Lawsuit: Does United Airlines Charge Different Redemption Rates Based on Account Balance?

Do you need to redeem more MileagePlus frequent flier loyalty program miles for an award ticket to be a passenger on this Airbus A320-232 aircraft operated by United Airlines simply because you have more of them in your account? Photograph ©2013 by Brian Cohen.

A lawsuit filed in United States District Court for the District of New Jersey earlier this week by two members of the United Airlines MileagePlus frequent flier loyalty program alleges that the complainants were being charged different redemption rates for the same reward.
Robert Gordon and Melissa Chan have supposedly accused United Airlines of charging higher redemption rates of MileagePlus frequent flier loyalty program miles for members who simply have more miles in their accounts. Chan reportedly had 3,500 more MileagePlus frequent flier loyalty program miles in her account than Gordon and was allegedly required by United Airlines to redeem 3,750 more MileagePlus frequent flier loyalty program miles for an identical hotel reward than Gordon.
The hotel reward was supposedly for a stay of three days in a hotel in Japan. Gordon reportedly did not have enough MileagePlus frequent flier loyalty program miles to redeem for the award; Chan did.
Gordon claimed that he was informed by a representative of United Airlines that the airline uses an algorithm to determine the number of MileagePlus frequent flier loyalty program miles needed to redeem a reward, which supposedly results in customers who have more MileagePlus frequent flier loyalty program miles to pay a higher redemption rate than those customers with lower totals in their MileagePlus frequent flier loyalty program accounts.
The majority of FlyerTalk members seem to be on the side of United Airlines in this case — and there could be a number of plausible reasons for what United Airlines is accused of allegedly doing by the co-plaintiffs in the lawsuit. FlyerTalk member Yavamos noticed that the number of MileagePlus frequent flier loyalty program miles needed for a hotel night is actually less for those with higher elite status, which is considered an additional benefit. Perhaps that there was only one hotel room left at one rate and that the next hotel room was a higher rate for whatever reason, according to content posted by FlyerTalk member craz.
However, FlyerTalk member emanon256 posted that “Just like all the times when Mrs. Emanon was offered a ToD for <$100 and I was offered a buy-up for >$400 on the same flight, same fare class, separate PNR. When I called, I was told the same thing, I was told their dynamic pricing maximizes revenue and makes offers based on what they believe people will pay. I didn’t sue, I didn’t even think about suing, I just took my business elsewhere.”
Although a spokesperson for United Airlines claims that the lawsuit is without merit both factually and legally, I am reminded of allegations launched against Delta Air Lines last year where the airline was accused of charging higher airfares to its SkyMiles frequent flier loyalty program members.
Have the frequent flier loyalty programs of airlines become suspect? Can they be trusted to ensure that you are receiving the best value? Have you experienced paying more money or redeeming more frequent flier loyalty program miles for travel than you should have been charged? Is it considered fraud for airlines to vary what they charge to members of their frequent flier loyalty programs — or is it within their rights to do so? Are the circumstances different when the varying rates are in favor of the customer? Is this lawsuit justified — or nothing more than frivolous at best? Is there more to this case than meets the eye?
What are your thoughts and experiences?

5 thoughts on “Lawsuit: Does United Airlines Charge Different Redemption Rates Based on Account Balance?”

  1. callum9999 says:

    Even if this is true, what law are they breaking by doing so? I was under the impression businesses could charge what they like to who they like (unless it was discriminatory like black people pay double etc.).

    1. Brian Cohen says:

      I certainly do not disagree with you — but just for the sake of argument, callum9999, an employee of United Airlines could assume that Melissa Chan is Asian. What if that employee actively engages in discrimination against customers of Asian origin under the veil of benign business practices by requiring of them higher mileage redemption rates for award travel?

  2. dhuey says:

    Perhaps I’m missing something, but from what I’ve seen so far, I think the plaintiffs will end up feeling this was a waste of their time (not to mention the court’s and United’s time).
    I suggest that we mileage geeks hold the litigation fire unless there is a serious breach of our understanding with the programs.

  3. olddallas says:

    I think that the effect of suing might be more an exposure of shady business practices than an actual victory with compensation. Exposure of possibly legal, but certainly unscrupulous business practices would be a victory for the public. Upon such exposure, United (and other airlines) would likely end the practice since the alleged practice actually discriminates against the better customers and exposure would drive them away.

  4. Fyd says:

    hotels have dynamic pricing, so you can have different prices, even when booking shortly after eachother, through the site. The same would apply when booking through United. Various people pay different prices for a seat on a plane or a room in a hotel. I don’t see any conspiracy or bad behavior – it’s just business, plain and simple.

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