Airline Frequent Flyer Devaluations: The Big Picture
After the recent announcement that United Airlines will shift to a revenue-based frequent flyer program in 2015, it’s important to assess the evolving landscape of loyalty programs and consider changes that may still be in store. As a consumer advocate, I want all frequent flyers to understand what a loyalty program should be, and to inspire airlines to either preserve the value of those programs or risk losing faithful customers.
Frequent flyer programs follow a simple give-and-get formula: airlines reward customers for their business, and in exchange they develop brand loyalty. However, starting in 2015, when both United and Delta will structure awards based on revenue, their passengers will earn miles not according to how far they fly, but to how much money they spend.
While this transition is a boon to some flyers (such as those who get reimbursed for air travel), it generally devalues programs by making the average mile harder to earn. Furthermore, it seems to disincentivize brand loyalty, since customers are faced with a more explicit tradeoff between earning miles and spending less. United has so far been coy about how the MileagePlus program will adjust on the redemption side, but if the recent changes to Delta’s Skymiles program are any indicator, it won’t be to the advantage of most frequent flyers.
Piecewise, these changes are not the end of the frequent flyer world, but should certainly make you re-evaluate your loyalty so you’re a part of programs that reward you the most. There are still other programs that award miles traditionally based on miles flown -- notably American Airlines and Alaska Airlines.
Most importantly, now is the time to make sure you’re maximizing your credit cards since the way you earn via credit cards has not been impacted by these changes -- United simply changed the way you earn miles when on a plane. My biggest tip is to get a card that gives you flexibility when it comes time to redeem and you don’t put all of your miles in one basket. I recommend three programs: Chase Ultimate Rewards, Starwood Preferred Guest and American Express Membership Rewards because they each allow you to accrue points into a central pool and then transfer to numerous partners. This way you can leverage the programs that best fit your needs and avoid those that make changes that could leave you grounded.
Brian Kelly is the founder of ThePointsGuy.com