I explained ten years ago why points programs devalue. They’re private currencies without any binding constraints. The Supreme Court even limited your right to sue this year. Programs can do as they wish with impunity.
There’s tremendous value in frequent flyer programs but you should not save points now for some future day in which you might spend them.
In general your points will never be worth more tomorrow than they are today. The only real exception to that has been the introduction of alliances. The ability to redeem across partners, even on the same award ticket, made existing points more valuable not less valuable.
In general I recommend points that transfer to other programs, you’re diversifying your points holdings even by accumulating a single currency. Starwood, Chase, American Express (and to a lesser extent Diners Club and Citi’s Thank You Points) are more desirable than individual airline miles because you can put your points where you need them when you need them later.
But this isn’t a panacea. Transferrable points can devalue. American Express has lost transfer partners many times in the past (US Airways, Continental, Northwest, to name a few). Starwood has devalued its transfer ratios… Qantas used to be 1:2. United used to be 1:1. For a time Singapore went down to 2:1 but was brought back up to parity. And their acquisition by Marriott could mean the end of lucrative points transfers.
SkyCity Marriott, Hong Kong Airport
There are two lessons:
- Burn as you earn. You don’t care about devaluations as much if you are earning and burning in roughly the same period, under the same award chart. It’s much easier to earn points than it used to be. What’s a problem is earning points 10 years ago, when it was harder to do so, and spending them now when awards are more expensive.
- Diversify your points. I like having Chase, Starwood, and Amex points.. and also points with various airline and hotel programs. That way I don’t take a hit to my entire portfolio when a single program devalues.
These two pieces of advice sound somewhat in conflict and they are. Diversifying involves building up large points balances that you aren’t likely to spend right away. The truth is I earn points too quickly to spend them right away, so I want to have them spread out as best I can. Plus I don’t know what my future self will want or need in terms or rewards. I’m hedging not just devaluations but unknown future preferences.
People should still play the game – at least sign up for accounts, accumulate points, track them with something like Award Wallet and keep points from expiring. But not have their decisions swayed by a frequent flyer program, don’t spend more to stick with an airline.
There’s the rewards part of a program, and there’s the recognition part. Elite status still matters for those who fly enough. And for those who fly regularly but not enough for status, getting the program’s co-brand credit card makes sense (but not putting spending on that card).
United has the best international business class awards, considering the lack of fuel surcharges and availability through Star Alliance. A United mile is worth more than an American mile but I still maintain an American mile is worth more than a Delta mile, even with American’s pending devaluation.
American Airlines Airbus A321T at New York JFK
Delta doesn’t even offer international first class awards at any price (which is what American is increasing the price of the most). Their upgrade awards are astronomically expensive, much more so than American’s. I’ll still take American’s upgrade policies and miles over Delta’s, despite Delta’s better inflight product.
The programs do matter for folks traveling enough to earn status. But the casual traveler absolutely shouldn’t spend more for the miles because the redeemable miles aren’t good enough to justify it — unless it’s Alaska. Alaska remains under assault from Delta in Seattle. They’ve said their program is a great differentiator. And they have the best operating margins of any US airline. Still, they were the second airline to go 3-tier redemption charts. And they were rumored to be one of the first to consider going revenue-based. So how long until they tip?
The key takeaways are:
- Transferrable points programs are best
- Foreign points programs like Korean Air Skypass, Japan Airlines Mileage Bank, and Avianca LifeMiles continue to offer good value
- Earn in the same period you burn, and be careful not to spend too much at the margin to accumulate miles.
- Have great experiences now, premium cabin long haul awards are the ones getting more expensive to the greatest degree. The same tends to be true at hotels, with the most luxurious and highest cost options becoming relatively more expensive.
Emirates Airbus A380 First Class