Prepaid Elite – Only From Mileage Plus

Prepaid Elite – Only From Mileage Plus

Buying elite status is nothing new, but buying a whole year’s worth of travel in advance and picking up the perks right away? That’s precisely what United Mileage Plus is allowing members to do. For $5,000, $10,000 or $20,000, members can purchase a “PrePaid Travel Card,” from which their 2005 travel purchases will be deducted. In exchange, they will immediately receive Premier, Premier Executive or 1K status immediately.

Sales of the cards begin Feb. 1, and members who purchase the card this year will receive a 5-percent discount on their yearly purchases. The card is provided through Chase.

United says the cards expire annually on Feb. 28. Which begs the question: What happens if you haven’t used up your card by that point? For many, annual travel is a crap shoot. The outlook in February may be far rosier than the reality in August. So if you’ve only used $10,000 of your $20,000 card, are you up the proverbial creek?

Well, we’ve got that answer. If you are within a few hundred dollars of using the entire value of the card on Feb. 28, you’ll be given a United travel voucher that can be used at any time in the future for travel on United. If you are several thousands of dollars from using the entire value of the card, then there will likely be a penalty, perhaps even as much as 50 percent of the unused value. The purpose, of course, is to prevent travelers from buying the card, using up selected benefits such as SWUs and then claiming refunds.

Because of the stored value, it will likely be tricky to predict which card purchase is best for you. Purchasing a level below your potential flight activity may rob you of important benefits such as bonus miles. For instance, let’s say that you purchase Premier instead of Premier Executive and end up flying 55,000 miles. That misjudgment will have cost you nearly 40,000 bonus miles, since the elite bonus for Premier members is 25 percent and 100 percent for Premier Executive members. One of the major advantages of this program is that unless you are pre-qualified for elite, it gives you a way to earn the elite bonus up front, not later in the year as you earn Premier status.

In many ways, it reminds us of the AirPass programs in which frequent flyers could purchase blocks of flight miles in advance. The idea is the same – the airline gets your money up front. In today’s business market, United does have their thinking cap on for this one. If anything, it takes the concept of “Elite Match” to a whole new level. Primarily for corporate or consultant-type flyers who suddenly find themselves assigned to a project that will require a substantial amount of travel in the coming year, we think it merits consideration by any flyer who might think of moving their travel to United. Having said that, we wonder if United will continue to be as willing to honor or accept elite status from other airlines, since they may have more to gain with this program.

Some of the fine print: the offer is for U.S. members to begin with, and then later on for Asian and European members. While you can use this card to purchase Personal Miles for yourself to top off your own account, you cannot use the card to purchase miles in the Give Miles or Reward Miles options of the Mileage Plus program.

Bottom line: It is a good idea that will enlarge United’s appeal, especially among corporate and independent travelers, as well as consultants. We imagine some existing Premier members will also buy a prepaid travel card as sort of add-on to their existing level of membership or to expand their travel value with the 5 percent online discount. The most difficult part of all this is choosing the right card, since with airfares in flux these days (because of the Delta’s SimpliFares launch), it might be better to “buy down.”

And the elite status juggernaut will roll on.

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