More Dis­ap­pear­ing Acts

Business Traveler (USA) - - SPECIAL REPORT -

Mileage re­wards con­sul­tant Gary Leff, a fre­quent con­trib­u­tor to Condé Nast Trav­eler and author of the col­umn“View from the Wing,” sees a coun­ter­in­tu­itive cy­cle be­ing played out by the air­lines in this econ­omy.

“At the macro level, it’s counter cycli­cal – when times are tough the air­lines are more gen­er­ous,”says Leff.“But now, with con­sol­i­da­tion, the air­lines are mak­ing money, fuel prices are low and the pen­du­lum has swung away from the con­sumer. Now only a third of those re­wards miles are earned by fly­ing. The bal­ance in that to­tal is com­ing in through banks, rental car com­pa­nies, ho­tels, on­line shop­ping por­tals…”

In fact, if one were to ask, since air­lines are so dis­in­ter­ested in their loy­alty mem­bers, why don’t they just dis­solve their pro­grams al­to­gether? The an­swer would be sim­ple – they can’t. They make too much money from them.

For in­stance, Amer­i­can Ex­press paid Delta $600 mil­lion for SkyMiles points in 2014. Those points, in turn, were kicked back to its Delta card­hold­ers.“So when air­lines change the way miles are earned for fly­ing, it’s re­ally y only y a small p part of the equa­tion,”says Leff.“But ut if you are look­ing for free trips down to Florida and you are earn­ing points with ann air­line credit card you may be frus­trated.YouYou may be bet­ter off with a 2 per­cent cash sh back card from your bank and then buy­ing those tick­ets,”he adds.

Premium seats on in­ter­na­tional nter­na­tional flights is where the true value of f fre­quent flier mileage ac­crual makes sense, Leff says. But those seats are get­ting harder r to come by as air­lines are sell­ing those­hose seats rather than giv­ing them m away. Plus pro­grams are now be­gin­ning gin­ning to re­quire that in­ter­na­tional nal fliers use points na­tive to the air­line they in­tend to fly. “Or you may have to buy a full fare coach seat to qual­ify for a re­wards up­grade,”he says.

And while air­lines make it harder to main­tain elite sta­tus, and harder to ben­e­fit from that sta­tus for now, busi­ness trav­el­ers may, in­deed be­come ben­e­fi­cia­ries of this sys­tem once again.

“Busi­ness trav­el­ers of­ten have to buy the more ex­pen­sive tick­ets as their plan­ning takes place closer to de­par­ture. Those trav­el­ers tied to strict poli­cies are usu­ally able to find their way around those poli­cies. Mean­while, trav­el­ers can shop around, earn points in a va­ri­ety of places on their credit card – park­ing at the air­port, meals be­tween flights.”

The next big change to ex­pect, says Leff (beyond the roll out of Amer­i­can’s im­pend­ing AAd­van­tage rev­enue-based for­mula), is some­thing that con­sumers are see­ing more and more – the “Spir­i­ti­za­tion”of the legacy car­ri­ers.

“Delta has al­ready done this,”he says.“We will see that the cheap­est fares will not in­clude ad­vance seat as­sign­ments or abil­ity to make any changes or up­grade. These poli­cies match car­ri­ers like Spirit Air­lines – they want to com­pete on priv­i­lege so fliers that want what they want will have to pay for it. We ex­pect to see Delta ex­pand these poli­cies to in­ter­na­tional routes and then United will come in on this a cou­ple of years be­hind Delta and then we’ll prob­a­bly see this hap­pen­ing on Amer­i­can. It might not be on ev­ery flight and the fare dif­fer­en­tial might not be so large. And buy­ers may not even be aware of these charges, although for now, Delta is mak­ing it clear so buy­ers can opt out.”

Will points de­value to the point of be­com­ing some­thing you re­deem for ex­tra lug­gage space? Up­grad­ing to an aisle seat? For a hard-earned stab at flex­i­bil­ity? Pos­si­bly.

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