Frequent Flyers Miles Programs An Increasingly Bad Deal

airlinetravelThese are not happy days for airline passengers who rely upon frequent flier programs.    Struggling airline carriers are relying heavily upon these programs to generate revenues  (it may be their largest profit center).  Even as travel has tumbled during the coronavirus pandemic frequent flyer miles are generating big bucks for airlines.  In fact, in the first half of 2020, Delta’s passenger revenue fell 60 percent, but the cash the airline got from American Express’s purchases of miles for its customers fell less than 5 percent.

Because of their desperate need for cash, most all of the airlines are making it harder and harder to use miles.   And some, such as American,  have announced that they’ve increased the number of miles/points needed to purchase rewards tickets.    Blackout dates have also increased, making it harder to find eligible flights for which your points can be used.   Customers who like to upgrade seats are also being hit;  Delta announced that it no longer offers upgrades on some of its most popular routes.    Airlines have also begun imposing even more fees on its passengers, including baggage fees upon frequent business travelers.  Industry observers expect that there will be more changes to ­frequent-flier programs as airlines continue to improve their tenuous bottom lines.

DOING THE MATH

As pointed out in a recent New York Times article, frequent flier credit card miles are simply a bad economic proposition.  For example, If you’re spending tens of thousands of dollars each year on credit cards, you can get 2-3 percent cash back with relative ease from some credit card issuer. That’s 2 or 3 pennies for every dollar you spend, which means that $50,000 in annual spending nets $1,000-$1500.  Compare this to earning a mile for every dollar you spend on a credit card (and some cards can return a bit more).  50,000 miles might net you a round-trip ticket worth a few hundred dollars, at best.  According to the New York Times, airlines do not want you to do this math.

TOP STRATEGIES TO COUNTER AIRLINE CHANGES

International Travel –   Because they are generally more expensive tickets, frequent-flier miles for international flights tend to be worth more than on domestic flights.   So pay more attention to getting the best miles for any international travel, especially if you travel abroad often.

Status Match   According to the Washington Post,  United’s MileagePlus users who are unhappy about the changes can call American Airlines to see if they can get what’s called a “status match,” where a member with elite privileges through United’s program can transfer that status to American. Another option is to rely more on credit cards to accrue points, especially those that make it easy to transfer points to multiple airlines — that way you’re not tied to one airline and subject to their increasingly frequent changes to their awards programs. Chase Sapphire Preferred and American Express’ Starwood Preferred Guest, for instance, allow transfers of points to multiple carriers.

Credit Cards –  As airlines steadily degrade the value of their frequent-flier miles, it’s becoming increasingly clear that rewards credit cards that offer cash back can be better deals than cards that offer airline miles.  There are a number of websites that evaluate various credit card travel programs, including one created by “The Points Guy” as well as the highly-regarded Bankrate.  But be alert to the fact that even credit card offerings are getting less attractive.   One exception is the introduction of credit cards that offer miles/points as well as cash back, such as the one offered by Fidelity Investment Rewards.

Use Your Miles Stash Now –  In an era where frequent flyer miles are being devalued by the airline industry,  this is probably the best time to use them rather than to continue to hold these “depreciating” assets.   The airlines are likely to continue to make changes that devalue miles in the coming years. Holding on to miles in this environment is like holding on to cash when inflation rages—the longer you wait, the less your miles will be worth.

Online Mileage Manager –   Check into using a website that helps you best manage your frequent flyer miles.    One highly rated site is Awardwallet.com which is a free site that will track your balances in one convenient spot and even alert you if your miles are going to expire. Other managers include Usingmiles.com and Tripit.

Airline-Free Travel –  Increasing numbers of Americans are opting to travel using boats, cars, RVs, buses and trains rather than airlines.    With the higher costs, unpredictable schedules and lamentable hassles of airline travel,  consumers are opting for cheaper and lower-hassle alternatives.    Some enterprising websites help you calculate various options.  Check out FromAtoB.

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