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United waives last-minute fees for its frequent-flier members

July 27, 2009

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With premium-class air travel down sharply for the year and no sign of recovery, United Airlines on Monday said it would soon waive last-minute fees in its frequent-flier program to attract more business travelers.

The move is the first in the industry among the major carriers, and it’s not likely to be the last. Airlines aren’t expecting any meaningful recovery in business travel this fall, so they need to aggressively court those still flying.

By dumping the fees, Chicago-based United is removing a major irritant for many business people, particularly those from small companies, who often have to make last-minute trips. This will make business travelers, who have kind of disappeared, more friendly towards United. American Airlines may follow the example since the carriers compete through major hubs in Chicago.

United said beginning Thursday it would do way with a $100 fee for award tickets booked within six days of departure and a $75 fee for those booked 20 to seven days before departure. The move builds on last week’s Mileage Plus sale that offered members discounts on redeeming miles and encouraged fall bookings. That sale ended Saturday, but was good for travel from Aug. 18 to Nov. 18.

Though the award miles can be cashed in for either business or leisure travel, most program miles are earned during business trips. And by encouraging award members to cash in, it means more earned revenue for United and it takes a liability off its books since miles for travel owed to customers is considered a debt.

Last minute bookings are typically done at higher mile levels — 50,000 miles or more valued at around $750 — so it doesn’t benefit United to have anything that might discourage those redemptions. Members with 1K and Global Services status are already exempt from last-minute fees.

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