| Date: | June 20, 2007 / year-entry #223 |
| Tags: | non-computer |
| Orig Link: | https://blogs.msdn.microsoft.com/oldnewthing/20070620-01/?p=26333 |
| Comments: | 33 |
| Summary: | At the beginning of the year, United quietly changed its policy on frequently flyer points. Under the old rules, your account remained active provided there was some sort of account activity in the past three years. The activity could be taking a flight, redeeming points for product, or earning points through one of their partners.... |
At the beginning of the year, United quietly changed its policy on frequently flyer points. Under the old rules, your account remained active provided there was some sort of account activity in the past three years. The activity could be taking a flight, redeeming points for product, or earning points through one of their partners. Anything that changes the point total resets the clock. Under the new rules, the lifetime of an inactive account has been cut in half, to 18 months. What's more, they made the change retroactive with no grace period. If your account had been inactive for two years, poof, it's gone. I understand why the airlines are doing this. It is widely reported that there are over 9.7 trillion unredeemed points in frequent flyer programs, and the threat of having to redeem those points for flights means having to account for them in their balance sheets. What I found interesting is that the explanation United gave for the policy change is the classic lie: "In order to serve you better." They explained that making points expire sooner means that there will be fewer people competing for the free tickets, and therefore a higher likelihood that you'll get what you want. Of course, this only holds true if you're not one of the suckers whose points just got expired out from under you. Now, they could have turned this lie into a truth by a simple change in wording. Instead of saying that it's "in order to serve you better," they could have said that was made "in order to serve our most loyal customers better." Because the loyal customers will have lots of points that don't expire, and it's the infrequent customers that will watch their points disappear. United is hardly the first or the last airline to be more aggressive on inactive accounts. In late 2006, Delta dropped their inactivity cutoff from three years to two, and US Airways dropped theirs from three years to 18 months. And recently, American dropped their cutoff from three years to two. (Alaska Airlines has held steady at three years, and Continental's technically expire after 18 months, though they also say that they haven't enforced the rule. USA Today summarizes the policies for the major U.S. airlines.) Epilogue: Yeesh, this article was intended to be just a "public service announcement" to remind people to check the mileage expiration policies of the airlines they fly with. I didn't expect the Spanish Inquisition. Fortunately, this problem is easy to fix: I'll simply post a dry "public service announcements" and not include my own personal analysis. |
Comments (33)
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"Now, they could have turned this lie into a truth by a simple change in wording."
Nit – the simple change in wording you recommend would still be a lie. The changes may have little or no impact on their most frequent (not necessarily loyal) customers, but they’re not making these changes to serve anyone or anything but thelmselves and their bottom line.
American Airlines actually dropped theirs to 18 months also. (The race to the bottom here.)
Two points:
Q. When will my miles expire?
A. As of December 31, 2007, miles will expire after 18 months of no activity on your account.
(Of course, the answer could be wrong, they could mean 2006, which would agree with what you wrote)
Q. Miles formerly expired after no activity for 36 months. Why is that policy now shortened to 18 months?
A. This change makes our Mileage Plus program better for customers who are most loyal to United while also reducing our operating costs
By shortening the amount of time a Mileage Plus account can remain inactive, United’s most loyal customers will compete with less people for award seats, making it easier for them to redeem their miles. This change also reduces the airline’s mileage liability for members who have become inactive and lowers the program’s administrative costs.
"I understand why the airlines are doing this. It is widely reported that there are over 9.7 trillion unredeemed points in frequent flyer programs, and the threat of having to redeem those points for flights means having to account for them in their balance sheets."
Yes, they have to account for them, but it’s not like they could all be redeemed in the same year.
They consistently limit the amount of seats that are available for redemption, and you can’t redeem miles for flights years in advance, so in any given period of time, their liability is limited to exactly how many seats they allow to be redeemed this way.
Who cares if you hand out a million coupons for a free widget if you only have 40 widgets available a month available for free redemption?
So, if they are getting killed with free flights, then they could quickly reduce the number of free seats available. So, even though I have a gazillion miles, I can’t use them at will…I still have to play by their quite restrictive rules.
“the threat of having to redeem those points for flights”
This is like a bank, under permanent threat that all customers can go and withdraw their money. They knew this when they started the program.
Part of the basic rules learned as a kid: you give me something, you don’t take it away.
This would seem a good place to remind people that there are various charities and programs that you can donate your points to, like one for families of soldiers visiting them while they are at another base inside the US (I think it is a program where you can just tell the airline to transfer your points to it, it isn’t an official charity). Also, you may be able to give them to a close relative, especially one who would have been paying for a ticket somewhere.
It seems to me that expiring the miles earlier will actually increase the competition for seats that the loyal customers experience as people rush to redeem their miles, at least in the short term, similar to how the US government’s recent passport requirements have caused a huge increase in the wait time to receive a passport.
Well, I think banks have policies on how long they honor a check for. From a quick search it seems like periods of anywhere from 6 to 18 months are not uncommon. Some checks (i.e. business, refunds, etc) have expiration dates printed on them that the banks honor. So, you need to keep that $100 in your account until your bank will no longer honor the check. Maybe you could put a note like “Expires in 3 months” in the memo field to expedite the process.
I once recieved a check for my birthday from an aunt. A few weeks later she sent a new check with a message: "Don’t cash the other check; I closed that account."
Nintendo recently announced they were doing something similar with their Star Points (which I think you only get in Europe).
When you buy certain first-party games or hardware you get a card which you can enter into their website to gain the points which can be traded in for various things. The benefit to them, I assume, is that they can build up profiles of different people and the types of games and hardware they buy, which can be quite useful. ("People who bought this seem to also buy that, so let’s try to sell them this new thing." Same as in-store discount cards.)
I had been registering my points but then hoarding them as there was nothing that I could cash them in for that I wanted. Now that they are going to expire old points I simply won’t register them in the first place. Unless the cards themselves expire (which isn’t clear, and even if they do they’ll probably expire much later in case a game was left on a retail shelf) I have nothing to lose from holding on to the cards in case something I want comes along, at which point I will register them. Nintendo, on the other hand, now won’t get any data from me unless they provide something that I actually want…
(I know they’re soon going to allow us to transfer star points into Wii points which let us buy old games — much more interesting than buying wallpapers and other tat that was on offer in return for Stars before — but I don’t want much of what’s on offer there either so I’ll hold on to my cards rather than register them. It seems a very stupid move all-round.)
"In order to server you better"–ah, another example of what Peopleware called "proof by repeated assertion." We know it’s not intended to serve us better, but we eventually give up because it’s too much effort to fight it.
It amazes me that this sort of thing is legal. In some states it’s not, when they try to do it on gift cards.
In my state it’s still legal to steal from gift cards, but I once got my money back on a gift card, which supposedly you can’t do. The card had one of those "We’re going to start stealing the money after two years" clauses, but it was on the back of the card, and you couldn’t see it until you peeled the card away from the backing.
So I told the store that (1) these conditions were not presented at time of sale, and (2) I did not agree to them. It took two or three people, but I did get the money back. (I might well have used the card before it expired anyway…but the real problem was the queasy feeling that this company was admitting it was planning to steal from me in the future. Why would I want to do business with a company like that? Now you see why CompUSA had to close all those stores.)
(Thanks go to Cem Kaner’s book, Bad Software, for how to approach the problem, referencing the Uniform Commercial Code.)
Air Canada has also reduced their expiry times to a mere 12 months. My deadline is at the end of this month, and I’ve sent my wife flowers to earn a couple points and show activity (also just to send her flowers). Now I’m stuck in the limbo where the points from the flowers haven’t shown up on the account yet, with the deadline fast approaching.
Raymond:
I fail to see your point… The flyer miles were expiring before, it’s just that they were expiring after 3 years instead of 18 months now.
So if the question is: How long are you going to keep the 100$ if the check’s validity was 3 years when you gave it to him… well I have to say “3 years”, since that’s what the (implicit) agreement was at the time.
If the consumer where abusing a loophole while the company was doing them a favor, I might have followed the “friend” argument, but that is not the case here I think.
The airlines probably have some legal way to weasel out of it, but IMO they should escheat† the full-fare cash value of unused miles.
If a business writes you a check and you fail to cash it after a reasonable‡ amount of time, they are required‡ to make a good faith effort‡ to contact you, and failing that they must‡ remit the money to the state. It is not their money, it is yours. If you do not claim it then it belongs to the commonwealth: it is not a windfall for whoever happened to owe it to you.
† Escheat: reversion of unclaimed or abandoned property to the state.
‡ Legal⊜ specifics vary by state.
⊜ I am not a lawyer. Do not believe anything I say. (Do not believe anything lawyers say either.)
Haha! Noone expects the Spanish Inquisition!
Sorry…
For a guy who blogs as much as you do, you are pretty touchy… just ignore it. In the words of the great Raymond Chen, "I can’t believe I had to say that!"
Just in case leo checks the comments in the future… wii points don’t expire. If it was me, I’d transfer all the cards to wii points now in case they revoke that ability sometime in the future :)
I don’t see the problem. "In order to serve you better" applies to all of their customers, even the ones without frequent flyer accounts. All those assets that were set aside to offset the frequent flyer liability can now be turned to better things like <del>higher salaries for the executives</del><ins>um, better-quality airline food and more leg room.</ins>
So another post saying "waah! life isn’t fair!"
We already knew that.
I agree with JeffCurless.
I don’t see anything annoying about your comments. They all seem quite reasonable. You seem a little over-touchy.
Anything that has the words "In order to serve you better" generally means you are in for a shafting.
No one expects the Spanish Inquisition!
Oh, I see someone beat me to it. Rats.
Forever, if I’m a man of my word (which I personally am; don’t know about you and your friends.)
Nobody expects the spanish inquisition!
http://www.youtube.com/watch?v=zO68fUMWx3g
fear, surprise, ruthless efficiency, and an almost fanatical devotion to the pope…
Raymond: We’re (mostly) complaining *with* you, not *at* you.
surely you have better things to to write about than this!
Since someone mentioned gift cards, our state (New Mexico) passed a law that just became effective, mandating that gift card balances not be "siphoned off" or have fees charged by the issuer for 5 years.
"Epilogue: Yeesh, this article was intended to be just a "public service announcement" to remind people to check the mileage expiration policies of the airlines they fly with. I didn’t expect the Spanish Inquisition. Fortunately, this problem is easy to fix: I’ll simply post a dry "public service announcements" and not include my own personal analysis. "
Dang. I like your comments and analysis
The airline industry is run by morons. That’s one of the reasons the industry has been a complete business failure for 100 years. Shortening the expiration period for miles will not save the airlines more than a trivial amount of money. Infrequent fliers, who the only ones affected, don’t claim a free ticket but once every few years.
There may be some reason I don’t see, but here’s my scorecard:
Raymond’s reason: stupid.*
There’s lots of evidence that airlines have no compunction about pissing their customers off for no particular reason. So #2 does have that going for it.
If you give someone $50 in cash, it’s gone, even if your friend sticks it in a drawer and forgets about for 50 years.
So why should writing a check be any different?
Why are you looking for a chance to un-give your friend the money?
Raymond, you are without a doubt the funniest blogger! Even when sticking it to stupid posters, you still make me smile.
They actually are being rolled back.