The Sky is Not Falling, Why American Express Membership Rewards Points Remain Valuable

I like Ben, Ben is a friend of mine, but this morning he goes a bit over the top at One Mile at a Time with his declaration of the death of American Express Membership Rewards as a valuable program.

Of course, I already used the program selectively — the American Express Premier Rewards Gold card was my choice for airfare (triple points) and groceries (double points) and that’s the crux of why my credit card advice hasn’t changed.

See, unlike Ben I still value 3 Membership Rewards points from airfare more than 2 Chase Ultimate Rewards points for the same purchases. And I value 2 Membership Rewards points from groceries more than 1 Ultimate Rewards point for those. (For the uninitiated, Chase Sapphire Preferred earns double points on travel.)

I don’t think these calculations are actually even close but I certainly don’t think they weigh in the opposite direction the way that Ben does, and to such extremes — Here’s the money quote:

a Membership Rewards point is very close in value to a Delta SkyMile, because nowadays that’s just about their most valuable transfer partner. Without exception, every one of the best award values through Membership Rewards has been ruined.

He acknowledges some remaining uses for Membership Rewards points and dismisses those. I won’t be so quick to dismiss and will propose other uses as well.

Well, you can use only 63,000 Membership Rewards points to fly Upper Class from New York to London on Virgin Atlantic by transferring to ANA… but you’ll pay $800 in taxes/fuel surcharges.

And that’s still a great deal! Only some of that is fuel surcharge, remember that about $300 is airport taxes, international taxes, and the UK ‘passenger duty’ that’s extortionate on premium cabin travel.

There’s a $500 fuel surcharge that you won’t be hit with if you redeem 100,000 Continental miles, sure. But I’d save the 37,000 miles by spending $500. And further, I expect the option to redeem Continental miles on Virgin to go away next year anyway.

You can use 90,000 Aeroplan miles to fly to Europe in business class through Aeroplan, though any domestic US segments will be booked into coach and if you fly Lufthansa transatlantic you’ll pay $600+ in fuel surcharges and taxes.

Not true. Domestic segments on Continental still book up front. Aeroplan is refusing to book domestic first class seats as part of a business class award, but Continental codes their front cabin as business class for award redemption so you’re good there. And the combined United/Continental will be coding their front cabin as business. Which means you only won’t be able to include US Airways first class in an Aeroplan award (you will of course be able to include US Airways first class in a first class award).

And the fuel surcharges are annoying, to be sure, but I’ll earn 50% – 100% more points on specific categories of spend on the Amex, and eat those charges, the math just works out.

British Airways? Well, through November 16 there are some good values, but after that you’re hosed.

Yes and no, the best value awards should be getting more expensive but folks transferring to British Airways for redemption on British Airways to Europe are in some cases even better off requiring fewer points. And Amex has twice this year offered major transfer bonuses to BA (40% and 50%).

Here’s an example I very much disagree with.

I had a longtime client with tons of Membership Rewards points email me wanting to travel from Detroit to Tel Aviv in business class. In the past we transferred to Continental and usually had a nice one-stop routing on Lufthansa for 120,000 miles in business class. Now the only option is to transfer to Aeroplan and pay 135,000 miles plus about $1,000 in taxes/fees. If we want to avoid Lufthansa and the fuel surcharges associated with them, we would have to add two additional stops (based on availability for his dates) and the domestic segments would be in coach.

I’d argue that Ben’s approaching this wrong. For Detroit to Tel Aviv in business class with American Express points, it’s not “the only option” to transfer to Aeroplan and pay 135,000 miles plus fuel surcharges to get a one-stop award.

Instead, I’d offer that I would rather transfer 90,000 points to All Nippon for that very same award and pay fuel surcharges. That’s 45,000 fewer miles, And the last time I did this on ANA, total taxes and fees inclusive of fuel surcharges were $611.

Now, was Continental a better deal at 120,000 and probably $400 less cash? Even then I’d have preferred to save the 30,000 Amex points and shell out an extra $400. I still might have gone Continental because Amex points used to transfer instantly there versus taking a couple of days with ANA. But the answer there isn’t at all obvious. (By the way, and for what it’s worth, a Boston – Zurich – Tel Aviv roundtrip routing would be only 85,000 miles.)

The All Nippon award chart — which is distance-based rather than zone or route-based — isn’t uber-cheap for first class, long haul. But medium distance trips and in business class there are some real bargains.

And let’s take this simple illustration. Now, I coined the term Skypesos. But I also wrote a pretty long-ish post detailing how to get really good value out of their program.

Let’s assume Ben’s analysis is right, that transfers to Delta are the best remaining use of American Express Membership Rewards (I actually think that All Nippon – even with fuel surcharges represents a good value, to some destinations Aeroplan will as well, the British Airways with a transfer bonus can, and Singapore Airlines for one-way Star Alliance awards, also with fuel surcharges, can occasionally be non-crazy too).

About half the year there’s a transfer bonus, sometimes as high as 50%, for moving Amex points to Delta. Say I earn 3 Amex points per dollar on airfare spend via the American Express Premier Rewards Gold card. With that 50% transfer bonus I’m earning 4.5 Delta miles per dollar. That means I can literally spend double the Delta miles and come out ahead compared to Chase Sapphire Preferred for the same award ticket. But of course, if you follow my advice you should be able to avoid spending double the Delta miles on many awards.

American Express Membership Rewards have taken some hits. But they’re still a very important store of value. They still have partners in all three alliances. And they’ve demonstrated their trustworthiness over the years.

Sure, the Chase Sapphire Preferred card has increased in relative value and I am a big big fan of that card. But no need to make extreme claims about Membership Rewards, either..

About Gary Leff


Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel – a topic he has covered since 2002.

Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the “World’s Top Travel Experts” by Conde’ Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. yeah Ben is pretty clueless about this. Experienced blogger such as yourself show him that he need more experience before he busts a nut.

  2. Thanks for being the voice of reason. MR is still a valuable program & I don’t understand the hysteria about paying taxes & fuel on an award. (Having just done the SQ LAX to SIN on A380 in J for $680 + 120000 miles, vs. $5980 full fare, that was well worth the $$ and miles.)

  3. Well said. MR Gold rewards is still the only card I use. Am contemplating adding sapphire, but holding out for big miles signup bonus….

  4. Ben’s point that the value of Amex miles is reduced is still true, despite you pointing several examples of better ways to get to certain places.

    ANA and Aeroplan adding fuel surcharges on both the JFK-LHR and DTW-TLV examples mean that you are paying more out of pocket and the value of AMEX miles has decreased. Just because there are some “deals” to be had doesn’t change that. If you are suddenly paying $500 per trip in fuel surcharges by transferring AMEX miles to either ANA or Aeroplan, your AMEX mile isn’t buying what it used to.

  5. @Jack Ryan the only change to ANA fuel surcharges is VIrgin flights. ANA has long billed those otherwise. I’m just suggesting that ANA redemptions on many routes are really superior options, and that Membership REwards while less valuable than they may have been are not nearly as bad as Ben supposes.

  6. The other issue is that the value of AMEX really goes down (from Continental leaving and AP charging fuel surcharges) when you consider the majority of people redeem for economy tickets, not premium classes. It doesn’t make sense to redeem economy tickets on many international flights with fuel surcharges. Not everyone can rack up enough to fly a family business class, for example.

    When you consider base fares on some fares are already really low to some international destinations, fuel surcharges on Aeroplan absolutely kill the value of AMEX points in relation to revenue tickets, especially since they can no longer transfer to Continental.

  7. I love that you both disagree on this issue. It shows that the value of a program really is subjective in many cases, and it’s great for the rest of us who aren’t as knowledgeable to get a sense of where opinions differ. Also makes a strong case for us to hire one of you to book our award trips!

  8. @Gary, I understand that ANA awards are mileage based. Is there a post which explains in detail on which routes an ANA redemption is superior?

  9. It seems there are very few limited values left in MR and those are highly variable on one’s needs. UR just seems more flexible especially on one-way booking.

    And the Fuel surcharges really are a killer. It is a heck of a lot of spending on gas/groceries you need to do to break even on paying $400 extra for the same award.

  10. I respectfully disagree on MR value. Possibly because I am in an AA hub but also because there are other options out there that offer consistent flexible rewards.

    My Amex Buss Plat gives me 2% cash on EVERYTHING. My Amex Blue gives me 5% on groceries and gas. You can find a few stray dogs like 3 pts on MR cards but for folks who’s air expenses are a modest part of their budget you get more bang with cash.

    If you spent $25,000 a year on air tickets you would only pick up an additional $250 in value (over a 2% card) if you give MR a 3 cent valuation. That would barely pay for your annual fee.

    Sorry, I am in the MR losing value camp.

  11. The triple miles on air fare for the AMEX PRG card is nice. But for people flying United, the MP Select Visa card is better (triple RDM plus 1 EQM). On other airlines, a quarter of each year (July-Sep), you can use Chase Freedom cards to get 5 miles/$ spend. The rest of the time Sapphire card get 2 miles/$. So I don’t think I am losing much in this category by not having the AMEX PRG card.

  12. Gary,

    I guess beauty is in the eye of the beholder. I don’t get terribly excited over trips to Europe with some pricey fuel surcharges, so if that’s where the value is, meh. I can suck up coach on a < 8 hour flight. And on an < 8 hour flight, it isn't long enough to really enjoy my time up front anyway.

    And don't forget that Hyatt has some nice aspirational awards (Chase UR partner), such as the PH Paris and PH Maldives. For top end hotels, those awards are down right affordable.

    I spend maybe $20,000/year on cards. I don't do much revenue (er, mileage generating) flying. If I split my spend amongst cards, I'm never getting any decent awards. SPG AmEx and Chase Sapphire have hotel benefits or transfer partners — where I can get awards for as little as 1200 points.

    I can't afford to spend $175/yr on a "back seat" card. This one probably bites the dust at renewal time.

  13. I think it depends on perspective, and how one values points. Some (like Gary) see points as a currency, and they don’t mind the tradeoff, i.e. 30K pts saved vs. paying $300. However, there is a camp that leans towards Ben, where they’d rather minimize cash outlay. I like getting C/F seats AND paying less than a Y ticket, whenever possible. It’s not as fun to pay $800-1000 for a “reward” ticket. Especially when that is for 2 or 3 people.

  14. Nice post.

    I like British points for flying to England. It seems everyone forgets they are reducing mikes in all cabins for JFK-lhr by 20%. Potentially unprecedented in the history of FF programs. While some of the peaches on cx and LAN will go away, don’t forget people do fly to London…and what better carrier to do it on? Add a 20% reduction and a 40% xfer bonus, and this becomes extremely affordable!

    The BA changes are a celebration for some!

  15. One big reason I will keep my Amex is also the ability to borrow points. – up to 60k with the plat. Even more you can buy them – up to 500k for 2.5 cents per. I have especially utilized this with the big transfer bonuses cutting the cost per mile significantly. Especially with BA. FYI I have redeemed several times in business from WAS to TLV and the fees weren’t so bad since I only transferred in lhr.

    You will always be able to flat out buy the points for Virgin Atlantic upper class for $1575 plus $500 taxes and fees. That is always a cheap business class option.

  16. Sorry Gary, I disagree. Amex MR has taken a big fall this year and is no longer my or my friends point currency of choice.

  17. @Dfyant I agree it’s taken a fall, my point is that it isn’t as bad as Ben makes it out to be. The points are still *worth more than Delta miles* because (1) of the transfer bonuses to Delta even and (2) because Aeroplan miles and ANA miles remain more valuable than Delta miles, and these are Amex transfer partners.

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