At the beginning of the year I wrote The State of Frequent Flyer Miles in 2015.
- Award charts are more expensive. Miles are easier to earn. The products we cna redeem for are better than ever.
- The economy and travel business are relatively good which makes programs less generous with us.
- And they’ve gotten smarter, there are fewer opportunities to game.
- But as they continue to get more complex opportunities emerge. And the economy won’t stay strong forever.
Something else has changed. Some of this is driven by the economy, that programs aren’t as worried about our loyalty in good times. But that’s not all of it.
At some programs, the gloves are off, there seem to be no constraints, things that were unthinkable for programs to do in the past are now just ordinary course of business.
Delta has frequently made its award chart changes without notice. But significant changes to its terms and conditions, eliminating published award charts entirely, and imposing de facto 21 day advance purchase requirements for saver awards on Delta flights and not telling members about any of this is truly brazen, even for SkyMiles.
There have always been less than trustworthy programs.
Amtrak was long known for devaluations and fundamental program changes without notice. They’ve taken away redemption options overnight, even leaving question about whether they’d honor redemptions already made. Expedia has been super-brazen in its devaluations. Goodness knows little can top LatinPass becoming a shopping program and declaring that members had to earn shopping portal points equivalent to their existing account balances in order to redeem accrued miles.
But the major core airline programs? In November I wrote that you should never believe an airline when its lips move.
I’ve been thinking the past few days, who can we still trust (in some relative form)? Instead of untrustworthy programs being outliers, it seems they’re the most common.
Trust is increasingly important even with a revenue-based program. You have a currency, the program is the central bank. There’s no external authority out there any more, not even really the threat of lawsuit except if you explicitly violate your own terms and conditions in a post-Ginsberg world.
The only constraint on program behavior is that at some level changes could be counterproductive to the bottom line. What can a program get away with without a material number of customers heading for the door? It’s about future business, without regard to past promises.
Programs all devalue, some have a history of giving notice and doing it a bit more fairly than others.
- I trust Starwood and Hyatt relatively more than Marriott, Hilton, and IHG. SPG has devalued but relatively slowly and still has most airline transfer partners fixed at 1:1 [gone are the super generous transfers, of course]. Hyatt introduced category 5 then 6 then 7 and increase suite redemption prices from a 50% premium to a 60% premium. But I believe they aren’t sitting around thinking up ways to screw their members.
- I trust Alaska a little more than other programs right now, but I attribute that to competition from Delta as much as company culture. They’ll play games at the margins but they don’t want to be chasing away loyal customers since that loyalty is strong in Seattle and their best tool right now against the onslaught.
- I trust American relatively more than Delta and United, but still believe their miles will be worth less in the future. I think the April 8 program changes without notice last year taught the program the importance of trust and advance communication. And they’ve been much better since. But they’re offering superior value now, and that’s not something that tends to last — when something is orders of magnitude better than what most others are offer, we get mean-reversion. We always have.
The best advice doesn’t change, really the current environment doesn’t mean you should do anything different than you already should have been doing.
- Focus on quality programs.
- Take a diversified approach. My advice for awhile has been accrue in credit card programs that transfer to a variety of airlines, to hedge your bets. But then take a portfolio approach even to programs with transferable points and accrue in a variety of these, because even they can devalue. I want points with Chase/Amex/Starwood. And all 3 of those.
- Earn and burn in the same period. You can still win but it’s more important than ever to earn, redeem, earn more, redeem more – rather than accumulating and holding your points. That way devaluations don’t affect the value proposition under which you earned your points.