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United Postpones Upgrade Surcharges

Among several frequent flyer program changes United announced late last year was the imposition of cash co-payments for upgrades, initially set to take effect on July 1 of this year.

Briefly, upgrades from all but the highest-cost fares (Y and B coach fares, C and D business fares) will require a cash co-payment in addition to frequent flyer miles.

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The amounts are not trivial. With domestic upgrade surcharges costing as much as $100 each way and upgrades on longer flights priced as high as $500 each way, round-trip upgrades will cost up to $200 for flights within the continental U.S., and up to $1,000 for flights to Hawaii and international destinations. And that's on top of the required frequent flyer miles.

United's original announcement has been superseded by a new one, which tinkers with the details and, more significantly, pushes the start date more than six months into the future.

First, and most importantly, the new upgrade award chart won't take effect until January 12, 2010.

Second and third: B-class unrestricted coach fares will be co-pay-free; and Z fares (discounted business class) will be upgrade-eligible, with a co-pay.

So, Mileage Plus members have been given a temporary reprieve.

Why the change? My best guess is that the recession-induced falloff in travel demand—which has disproportionately undermined demand for first and business class—has made the surcharges seem like an embarrassingly out-of-touch misstep.

Not too embarrassing to impose later, mind you.

Which brings us back to the rationale for surcharges. Currently, American and Continental charge cash together with miles for upgrades, so United can legitimately claim that its new fees will be in line with the industry's. The reality, though, is that the airline is doing it because it can: It's cash-strapped and can get away with squeezing its customers.

United claims that the new fees are "to ensure that the upgrades adequately reflect the value of a United First or United Business seat ..." My reading of that is that miles just don't have much value compared to cash. Frequent flyers (and industry-watchers like myself) have been saying as much for years, even as airlines insisted that they were committed to maintaining the value of their loyalty currencies.

If United wants to enhance the value of its miles, it could begin by abandoning rather than postponing its new upgrade fees.

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