Should United’s program be called Mileage Plus or Mileage Minus?  Read this and then decide.

Yesterday I made the bold claim that United applies an additional filter to block out already-scarce frequent flier award seats on offer from their alliance partners.  Now for the why and how.

To understand this problem, you need a quick primer in the economics of frequent flier programs.  The concept that began just over 25 years ago as a way to reward flier loyalty has dramatically evolved.  Miles are now awarded for just about everything, from grocery shopping to car rentals to credit cards.  And just as our ability to earn miles has expanded, so has our ability to redeem them.  Airlines have partnerships with other airlines.  The heaviest concentration of these are the three global airline alliances:  Star, SkyTeam and oneworld.  United is a founding member of the Star Alliance.  In theory, miles that a United member earns can be used to book flights on any of the Star Alliance airlines.  This greatly expands the choice of global destinations, as United’s network pales in comparison to the combined global reach of Star Alliance.

Back to the point, frequent flier miles have become a form of currency, and airlines are the central banks of this monetary system.  When Chase gives you miles for credit card purchases, it has to buy those from United.  So do Avis, Safeway and their airline partners.  The converse is also true: when United members redeem miles on partner airlines, United has to pay for those seats.  Since there are so many more Mileage Plus members than there are members in their partners’ programs, there are more United fliers redeeming on, say Air New Zealand than there are ANZ fliers redeeming on United.  This imbalance has to be addressed, which means United sends a check to its partners.  This financial pain is even more acute when United members redeem for expensive business and first-class tickets.  United’s solution to keep these costs down?  Make less partner seats available to its own loyal customers.

This is called Starnet filtering.  Starnet is the networked program used by all Star Alliance airlines to book flights on the other carriers.  The filtering refers to the additional filter United puts on top of the already-limited award seats released by its partner airlines.  Here’s an example:

Your blogger wants to fly on Swiss to Zurich in April.  Swiss has released several award seats in business class on the flight in question.  These seats can be booked with miles from any program in Star Alliance, from Air Canada’s Aeroplan to Singapore Air’s KrisFlyer.  But when I called United to make a booking, they claimed the flight is not available as an award.

This is not a story that I’m breaking.  It’s been documented in a couple of excellent pieces by Nicholas Kralev at the Washington Times.  It’s also been discussed quite a bit in the blogosphere and at FlyerTalk.  I think it’s important to keep the pressure up on United over this.  One of the key benefits of United’s program is supposed to be that members can redeem awards on any of its partners.  Now that United is making it increasingly difficult to do so, this amounts to nothing more than a bait-and-switch.  We’re promised destinations like Bali, Paris and Singapore, but when it comes time to make a booking, United’s penny-pinching policy stands between us and our hard-earned award ticket.

To add insult to injury, United lies to its own reservations agents about this.  Savvy travelers like me have ways to find out if an airline has released award seats on a given flight.  So when I call in, I know exactly what I’m talking about (”I” class in the case of that Swiss flight I want).  Reservations agents are told that - even though I can see “I” class available - they haven’t released that seat to United.  This is patently false.  I have confirmed with sources at Swiss that when they when they release award seats, every program in Star Alliance has equal access to them.

So what do we do about this?  Arguing with United reservations agents is pointless.  They have been lied to by their management and likely won’t believe you.  The most important thing you can do is to make other United fliers aware of this issue.  Reference this blog post and the articles linked therein.  Step two is to write the United executive offices and tell them you know exactly what they’re doing, and that you won’t be flying United again until they put a halt to these shenanigans.

Last, be sure to stop crediting those credit card, car rental and grocery miles to your United account.  Since those companies have to pay United for the miles, it’s money in United’s pocket every time we choose Mileage Plus.  Hit them where it hurts.