With immediate effect, your United Miles will never expire!
In this past, United miles would have expired after 18 months of inactivity. Meaning to say, you could keep your miles indefinitely should you earn or use your United miles in any way before you hit the expiry date. There were countless of ways to keep your miles alive – transferring credit card miles to United, earning miles from flights/car rentals and redeeming miles for magazines/flights and etc.
Why I Find It Odd?
It is reasonable to assume that one will proceed to change/implement a business decision when its Pros > Cons or at least Pros = Cons.
Why does new change align with United’s interest?
First, the new change may imply that United wants to be on par with Delta SkyMiles and JetBlue TrueBlue where both programs adopt a “zero-expiry” policy.
Second, this new policy may have a greater customer lock-in effect as well.
Why does the new change misaligned with United’s interest?
The previous policy brought 2 pros factors for United. Firstly, a program with an expiry date creates motivation for customers as it forces United members to be active members (Earn and burn your miles, otherwise, your miles will be gone). Secondly, when United puts an expiry to the miles, United accountability to its members will end at a certain point in time.
In fact, miles owing to customers are accounted as a liability in their Balance Sheet. It is reasonable to assume that there will be more redemption over a longer period of time as more members will have more time to earn their redemption tickets. While institutional/professional investors may filter/adjust this particular liability away when they do their analysis, it still does not look good in the eyes of general investors. This “zero-expiry” policy may reflect a greater liability on the balance sheet as well.
Balancing both Pros and Cons:
It seems like this policy change is bringing more cons than pros to United. Maybe United genuinely wants to keep its loyalty program attractive, in view that the US market is pretty saturated; or maybe United is planning to announce some new bad news in the near future? Earlier this year, United announced that it will introduce dynamic pricing in November, maybe this is a treat before heavy storm comes?
Whatever it may be, this is a welcoming decision for all the Mileage Plus members. This decision leaves American Airlines as the last US major airlines that still enforce a mileage expiry policy.
What are your thoughts on this?