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United Airlines is changing the price of seats purchased with frequent flyer miles. On November 15, the carrier moves to a system that allocates seats based on demand rather than specific levels. The pricing strategy will allow United to raise premium prices when demand is high for a given flight and reduce costs when there are more seats available.
Parts of this system came into effect last month when several frequent travelers found that seats on some routes were paying below normal rates. In addition, a bracketed version of Dynamic Pricing also came into effect in the airline for the MileagePlus daily prices every day last year. Beginning on Friday, this move is now officially part of a comprehensive effort to apply dynamic pricing to the entire United Without Borders rewards calendar.
The practice of dynamically pricing seats according to demand contrasts sharply with the traditional reward level booking system, in which seats are clbadified in concise compartments available to consumers.
With differentiated pricing, for example, a traveler can expect to pay around 40,000 km for a standard round-trip ticket in national clbad, regardless of the demand. Dynamic pricing, on the other hand, removes the ranges of a specific seat and allows prices to fall when demand is low and rising when stocks are tight.
Among traditional carriers, American Airlines only has a tiered seating model later this year.
Since dynamic pricing does not take advantage of a differentiated pricing structure, United also publishes its published rewards table on November 15th. Luke Bondar, Director of MileagePlus, however, confirmed that the airline was also considering the use of dynamic pricing on these fares.
Until this fall, MileagePlus will remain in its current tiered system with the addition of cheaper rewards (and no more expensive seats) that some pbadengers have seen in recent weeks. On November 15, United will open the system to full dynamic pricing and will raise the price cap on premium bookings. In addition, at this time, the airline will remove the tight booking fees that many MileagePlus members have complained about.
United will also not change the number of seats available for premium bookings with the switch to dynamic pricing. "We are not changing the pricing structure of the underlying premiums," Bondar said. In other words, the same number of seats available for rewards on each flight will remain the same, from 14 to 15 November this year.
An area likely to develop, however, is preferential rates for premium seats for high-level travelers. "We are very committed to finding ways to increase the availability of the smart grid. [premium award] reservation in national clbad, "said Bondar.
Impact on the airline compared to consumers
United sees dynamic pricing as a value for today's loyal customers. According to Bondar, United's frequent flyer customers have consistently demanded better price selection for the entire booking and travel, which includes flexible pricing on premium seats when demand is low. Dynamic pricing can allow this; In the future, the traditional fare of 25,000 miles will certainly be higher from time to time. The new model also takes into account the occasional situation in which the return ticket could cost 15,000 or 20,000 miles – a significant discount from current fares.
Consumers may find the value mixed, considering that each approach to selling premium seats has advantages and disadvantages. Differentiated pricing is more transparent and allows pbadengers to set a precise budget for their next trip, with relatively rigid parentheses.
With a published rewards calendar, it is also possible to know how much a cheap premium seat will cost when a potentially high fare will be charged at a considerably higher than normal fare. Dynamic pricing can not offer that, but it can offer premium seats that are generally cheaper than tiered seats at certain times of the year. For pbadengers who are struggling to save 25,000 or even 15,000 miles each year, this model can add a lot of value.
Lessons Learned from Delta
United's move to a dynamic pricing model echoes a decision similar to that made by Delta in 2015. Despite the reported benefits for frequent flyers, it is also likely that this decision stems from the desire to achieve better results. income from his loyalty program. From the perspective of the airline, dynamic pricing allows it to maximize revenue (ie to charge more for premium seats) when demand is high and fill them cheaply when planes are empty. The rare occasion in which a pbadenger gets a place at the expensive negotiated fare can also be eliminated.
The reaction of the pbadengers is not clear. When Delta initially launched dynamic pricing in 2015, many frequent travelers complained about the lack of transparency about the potential cost of rewards. But everyday pbadengers have generally been indifferent.
With hindsight, Matthew Stolen, a great Delta traveler, dismissed the change. "While it was disappointing to see them aggressively pricing for their reward flights, Delta continues to offer a superior and more flexible product than other US carriers. In addition, I feel that thanks to Delta's consistent sales of award flights, help is even more effective. "
The only pbadengers likely to be irritated are frequent flyers accustomed to premium levels and booking habits. "Delta's move to aggressive pricing has definitely affected my booking habits," said Nick Farina, a top-level elite of Delta's loyalty program. "While it's possible to find good deals, unpredictability makes miles far less valuable to me … even if it's not rational."
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