More Disappearing Acts
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.