When United Airlines recently turned on the switch for Auction Rewards for Mileage Plus members, we were right there, asking if this was the next big thing for Mileage Plus. Ken Feldman, Vice President of Loyalty and e-commerce, and John Wright, Director of Mileage Plus Strategy, answered our call.

InsideFlyer
United has had a history of auctions. Is this different from those? Is this here to stay, or will it go away?

Ken
Our strategy is to add as much value as we can for our members to be part of the frequent flyer program. Our most frequent flyers think about the kinds of things they want to redeem with their miles, and that goes beyond another trip away from home. They have asked us over time for other products and services.

John
We’ll continue to do auctions, but also it gives us the option to put things out there that we know will be interesting to a range of customers.

Ken
We have a large array of members; those members are continually looking for value United can offer them. To keep their interest and to identify this array of vacation opportunities, it keeps them interested.

IF
Is this a permanent part of your award chart? It looks like you’ve got some other items you’re going to be putting in after this.

Ken
I don’t know if you would call it a part of the award chart, but I would call it part of an award folio. We are adding items to the auction inventory on a daily basis.

John
We are viewing our mission in terms of retaining customers’ interest much more broadly than in the past. Our goal is to make sure these customers recognize that there is enough value that United can offer them though all the programs that are offered. We keep them coming back as their airline of choice.

IF
Some of the other airlines are working on the concept for a shopping mall. Is this auction United’s strategy for that type of thing, or do you see more of this because you added hotel redemption and you added some other things? Are we going to see both types of things or is this United’s strategy of going all-out and saying miles become truly transferable into a variety of merchandise?

Ken
We’re always going to be looking for new and innovative opportunities for our members. I think this a really good step that we have taken to get that members’ interest. Based on the response to these types of programs, we will evaluate others as well.

John
I do think you point out a trend, in terms of offering car and hotel opportunities, and now auctions. We do see the need to expand the program beyond air, and we will figure out the best way of doing that as we go forward. We understand the customers want to be rewarded in multiple ways and we can no longer look at this in a air-only type of loyalty program.

IF
In watching auctions, people seem to be willing to pay far above the number of miles than you might have if you had a regular award chart. They get caught up in the fun.

John
In terms of value for the miles, I won’t assume that they are bidding more miles than they should. The car for example, even at a million miles — if you value miles at two cents a mile, that’s 20,000 dollars for a $35,000 car. That feels like a good deal. Those miles are being redeemed at three cents a mile.

IF
I think there is a fantasy and aspiration value that goes beyond the price of a mile. I think that’s what we’re seeing.

Ken
I think it also highlights the many different ways customers can earn miles in our programs versus other programs.

IF
Will most of the rewards come from the partnerships that United is involved with?

Ken
We’re interested in investing in our customers and we’ll do what it takes to put up interesting awards. I would say some awards are provided by partners and other awards we will sort out internally.

John
The partners see the frenzy; they want to be a part of it.