for airline programs. The reason is that you have to have some activity within 18 months (or 24 months) to ensure that they miles you already earned will not expire. For those of us savvy with programs, we either never let it get to that point or reset the clock with something like a $.99 purchase through a shopping portal.
United Made Good Money on Miles Expiring
With the many, many travelers that earn miles and do not study the program and award charts like we do, they get the e-mails about miles expiring and they sometimes panic and buy miles to keep the account alive and well – it may not be much but it could be around $20. That amount really adds up with the many travelers that want to keep their miles alive!
The other way that programs offer as a way to keep the miles alive is through holding an airline credit card. Since anything charged to it will count as activity (since you earn airline miles with spending) an the annual fee being charged will let you keep it open as well, it is easy enough to not even care – so long as you have the airline credit card. In many cases, that is around a $95 annual fee. More money for the airline.
Finally, what about the people that do let their miles expire? Well, they need to pay a reinstatement fee (which United still requires for any miles that expired prior to July 2019 – and as long as only expired within the last 18 months). There is a “sale” from United on that now but it would still cost people between $35 – $490 to get back miles they had already earned in the first place – which made United money already!
The alternative is to do a challenge which is also on sale and costs $70 and involves giving more money to United through a flight or a new credit card from United. Either way, United makes money on your loss.
So, Where Will United Make Up This Lost Revenue Now That Miles Do Not Expire?
Enter November, 2019! That is when United will ditch their award charts and can then charge pretty much whatever they want for awards. Since Delta and United like to copy each other with everything, just look at how Delta has done it with award charts. Business flights are much more expensive 90% of the time while they run flash sales on economy awards around the globe.
United will still be able to clear a massive amount of miles off their books by charging more for the same awards that cost fixed rates now.
So why did United announce they were ending mileage expiration? They will still be making a lot of money and clearing miles after the loss of the award charts but by announcing this “customer friendly” move now, they can seem kind and measured as they consider their customers.
But, they would never have made this move if they could not clear miles away another way which is why November is not going to be a nice time for many of us that love the United MileagePlus program for great awards.
To answer the opening question – yes, it is a good thing that miles will not expire going forward. But, it is not a totally free gesture from United as it will be balanced soon.
Featured image courtesy Markus Mainka / Shutterstock.com