Airline rewards get less rewarding for most flyers
The skies are getting less friendly for the majority of passengers, or at least for those stashing away miles in the airlines' customer-loyalty programs.
As major U.S. carriers convert from the traditional mileage-based programs to revenue-based ones, frequent business travelers stand to reap some benefits, but everyone else will not. That's the consensus of frequent-flier bloggers, who say people fixated on earning miles and who chose an airline on that basis could miss out on cheaper, more convenient flights offered by competitors.
"A lot of people at the leisure traveler end of the spectrum haven't caught onto the fact that there is so little value in these programs for them these days," said Tim Winship, editor-at-large for SmarterTravel.com. "They continue to participate and consider the mileage implications of their choice of carrier, when they'd be better served picking the cheapest and most convenient flight."
Many consumers are unaware of the switch until they make a travel plan and look to book a plane ticket, only to find the rules have changed -- and usually not to their advantage.
"The programs are complicated, and most members aren't paying that close attention until it comes time to redeem, and then they're frustrated things are more expensive," said frequent traveler Gary Leff, co-founder of InsideFlyer.com. "The period we're in, airlines are filling planes, more or less, so they don't have to leverage a loyalty program in order to sell seats."
American Airlines (AAL) is the latest carrier to devalue its mileage program by awarding miles for flights based on the cost of a ticket rather than miles flown, a shift that comes on March 22. The trend began about half a dozen years ago, with carriers including JetBlue Airways (JBLU) and Virgin America (VA) introducing revenue-based programs, while Southwest Airlines (LUV) switched to one that rewards a certain number of flights with a free ticket. Delta Air Lines (DAL) and United Continental (UAL) are more recent entries.
"Of the larger airlines, only Alaska Airlines (ALK) is still out there with a traditional mileage-based program, but the expectation is they'll cave," said Winship. "The carriers are expanding on what goes on with hotels, where you earn points according to how much you spend."
The changes favor frequent business travelers, who more typically purchase unrestricted tickets and buy more expensive walk-up fares. These contribute disproportionately to the airlines' bottom lines, as opposed to the infrequent leisure traveler who flies once or twice a year and buys heavily discounted tickets in advance.
Airlines are also changing what the miles in their loyalty programs are worth, and it's up to the individual carriers as to whether they give members advance notice.
"None of the airlines are going out of their way to market the changes to their programs. And how miles are worth quite a bit less than they used to be is something they're leaving to consumers to discover on their own," said Zach Honig, editor-in-chief at ThePointsGuy.com. "There is absolutely no regulation when it comes to frequent flyer miles."
"United made their big change two years ago, Delta keeps making changes on a rolling basis and American makes its big change later this month after announcing it several months ago, which is the opposite of what Delta does," said Leff. The carrier's practices include removing its "price lists for rewards, and you don't find out what a reward costs until you go to book it," he added.
The carrier has made a strategic decision to hang its hat on operational excellence, and not its loyalty program. "They aren't going to promise boatloads of miles and upgrades, but rather focus on getting you there on time," Winship said. "This is something I hear from Delta customers on a pretty regular basis -- that SkyMiles suck but that they took off on time and arrived on time, so it's a balancing act."
Delta, which in December said it intends to change its pricing to sell more first- and business-class seats, considers frequent flyer miles to be a "giant liability," according to Glen Hauenstein, the airline's chief revenue officer and incoming president.
Delta would prefer people stop saving miles for things like family vacations and retirement and use smaller quantities of miles instead on purchases like a bottle of champagne in a Sky Club, for instance, Hauenstein told an investor's conference on Tuesday. "It doesn't have to be in these large chunks of free travel."
Leff was dismissive of Haunestein's contention, saying "people want free trips, not just spending more on ancillary services on their business trips."
The frequent-flyer programs "offer the dream of travel and access to things they otherwise couldn't afford," said Leff. He added that's a far cry from "blowing your miles on a good bottle of champagne that is probably overpriced."
For infrequent flyers, "there are a whole lot of other considerations that should trump mileage," said Winship. "Do they have a departure time that works for you? Is it a nonstop flight, or does it stop in Dallas? Or worse, do you have to connect to another flight in another city? Mileage earnings should be down on your list of priorities, and maybe pushed off altogether."