TLDR:

United Airlines has a black market problem. Elite members of the United Mileage Plus (UMP) program are selling upgrades (with PlusPoints) to anyone who wants them on Craigslist. United isn’t happy about it and tries to stop them but even if they catch someone selling upgrades it results in that elite high revenue generating member being expelled from the UMP program. Either outcome is not a winning one for United.

Now, as bad as a black market sounds, it’s probably not such a bad thing. Something I’ve learned building products is that when a customer workaround to an obstacle or limitation is discovered it means there is a need and therefore an opportunity. For United I believe this is an opportunity for them to improve their competitiveness, customer loyalty, and ultimately revenue.

The opportunity for United is to allow members to sell and buy PlusPoints upgrades to each other. This would most likely involve embedding into their account management system the means for Elite members to make PlusPoints available for sale, and to embed into their reservation system the means to buy PlusPoints and request an upgrade to their reservation.

For the rest of the post I’ll cover the following:

1. Why I care about this
2. Some background on PlusPoints and how they work
3. The problem for flyers and United
4. The new feature I’m proposing
5. Why I (United Flyers) want this feature
6. Why United would benefit from the feature
7. And finally a demo of the proposed feature from the buyer and seller experience.

Why do I care?

I love flying, I really love flying internationally, and I really, really love flying internationally in premium cabins.

I have never risen beyond United’s Gold status however so I have never earned PlusPoints (formerly RPUs/GPUs). So given my low/mid level status the only way I can really get into those premium cabins is if work pays for it or I use my UMP points. The points accrual game is a long one so that only happens once every year or two, so not nearly enough!

I am a loyal United flyer though so I would love a more affordable upgrade option, and that’s what motivated me to think through how United could address their upgrade black market problem in a way that benefited all involved: United, UMP Elites, and loyal UMP members like me.

First, some background…

What is United’s PlusPoints program?

Elite members of United’s Mileage Plus (UMP) program are awarded PlusPoints (formerly GPUs and RPUs) when they reach elite status levels of Platinum, 1K, and the invite only Global Services. (See the chart below). PlusPoints allow elite members to request upgrades to their regional and global reservations. It’s a nice perk that comes with elite status and the cash saved (and therefore their value) for flying in premium cabins is substantial. Another perk is that you can upgrade friends and family with your PlusPoints. See the chart below and for more details go to United.com.

How do PlusPoints work?

Once a flight reservation is made, the Elite member can request an upgrade using their PlusPoints. Sometime before flight day the elite member is notified if they are upgraded and the PlusPoints used are then deducted from their PlusPoints balance. See Figure 1 below for a high level flow of the process as I understand it, or read United’s explanation.

So what’s the problem?

The PlusPoints Black market on Craigslist

There is a black market of sorts for PlusPoints on Craigslist. Some Elite members sell their PlusPoints for upgrades to United economy flyers who want to fly a premium cabin but can’t or don’t want to pay the cash price for the seats. The process for an Elite UMP member to do this is identical to any other upgrade request because all the elite member needs is a reservation number to apply the PlusPoints. Here’s a recent example of a Craigslist post:

This practice is not popular with United because it violates their Rules/TOS. In fact not selling PlusPoints and other benefits is referenced 3 times in their rules. Anyone caught selling PlusPoints will most likely be kicked out of UMP and lose their status, points, and PlusPoints. The risk is high because apparently United has people posing as buyers to catch the sellers and once they have a catch their response is swift and brutal. The key excerpt from the rules is this:

And if you’re curious about what United’s “Remedies” are, take a look at #2 under the Rule’s General Conditions, which includes this juicy deterrent:

So given United’s rules, and the risks, why do UMP Elites want to sell their PlusPoints?

There are a few common reasons in play here:

1. Cash – Elites are not necessarily wealthy people. Think of a 20 or 30 something consultant who travels (Pre Covid) weekly and makes between $80k-$120k. An extra few hundred or thousand Dollars is a significant incentive. If someone is short on cash this could be a quick way to get it.
2. Perception of ownership – Some Elites consider PlusPoints to be their property earned with their Dollars spent and hours flown.
3. Ease of sale – The time required to put up the Craigslist ad is about 5 mins, then the Elite member just reads response emails and when a buyer is found they simply apply the PlusPoints to the buyer’s reservation. Note also that the transaction risk is also all on the buyer who has to trust that the seller is legit and not a scammer.

Why do Elites even have PlusPoints to sell?

Many Elites never get the chance to use their PlusPoints by the end of the year because they typically:

1. Fly premium cabins for work travel
2. Get auto upgraded because of their status
3. Travel so much for work that they don’t want to travel if they don’t have to

A Quick Disclaimer

By now you’ve probably wondering if I have ever sold or bought any PlusPoints. The answer is no to both. I have never reached a high enough elite status to be given any PlusPoints, and I enjoy flying so any PlusPoints I earn would certainly be used. 

I also haven’t bought an upgrade on Craigslist. Unsurprisingly I love flying any class above economy so I am tempted but I just love my points balance too much to risk even getting “marked” by United, and I honestly don’t mind flying economy provided I have a window seat in Economy Plus which my usual Silver/Gold status has guaranteed me every time. A few times I have benefited from my Dad upgrading me on a few longer flights (Thanks Dad).

What is the feature?

Essentially it’s a PlusPoints market embedded in United’s account management and reservation process.

The feature will allow UMP Elites to “sell” their PlusPoints to passengers of Silver status or above who can use them to request upgrades for their reservations. The purpose is to replace what happens on Craigslist today.

Why do I want it?

I mentioned why I want this feature, namely affordable upgrades. While I’d absolutely like to have more accessible and affordable upgrade options, I think there are multiple beneficiaries to making PlusPoints sellable:

1. Elites Members – Can sell their unused PlusPoints to get some cash
2. UMP status passengers (myself) – Can access affordable upgrades on their cash reservations
3. United – Can earn additional revenue from the increased loyalty of UMP members, and the increased incentives for non Elites to fly United and maintain or earn the UMP status required to buy PlusPoints.

Why would United allow the sale of PlusPoints?

The benefits for Elites and passengers is easy to understand and I’m pretty sure they would be onboard (yeah, a pun) if PlusPoints sales were active. United however will likely need some convincing of how this would benefit them. Not having much insight into United’s business I would also like to learn what reservations (yeah, another pun) United would have, and why they think selling PlusPoints would either not work or just not be something they would want to do.

The four reasons why United can benefit from the sale of PlusPoints

1. United can retain control of the PlusPoints program
2. United can increase member loyalty and retention
3. United can attract new customers and members to the Mileage Plus program
4. United can increase revenue per Mileage Plus member. 

Let’s look into each a bit further.

Reason #1: Retaining control of the PlusPoints Program

Incorporating PlusPoints sales in the reservation process would eliminate their uncontrolled sales on Craigslist. United can also:

• Control who can buy PlusPoints – Limiting participants to UMP members of Silver status and above provides an additional benefit to loyalty and status with United, and keeps the benefit to those who consistently contribute to United’s revenue.
• Control the price of PlusPoints – Setting the price allows United to maintain the value of PlusPoints and their premier cabin experiences. United could also: 1) adopt dynamic pricing as they have done with cash and reward redemptions to adapt to market demand, and 2) set PlusPoint price levels based on UMP status, for example, Platinum and above pay $400 for 25 PlusPoints, Gold pays $450, and Silver pays $500.
• Control assignment of PlusPoints upgrades – Adapting their existing upgrade allocation algorithms that account for various factors such as status, ensures that Elites and higher status members are prioritized. Further, United can add rules that prioritize non sold PlusPoints upgrade requests over those from sold PlusPoints.
• Limit participants to United credit card customers – Requiring ticket purchases to be paid using a UMP credit card, and for sale proceeds to apply only as credits to UMP credit cards, would be a strong incentive for members to use their UMP credit cards, remain UMP credit card customers, or apply for a UMP credit card if they don’t have one. This could be a significant edge in the highly competitive points based credit card market.
• Limiting participation to only non reward reservations – This ensures that upgrades can only be applied to tickets that have directly contributed to revenue.

Reason #2: Increasing loyalty and business from all UMP members

A PlusPoints market will increase the value of the United Mileage Plus member experience which could result in increased revenue derived from:

• Higher UMP elite satisfaction – from knowing that they get additional value from their Elite status
• UMP status growth and retention – UMP members will have a greater incentive to maintain and grow their UMP status to earn greater access to potential PlusPoint upgrades. Non status United Mileage Plus Members will have greater incentive to earn at least Silver status so they can have access to potential PlusPoint upgrades.
• Additional revenue – as mentioned in #1, there would be increased revenue from cash sales and UMP credit card signups and transactions.

Reason #3: Attracting new customers and Mileage Plus members

• UMP status growth and retention – See Reason #2
• Limit participants to United credit card customers – See Reason #1
• Limiting participation to only non reward reservations – See Reason #1

Reason #4: Increasing revenue of UMP members

There are two direct ways United could earn additional revenue aside from those mentioned above:

• Sales Commission – United takes in commission % for all PlusPoints sales
• Non refundable PlusPoint purchase deposit – United could charge a nonrefundable deposit with every PlusPoints purchase to collect revenue to cover admin costs. The demo below accounts for this scenario
• Increasing price competitiveness – While UMP members are loyal to United, sometimes the cost of a United flight exceeds the benefit of earning miles and gaining status compared to a cheaper competitor’s flight. The potential for an upgrade to a premium cabin on a long haul flight, combined with the usual benefits of miles and progress to higher status, could translate to UMP members increasing their price limit assessment for the higher revenue long haul flights.
  
  For example, If a return fare from Chicago to London is $700 on AA and $900 on United, would you pay $200 more to fly on United just so you can contribute to your points balance and status progress? If no, then would you reconsider if you could pay $650 more ($200 price difference + $450 paid for PlusPoints if the upgrade goes through) and fly in Polaris?

Problem priority level (Level of frustration)?

Low. No frustration here really, more of a terrific offering that I’d go for, if it were available.

What are the current workarounds?

How can this be solved?

My Minimum Requirements:

The minimum high level requirements for a feature that allows the sale of PlusPoints are:

1. The sale of PlusPoints – A UMP elite member can add or remove their PlusPoints being available for sale, have their balance adjusted, and receive $ compensation when they are sold.
2. The purchase of PlusPoints – A Mileage Plus member with Silver status and above can purchase PlusPoints for a reservation, and if upgraded the full payment automatically is charged.
3. An amended upgrade algorithm – Updated to account for priority level of purchased PlusPoint upgrade requests, and the status levels of UMP members of from Silver status and up.

Primary User Flows

Below are the flows for the Elite Member selling their PlusPoints (Figure 2) and the PlusPoints buyer buying PlusPoints (Figure 3)

Demos

Demo 1: An Elite UMP member putting their PlusPoints up for sale

Try the demo yourself! Click here to access the Seller’s prototype.

Demo 2: MP member buying PlusPoints with their flight reservation

Try the demo yourself! Click here to access the Buyer’s prototype.