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Top leaders at United Airlines have foreshadowed a future of MileagePlus marked by accelerating profit. What does the future of MileagePlus look like for travelers?

United Airlines CEO, COO On The Future Of MileagePlus

At yesterday’s Q3 earning call Tom Fitzgerald of TD Cowen asked, “Would you help us understand the sizing of the contribution from MileagePlus and Kinective Media on margin expansion in 2025?”

(Kinective Media is a new media network United launched earlier this year)

Andrew Nocella, United’s Executive Vice President and Chief Commercial Officer, took the question first, calling MileagePlus a “jewel” and noting the “different path” United has taken since last year:

“I don’t think we’re prepared to do that today. MileagePlus is a jewel in our business and has not been focused on enough over the last few years. And we took a different path about a year ago when we hired Richard Nunn. We took a different path as we invest in the technology there. That investment in technology is going to do a lot of things for our business first and foremost, it’s going to allow us to personalize service to our customers in a way that I don’t think any airline has done. Of course, Starlink is a core part of that, which obviously was just recently announced. So we’ll have a lot more to say on this but it is going to be material. It’s going to spool up starting next year. But I’m going to have to — I’m not going to give you the details today on that, but it’s pretty substantial.”

What can we make of that? By not being focused on, does he mean that until Nunn took over, the redemption side was far more valuable for discerning flyers? Is this “personalized service” Nocella discusses simply a targeted, analytic-based ad network that will be extremely profitable to United because detailed customer information will allow for carefully tailored ads that advertisers will pay a huge premium for? That’s my hunch.

CEO Scott Kirby added his thoughts:

“Tom, I’m going to give you a little bit of detail. And that is that in ’25, this is an investment phase. We’re going to — it’s going to not be losing money, we’ll make a little bit of money on in ‘25 but this really starts to accelerate in ’26 and beyond. So as you think about modeling ’25 though, we’ve got ton of momentum in the core business. I wouldn’t layer a bunch of MileagePlus connected revenue on in 2025. I do expect we’ll be giving more and more disclosure so you can model this on your own. You don’t have that information at this time but I’m committed to getting you more information to allow you to model it for yourself.”

Invest in what? What will happen to create so much profit in 2026? What could it be beyond the ad network? While I do see fares going higher which could push redemption prices higher, I do not see much room for devaluation in the current environment, both on the earnings and redemption side. On the earning side, I’ve lamented that United’s upgrade monetization algorithm essentially has left me with two options: purchase first class outright or sit in economy class, at least on domestic flights. That makes elite status materially less valuable, but apparently is pushing some to run harder on the status hamster wheel.

On the redemption side, the continued devaluation of premium cabin redemption pricing has been a bloodbath, but I do think competitive pressures (with Delta Air Lines still the outlier) will keep United from further short-term devaluations.

Piggybacking off Kirby, Nocella offered additional thoughts:

“And I’ll just bring up one other point — I was going to bring up one other point. The program is doing incredibly well. And again, we don’t talk about it enough and we should. But revenue from the premier population in the quarter was up 9% and that drove the majority of the revenue growth at the airline. And so our premier members are heavily engaged with us. As I said earlier, they hold the credit card in record numbers and they’re spending record amounts on their credit cards. But the fact that the premier population base is doing that much more revenue on a base that is actually close to flat, because we’ve made sure that we can deliver benefits to all of our premium members and we held the level of premium members flat, the program is doing incredibly well.”

When you hear that, you realize that very little will change in ways that you and other discerning readers will find valuable. United is not taking the Alaska Airlines approach…and who can blame it if revenue is up 9% amongst MileagePlus elite members (while premium membership numbers are flat overall), more people are signing up for United’s co-branded credit cards, and people are putting unprecedented spending on such cards?

Translation: there is absolutely no need to improve the value of the program.

The Future Of MileagePlus: My Prediction

Now let’s talk big picture.

Over the last decade, MileagePlus has moved from a highly valuable program for regular United flyers to one that is still worth pursuing, but marginally far less valuable to frequent travelers. Premium cabin redemptions have skyrocketed in price. Upgrades are far more difficult.

But for the average or occasional traveler, I would argue that the program has become far more valuable. Sure, the 12.5K domestic awards are gone, but 15K saver awards are still widely available. More importantly, miles no longer expire, there are no change fees, and there are no redeposit fees.

That’s a big deal. And United’s app or website makes it so easy to redeem miles…and cancel or change tickets (compare that to oft-lauded Air Canada Aeroplan, which is terrible in terms of website functionality, mileage expiration, and change/cancellations policies).

I think the monetization part will come through the data Untied is able to harvest and sell, but I don’t think we will see much change (positive or negative) on the earning or redemption side in the next 12-24 months. Certainly, there will probably be some devaluation, but I’m hoping it will not be like what we have seen this year and I don’t think United will copy Delta in that respect.

CONCLUSION

Kirby and Nocella shed some light on the future of MileaagePlus. While I would not get my hopes up that the program will improve and I still recommend against putting spending on a United co-branded card or building up a high balance of miles, I’m predicting a more static program in the months ahead for the items that matter most to flyers, with the downside being that we will be targeted by ads we don’t want to see but at least we can turn off our screens or close our app…


> Read More: United MileagePlus Is On A Destructive Course


image: United Airlines

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