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Are United Miles Now Worth 1 Cent Each on New Discounted Awards?

March 27, 2019
6 min read
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Monday we learned some news about United award prices that was, on the surface, pretty great. Domestic United economy award flights now start at just 5,000 miles one-way for United elites and United credit card holders, and 6,000 miles each direction for everyone else. These award prices are down from the usual one-way domestic saver awards starting price of 10,000 or 12,500 miles.

United confirmed to TPG that this was not a sale or restricted to any particular list of cities, and indeed we found examples from 5,000 miles each way on the East Coast, West Coast and points in between. (We also found that a 1,000-mile discount for elites and cardholders remained constant in our tests.)

Aren't Cheaper Awards Good News?

So why isn't it great news that you can now fly from Houston to Las Vegas for as few as 5,000 miles when the award price used to start at 12,500 miles? Well, it is good news that the award now costs less, but when the flight price is $48, spending 12,500 miles would be a terrible deal. Although 5,000 miles is much less, it's still not a great deal either. TPG values United miles at 1.3 cents each, but at 5,000 miles for a $48 flight, you are right in the ballpark of only getting one cent per mile in value from your United miles. (And actually, once you factor in the $5.60 in taxes you'd need to pay on the award, your 5,000 miles are only getting you $42.70 in value, or just 0.85 cents per mile).

That less than one-cent-per-mile number turned out to be a recurring theme.

Discounted Awards Price Around One Cent Per Mile, Except When They Don't

TPG tested the one-way discounted award routes mentioned Monday in this article with randomly selected mid-May travel dates, and found a very common theme. When averaged together, the routes (with the exception of one dramatic outlier that was removed — more on that in a minute), provided a return of 0.93 cents per mile against the lowest price of a paid ticket for the same United flights. Note that those were the results for those with United elite status or a United credit card. Without either of those factors, the results provided an even smaller return per mile.

But really, it didn't take a spreadsheet to come to this conclusion. TPG readers were spotting the common pricing theme just by eyeballing search results yesterday. A $50 flight might cost 5,000 miles and a $90 flight might cost you around 9,000 miles if the route was one that is benefiting from new lower award prices. If this formula spread to all redemptions, a fixed one cent per mile valuation of United miles (or less) would be a dramatic blow to the program. But, some further searches revealed that's not quite the whole story.

In our line-up there was one big outlier, a flight from San Francisco to Denver that cost 8,500 miles but was pricing at $486. Now, this flight connected in Houston in the middle of the night to get from California to Colorado, so it's not the best idea regardless of price, but it wasn't the only unusual result we found.

In doing some additional searches for flights we actually wanted, we found results from Houston to San Diego for 5,500 United miles or $182 each way and from Houston to Las Vegas for 5,000 miles or $247 in cash. In both cases, those itineraries connected in Los Angeles. Those flights would provide 3.2 - 4.8 cents in value per redeemed mile, which is a very good return if you are okay flying through Los Angeles.

So, these new lower-priced routes are often providing about 1 cent in value against the lowest-priced tickets, except when they aren't. Connections may have something to do with that, but the story certainly isn't as simple as one mile = one cent.

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The Basic-Economy Factor

There's another layer, too: the Basic Economy layer. The airline might apply basic-economy rules to the lowest-priced award ticket, thus restricting carry-on bags and advanced seat assignments. This is far from an unreasonable fear, since Delta SkyMiles has already done this and United has been known to adopt some of Delta's strategies a few months later.

We have reached out to United for comment on whether we should expect Basic Economy restrictions on the lowest-priced awards, but have not heard back at the time of publication. Update: United states that they are not applying Basic Economy restrictions to their lower cost award fares.

For now, United awards don't come with Basic Economy restrictions, so comparing the lowest award price to the lowest United cash price is not entirely apples to apples. Instead, a more fair comparison at this juncture is probably comparing award prices to the lowest non-Basic Economy fare.

Take this example — a nonstop flight from Newark to Ft. Lauderdale on May 4 has an award price of 5,500 miles + $5.60 in taxes. The cheapest cash price is $54. Factoring in taxes, that is a return of 0.8 cents per mile.

However, that $54 is for a Basic Economy fare. If you want an advanced seat assignment, ability to use your elite perks and a full-sized carry-on (all of which you'd enjoy on the discounted award above), the cheapest fare available to you is $91. If you compare the 5,500 mile award cost to that number, your return is a much healthier 1.54 cents in value.

Bottom Line

Crunching numbers largely confirmed our suspicions that United's discounted awards are frequently returning at or below one cent per mile of value on redemptions when compared to the lowest cash price. However, this isn't always the case and there are outliers. Additionally, when compared to the cheapest economy price that isn't Basic Economy, the value proposition shifts, sometimes relatively dramatically to a rate that does make redeeming miles a good value.

We're still nervous about what strings may ultimately accompany these new lower award rates, but for now, find and book these newly more-affordable United award tickets when they align with your travel plans.

Featured image by United's 'high-J' Boeing 767-300. (Photo by Zach Honig, TPG)

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Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
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Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023