Alaska Airlines Changed Their Mind About Why They Devalued Without Notice

Mid-last week Alaska Airlines made no-notice changes to their Emirates award charts for business and first class travel, raising prices by as much as 100%. Overnight the price of business class and first class awards went up — a lot. A first class roundtrip between the US and Africa on Emirates went from 200,000 to 400,000 miles.

Changes without notice are the worst thing a loyalty program can do. They promise future benefits in exchange for business now. You spend years, even, working towards an award. Any reputable program wants to retain the trust of its members, so gives significant advance notice when making changes that hurt its members or reduce the value of its points.

Alaska offered an explanation.

  1. Their old awards were too good a deal, so they needed to become more expensive.
  2. Travel hackers forced their hand.
  3. Our policy is to 30 days’ notice when we can, but we couldn’t do it this time (for an unknown reason).

Thirty days notice is pathetic, though not as pathetic as no notice at all. Blaming things on ‘travel hackers’ was merely an attempt to deflect blame, and not at all credible. The excuse was largely taken to mean either:

  • Folks pushing the envelope on Alaska’s routing rules, such as by booking same flight numbers making multiple stops to rack up extra segments or by flying from the US to Europe via Dubai (which Alaska explicitly offers on its award chart, and suggests when you search for flights on its website).

  • Folks signing up for credit cards or buying miles (which Alaska regularly sells at a discount, month after month) rather than flying the airline.

Of course if the problem were the routing rules, Alaska could change those instead of doubling the cost of awards to all members overnight.

And if the problem was all of the people buying miles, Alaska could stop promoting 40% and 50% bonuses on the purchase of miles month after month. In fact they don’t because customers who buy miles are profitable – redemption costs are lower than the sale price of miles, and they don’t even have to provide those customers with transportation.

Yet some readers believed Alaska’s reason and were sympathetic to it. It seemed to me like they were reading their own priors and prejudices into the situation. But commenters felt:

  • Alaska was forced to do it because the awards have been popularized by bloggers

  • They were closing a ‘loophole’ (the ability to redeem 100,000 miles each way for first class between the US and Asia)

For example nsx wrote,

Alaska saw no benefit to giving people who read these blogs but never buy tickets from Alaska time to make a run on the bank. Thus no advance notice.

That’s what they meant with “Given the dynamics of this particular award, we were unable to announce changes in advance.” Blog readers aren’t the kind of customers Alaska wants to reward. They are demon customers. It take a willful obtuseness not to see that.

It turns out that Alaska Airlines now say that wasn’t it at all! Per One Mile at a Time, Alaska is now offering a new and different explanation: too many brokered awards.

I am truly sorry that more notice was not given with regards to the changes made to Emirates award travel, but this was the direct result of fraudulent activity that has been happening with our award level on Emirates.

Both Alaska Airlines and Emirates have been dealing with issues of “travel hacking” or the selling of award tickets for a profit by individuals and brokers in direct violation of our policy and Emirates policy.

The decision was made that in order to continue to offer award travel on Emirates changes had to be made to curb this fraudulent activity. Normally when we make changes to our Mileage Plan we give 30 days notice but in this instance with the rise of fraudulent activity we needed to make a drastic change to fend off the rise of “travel hacking.”


(Line breaks and emphasis mine.)

There are four kinds of fraud loyalty programs face. At first Alaska made it sounds like the kind they were combating was “people who benefit too much.” Of course programs write the rules, and if they don’t like any given sort of activity they can change the rules.

They now seem to be suggesting the issue is selling awards. This increases program costs. It reduces breakage (points going unused, and eventually expiring). Purchased awards may displace revenue tickets when people buy awards from brokers as ‘discount tickets’. Here’s why airlines and hotels won’t let you sell your points.

Programs work to fight brokers. Usually they investigate accounts and scour eBay and Craigslist. But the overarching goal is not to deprive legitimate members following the rules of the program from benefiting from the fruits of the program. There’s no universe in which fighting fraud though required doubling award prices overnight without notice for all members. Which is why this story is less than plausible just like the first one was.

Now that they’ve devalued awards without notice and even changed their story as to why they’re looking even worse in my view.

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. Well, it sounds like they have adopted a narrower definition of “travel hacking” so as to limit it to brokered awards? If such were rampant enough to detect yet too difficult to police, it may be that Emirates applied pressure upon AS to act quickly. And I would also feel sympathetic if AS moved to act.

    As far as the lack of notice goes, I feel only so much sympathy – prices of everything go up without notice, and assuming abuse is occurring, announcing that abusers have one month to complete their abuse seems a bit foolish. But, alas, this presumes “abuse” and not “fair use”. People will disagree when that line gets crossed.

  2. There are more logical solutions that would not upset your customers nearly as much, for example Korean Air’s policy of only allowing award tickets for family members, or some variation of Singapore’s requirement that you add the person to a limited list of who you can redeem miles for. If this was really the reason, the solution they came up with seems poorly considered.

  3. As much as I want to defend Alaska it seems like they could have made better choices. If brokering or hacking is a problem they could limit awards to family members or ramped up the cost a little instead of a lot. I have this weird feeling they they had outside pressure to do this. Maybe from partner airlines.

  4. Alaska can say whatever it wants. It most probably has to do with Emirates. As far as I know, Alaska had the most common way to accrue miles for an Emirates award. I read into the situation the same way, as when AA increased Cathay awards. There were just way too many people redeeming for Emirates awards than what statistics would indicate an average Alaskan flyer would redeem. So did the “travel hackers” ruin it for everyone else? I guess it depends on who is defined as a “travel hacker”. But, popularity does increase scarcity, and I think this is the perfect example.

  5. @jfhscott: where do you live that prices of things go up by 80-100% overnight? I would only then be sympathetic for you.

  6. @DaninMCI outside pressure from partner airlines is fine, you say “great, we’ll give our members notice and make the change” remember that Emirates benefits from its Alaska partnership enough that they added a second Seattle flight.

  7. @jfhscott prices of everything go up but remember that this is a loyalty program. you can use your cash whenever you want to buy whatever you want. you can only use your alaska miles to redeem for a set of things they dictate, when they say, at the price they say. so you save up over time only have to the reason you were saving pulled out from under you. miles aren’t cash, and airlines don’t want to let them become cash.

  8. I don’t understand why the airlines don’t just restrict awards to the the name of the person on the mileage program. This would eliminate selling tickets or “giving” them to other people.

  9. Alaska was being far too polite initially in blaming ‘travel hackers’. Now they have cut to the chase and said it: BROKERS! Which is what we knew! Emirates knew too, and clearly leaned on Alaska to act promptly. Unfortunately their response was possibly made in haste not well considered. It will severely curb EK premium redemptions, but if EK are happy to fly with near empty F cabins, well then that’s their business! It’s not as if they need to turn a profit anytime; the airline is a subsidized flagship emirati charity case.
    I think that Alaska needs to explore how to preserve their awards for their genuine MP members and sift out the brokers and grifters who are sucking the life out of the program. I wouldn’t mind a ‘security check’ akin to the airport check each time I take up an award if it means fraudulent activity (Alaska’s words) was eliminated. A smart IT person could do this in no time!

  10. The people at Alaska Airlines are lying to themselves. We can’t expect them to be honest with the public. Their story(ies) smack of some form of mass/corporate hysteria and self delusion

    No doubt they are very comfortable with themselves because they have a corporate charter that says their values include honesty, respect, integrity, trust and such. Therefore any actions the company takes must be honest, respectful and trustworthy.

    When whoever it was was going through the group think to come up with these justifications, it is a shame that no one had the gumption and clear headedness to point out that the Emperor was wearing no clothes.

  11. In their possible defense, perhaps AS thought that “travel hacking” = brokers? I mean there is no universal definition of the term and in fact I hate using it because of that.

  12. I think “john’s ” comments are a result of “feeling the Bern” ! Come on do you really believe what you wrote ?

    Having some information while it’s a lousy turn of events the bloggers, t ravel scammers and yes the airlines and cc companies have all a hand in this.

    Frankly looking around the pasture 120K for EK’s business product is still a deal. It’s a hell of a lot better than any US metal going international and better than some others as well. No i’m ok with it and staying with AS.

  13. Alaska has a reputation for screwing over their customers worse than delta.

    Take a look at the FT threads where Yvette from Fraud prevention has written incorrect and far from true reasons for them closing down accounts for no reason.

    I’m almost wondering if AS has opened themselves to liability by enticing consumers in with a bait and switch propagated by bloggers such as yourself discussing the value of miles and then changing, for the first time, without notice.

    Almost as good as a very, very buried T&C they use that requires the Alaska FFP be put in at booking or they will close your account.

    They are the most shady crooks out there, at a level Delta only wishes they could live up to.

  14. @juan – that would make too much sense and likely be utterly too advanced of a feature for the current IT systems

  15. What a garbage excuse. If the issue really was reselling of awards, then raising the miles required only means that the price to buy a re-sold award will be more… but it’ll still happen.

  16. @Ghostrider, Uh yeah, I believe what I wrote. I’m not sure which part(s) of my comment you find so unbelievable, but when Alaska tells us that it was “unable” to give advance notice of these changes, I think it was clearly lying to itself and the public. Instead of claiming that it was unable to give notice, Alaska should have said something like “we believed it was unwise” or “it was in our interests” to forego advance notice. If there was in fact circumstances beyond Alaska’s control that made it impossible to provide advance notice, I wish Alaska would explain what they were and then I will stand corrected.

    As far as feeling the “Bern,” I have never had any Alaska miles. It is a shame though to see a company that I thought ran a good program treat its customers so poorly and then try to justify it with stories that just don’t hold water.

  17. Alaska Air’s use of the word “unable” is no worse nor better than people declining a social invitation (party, wedding, etc.) by RSVP’ing that they are “unable to attend” when the truth is they do not WISH to attend. Sounds like Japanese culture where people find it rude to say “NO” or “I refuse,” so they say “it is difficult.”

  18. Based on what I’ve read, I suspect EK wanted to cut off access to premium awards for AS customers altogether with immediate effect due to overuse. Was it brokers, bloggers, churners, routing hackers, or some combination of these? Who knows? In any event, I think AS managed to negotiate EK down to a massive increase without notice.

  19. @Arcanum and they could have negotiated notice if notice mattered to them. it says a lot that notice wasn’t top of mind and a top priority.

  20. I’m not buying into the explanation at all
    Lets even for a moment we believe them Brokers wont likely be deterred at all just make less
    But the loyal program member will be affected
    If theres a thread of truth to this they could have easily restricted this to the account holder and their traveling companions on the same locators
    This is nothing more than a money grab fast and furious
    Ive lost respect for this typically great airline

  21. This is just simple fraud.
    You buy their miles and next day they cost 50% of money paid.
    In serious country this guys goes to jail- not in US…

  22. If Emirates were concerned about their F/J cabins filled with people from Alaska redemptions, they could just restrict number of released seats to them. Emirates are not generous to begin with as Etihad, for example. For my last trip DXB-JFK I booked 2 F seats and 1 J seat, and was hoping that 1F seat would open (to upgrade). From 14 F seats, only 5 were taken, but Emirates didn’t release any seats for awards. So, 9 empty seats.

  23. @Gary: If EK was the driving force behind this, AS may have been forced to take what they could get. I can see EK not wanting a run on the bank by giving notice since this was arguably the best redemption with AS miles. In any event, none of us know for sure what happened behind the scenes, so this is all speculation.

  24. @Arcanum Alaska had plenty of leverage if they cared to use it, Emirates values their partnership enough to have added a second Seattle – Dubai flight.

  25. I agree: the explanations make no sense, and the actions don’t fit the stated reason. Too many bloggers jumping on sweet redemptions? Require that people have flown at least one AS flight in the past year to be able to redeem an award. Or flag award tickets so that the passenger must check in at the airport, and an agent will ask them how they know the person who issued the award. Or investigate accounts that issue awards.

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