United Airlines exec: buying miles is good for business

United Airlines exec: buying miles is good for business

Buying airline miles to redeem for low-cost travel in business class, and sometimes even first class, is a favourite money-saving trick of the savviest frequent flyers.

It’s quite a simple concept, and one oft-covered by Australian Business Traveller during ‘buying miles’ promotions from the likes of United, American Airlines, US Airways and Avianca, where points can frequently be picked up at a significant discount.

In essence, you first ‘buy’ frequent flyer points during such a promotion and then redeem them for a seat at the pointy end – with the net cost often thousands of dollars less than what you’d pay to book that same flight the normal way.

But does that have an impact on commercial ticket sales, and ultimately an airline’s likelihood to offer similar promotions in the future?

We sat down with Dave Hilfman, United’s Senior Vice President Worldwide Sales, to find out more.

Buying miles during United MileagePlus promotions

In the last round of cut-price offers, United promised travellers bonuses of at least 35% on their purchased miles, and actively encouraged sharing the promotion with members’ friends and family members to increase the size of the collective bonus.

The deal became so widespread that United sold in excess of 22 million miles in just 72 hours, triggering the offer’s 100% mileage bonus and allowing over 4,500 knowledgeable flyers to pay just half the usual asking price.

When questioned if travellers buying miles at such heavily discounted prices ultimately had an impact on commercial sales, Hilfman told Australian Business Traveller that “when it comes to promotions, we manage those pretty carefully – they’re obviously revenue-generating or we wouldn’t do it.”

“I like to say we love all of our customers, (but) some we love even more because they’re willing to spend a bit more with us,” such as by buying full-priced business class fares as opposed to spending less to secure the seats with miles.

Through United’s MileagePlus scheme, the airline is able to limit the number of award seats that can be booked on any of its own flights in line with commercial demand – with its Star Alliance partners such as Singapore Airlines and Thai Airways able to follow suit.

Redeeming MileagePlus miles for discounted travel

As Hilfman admits, business travel is the airline’s “bread and butter”, with jetsetters that book regular tickets at the last minute generally willing to “pay the higher fare levels to get access (to a flight).”

Award bookings – whether made using purchased miles or those that are earned from flying – don’t ever “interfere with those (last-minute) opportunities for people when they need to buy seats, particularly business customers”.

“We’re always making sure that we have (commercial) seats available,” Hilfman added, which means that if the airline feels it could sell a seat at full price rather than giving it away to an award booking, it will.

“There are some times when we’re sold out because business is so good, but generally, we never just do promotions if there were any issues about not having enough seats to take care of our last-minute business customers.”

The latest United MileagePlus promotion

United’s latest deal provides a 25% discount on mileage purchases through the year’s end, and brings a few significant savings closer to home.

You’ll need only 30,000 miles for a one-way business class journey from Sydney to Singapore or Bangkok with United’s Star Alliance partners Singapore Airlines and Thai Airways, or 60,000 miles for the round trip.

At a 25% discount, 60,000 miles can be had for US$1,693 (A$1,920) – less than half the $4,000-odd charged by SQ and Thai for the same seat on the same flight.

United’s own p.s. Premium Service flights from Los Angeles to New York set travellers back 50,000 miles – which can be bought for around A$1,600 – for a return transcontinental trek in BusinessFirst.

Looking at fares later this month, you’d easily pay A$2,740 for the same flights… but if you were hoping to snag a seat on United’s new Boeing 787 Dreamliner flights between Melbourne and LA, you won’t find a single business class saver award seat available over the coming months…

Blue or green squares indicate that business class saver awards are available…

As we at Australian Business Traveller always suggest, never buy miles unless award seats are available when and where you need to travel, as the airlines might just be hoping to sell you a ticket at full price.

Chris Chamberlin travelled to Melbourne as a guest of United Airlines.

More ways to save on business and luxury travel from the AusBT team:

Follow Australian Business Traveller on Twitter: we're @AusBT

Chris Chamberlin
Chris Chamberlin is a senior journalist with Australian Business Traveller and lives by the motto that a journey of a thousand miles begins with a single step, a great latte, a theatre ticket and a glass of wine!
 

5 comments

  • eminere

    eminere

    7 Nov, 2014 10:24 am

    "As we at Australian Business Traveller always suggest, never buy miles unless award seats are available when and where you need to travel, as the airlines might just be hoping to sell them to you at full price."

    Sound advice.  Of course it also helps if your job affords you flexibility with leave dates/periods.

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  • TheRealBabushka

    TheRealBabushka

    7 Nov, 2014 10:49 am

    Does anyone know what the following paragraph is suppose to mean?

    "Award bookings – whether made using purchased miles or those that are earned from flying – don’t ever “interfere with those (last-minute) opportunities for people when they need to buy seats, particularly business customers”.

    Was the UA official interviewed trying to be guarded to the extent that what he says comes out sounding contradictory or icongruent?

    Subject matter No. 1

    Award bookings – whether made using purchased miles or those that are earned from flying (Hung sentence...and?)

    Subject matter No. 2

    don’t ever “interfere with those (last-minute) opportunities for people when they need to buy seats, particularly business customers

     

    Subject matter No. 1 and 2 joined in the same sentence, even with a hyphen does not make sense!

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  • TheRealBabushka

    TheRealBabushka

    7 Nov, 2014 10:54 am

    Just for the record, I'm not having a go at Chris.

    It just pisses me off the way some Americans speak in incomplete sentences that comes out as pure gibberish!

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  • Chris Chamberlin

    ChrisCh

    7 Nov, 2014 12:30 pm

    The en dash section elaborates on the term 'award bookings' to show that we're talking both 'regular' award bookings for the typical members that earn their points in the more traditional ways, and 'buying miles' award bookings for those who have stocked up during a promotion.

    Ignoring the clarification, the par reads as:

    Award bookings don’t ever “interfere with those (last-minute) opportunities for people when they need to buy seats, particularly business customers”.

    (In other words, revenue seats remain available to purchase until the aircraft is full, while frequent flyer award seats are a little more limited.)

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  • TheRealBabushka

    TheRealBabushka

    7 Nov, 2014 02:39 pm

    Right! Thanks for the clarification Chris!

    No member give thanks

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