Whether the frequent flyer miles game seems to be historically rewarding, or in dire straits, depends on your perspective and – I think – your time horizon.
If you got into the game any time in the last 6 years, the current state of affairs must frustrate indeed. You got in at one of the most generous times in history.
As a result of the Great Recession, the worst economic times in 70 years, hotels leveraged their loyalty programs to put heads in beds. It’s hard to even fathom the generosity of Hyatt’s Faster Free Nights promotions (2 stays at any hotel yielded a free night at any hotel) stackable with thousands of United miles alongside.
Airlines were printing miles and so were credit card companies, to lure customers and economic activity.
Airlines that were facing bankruptcy used their mileage programs to keep customers from jumping ship.
And at the same time award seats were everywhere — with travel generally, and premium cabin travel in particular, at a standstill there were empty seats on planes and airlines could make those seats available as awards.
With the economy regaining steam there are fewer empty rooms needing bonuses to fill and fewer empty airline seats so members have to scrounge to find availability. Airlines and hotels both are compensating for the number of points they printed by raising the points prices of awards.
It can seem like dark times indeed.
- Delta double-devalued its award chart and announced revenue-based earning for new next year along with a new five-tier redemption chart.
- American eliminated distance-based oneworld awards and international gateway stopvoers, and gutted the double miles award
- United raised the cost of international premium cabin partner awards to mind numbing levels.
- Hilton gutted its award chart and even eliminated the points and fixed miles earning style (this was the program which used to market as its distinguishing feature that you could double dip points and miles and now you have fewer options to do that).
- Marriott keeps devaluing their hotel award category assignments.
.. Among many, many other changes (feel free to share your least-favorites in the comments).
But if your perspective is a bit longer, then things may not seem nearly as bad. Compared to 15 years ago, when mileage programs had a long and rewarding run in front of them…
Earning is faster and easier than it used to be.
Credit cards didn’t used to have spending category bonuses. The Delta American Express was really the only one bonusing ‘everyday’ spend. Airline cards didn’t generally offer double miles on ticket purchases with their affiliated airline, even.
There weren’t as many opportunities for big bonuses. While you did get partner bonus offerings, like American offering 20,000 bonus points for making 20 transactions with their partners for the program’s 20th anniversary back at the beginning of the last decade, and there were savings bonds and money orders from AAA once upon a time, the explosion of prepaid card offerings is a newer phenomenon which accelerated as the cost of traditional banking has been driven up by legislation like the Durbin Amendment.
Redemption is more flexible than it used to be.
Alliance awards are a phenomenon only as old as the alliances, when I redeemed a United Mileage Plus award for business class to Australia I could have flown United’s partner Air New Zealand across the Pacific — but I would have had to fly United Washington Dulles – Los Angeles in coach. United offered transportation to the partner airline’s gateway city only “as a courtesy.”
As a result of one-partner award, awards that were roundtrip only, there weren’t opportunities for exploiting stopovers. (Flying United metal only, where are you going to stop over internationally? They had limited tag flight service.)
The Quality of Products Has Gotten Better
International business class has, for the most part, true lie flat as a standard.
In the ultimate of first world problems, I dread American’s old angled business class seats and Air France’s angled seats. Now the question amongst top carriers is four-across or six across? How much real estate on the aircraft does a business class suite take up?
Less than 10 years ago United was flying recliner-style seats across the Atlantic and Pacific as their only business product.
And 20 years ago lie flat was not even the standard for international first class.
I’m not generally sympathetic with the argument that mileage prices for better products should be higher, but it’s undeniable that the comfort we can get with our miles has improved substantially.
The price of awards has gone up
It’s not all sunshine and unicorns. Before October 2006 a United business class award to Australia was 90,000 miles and United offered last seat availability in business to all members for 150,000 miles.
After the February massacre, a United saver award is 140,000 miles (only up 5000 miles) and a partner saver award is 160,000 (more than United used to charge for last seat). United’s last seat availability in business class is now 350,000 miles!
For ten years I’ve been writing that more miles outstanding means higher award prices to come. That’s a prediction that has sadly but not unsurprisingly held.
I’ve also talked about reversion to the mean, that the best values at the outer edges of programs are the things we can expect are most likely not to last.
A United 150,000 last seat availability business class Australia award wasn’t going to last when Delta and Northwest were charging 150,000 miles for saver. American offering last seat availability for double the miles of MilesAAver wasn’t going to last with their primary competitors charging triple the saver level.
Programs have gotten smarter
As bad as tech is in the airline space (and it never ceases to amaze me how bad that is), it has certainly gotten better. When I started flying United and earning status in the late 1990s you weren’t supposed to earn class of service bonuses when you upgraded… but you did. A confirmed upgrade was 10,000 miles, but you earned some of that back with extra miles for flying in a premium cabin. That’s long been fixed.
Airlines have learned to support more inventory buckets, until 2002 Alaska Airlines didn’t even have separate upgrade inventory. Confirmed at booking upgrades were 5000 miles and those came out of revenue first class space.
There are fewer opportunities along the edges, like submitting award tickets to british midland’s Diamond Club for mileage credit (their IT — as well as human IT — wasn’t very good…even though the boarding passes would identify award booking classes they still uniformly credited these miles).
While programs overly fetishize high revenue flyers nowadays, they have learned to stop rewarding some of their least profitable customers. Delta even won at the Supreme Court defending its right to do whatever it wished to its customers.
Then again, the end seemed near 11 years ago when United started offering confirmed international upgrades to top tier elites only on nearly full fare tickets and considered awarding those upgrades based on ticket spend instead of miles flown. At the same time Delta had been awarding status miles only on full fare tickets. They backed off of those changes because the economy didn’t support it at the time, but current revenue-based strategies have been a long time in coming.
Credit card companies for the most part no longer just reward you for getting their card, they first want you to get into the habit of using it before awarding an outsized number of miles. When I got started that wasn’t a thing, and then it began with $250 and $750 minimum spend requirements. The idea of $10,000 or even $25,000 spend to achieve a full bonus was unheard of.
What you think of where the programs are going depends on…
Your time horizon matters a lot to what you think of programs, and where they’re at.
The overall cycle of the economy matters a lot. When airlines have empty seats awards are easier to get. When they need to fill seats they bonus purchases. Unquestionably we’re at a point in the cycle where consumers aren’t doing as well as they were just a few years ago, or as well as they were doing 12 years ago (again in bad economic times).
Programs have gotten smarter, and loopholes close. That’s frustrating. But on the whole they haven’t gotten simpler, so outsized opportunities remain.
Ultimately the programs are like the casino house — they set the rules, so over time and across the majority of their customers they’re the ones who should win. But there’s still a value proposition there which lets us reap benefits — to my preference, premium cabin international travel – that we wouldn’t otherwise be able to afford.
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