Overnight last night Alaska Airlines made no-notice changes to their Emirates award charts for business and first class travel, raising prices by as much as 100%.
Changes without notice are the worst thing a loyalty program can do — to their members, and to themselves. A loyalty program is an intertemporal proposition. They promise future benefits in exchange for business now. You spend years, even, working towards an award. That’s why any reputable program that wants to retain the trust of its members, and its own value proposition, gives significant advance notice when making changes that hurt its members or reduce the value of its points.
Since Alaska has sought to use its loyalty program as a way to differentiate itself from other airlines, this was especially surprising and jarring.
Alaska has now offered an explanation that boils down to:
- It’s the fault of travel hackers
- We offered too good a deal
- We couldn’t give notice
- But we won’t do it again if we can avoid it
First, they shift blame.
Alaska’s premium Emirates awards have long been known as an exceptionally good deal. With the rise of “travel-hacking,” intended to exploit Mileage Plan’s award routing rules, coupled with below-market award levels, our previous award levels were unsustainable. The new award levels enable Alaska to continue to offer Emirates Business Class and First Class as a redemption option.
If the problem was ‘travel hackers’ taking advantage of routing rules, the solution would have been to tighten the rules (perhaps not to allow more than two Emirates flight segments, or exclude certain ‘direct’ flights from redemption) rather than to massively increase the price of awards. 400,000 mile round trip first class awards weren’t necessary to accomplish the task. That’s unleashing a neutron bomb to break up a fight at a soccer match.
In any case, the number of people booking crazy routings was relatively small (I can’t imagine wanting to).
On the other hand, since Emirates awards have been widely available — 14 first class seats on their far-flung fleet of Airbus A380s — members found it easy to get awards to Europe, Asia, and Africa much of the time. That was costly to Alaska.
Furthermore, Alaska fed this by regularly running discount sales of their miles.
However the awards were reasonable, 200,000 mile roundtrips were hardly ‘an exceptionally good deal’ that was unsustainable. Meanwhile 400,000 mile roundtrips (or 300,000 mile roundtrips) aren’t ‘market price’. That’s more expensive than even United charges for international first class on partners.
They promise advance notice in the future… maybe
According to Alaska,
Our policy is to communicate significant program changes with at least 30 days’ notice when at all possible.
They don’t say they’ll give notice in the future — only when they consider it ‘possible’.
And only then 30 days’ notice, which may not even be enough to put extra spending on their Bank of America co-brand credit card to earn miles, or do online shopping to earn extra miles, to get a big enough balance to book what you’ve been saving for.
That’s why United and American have gave at least 3 months’ notice for their most recent major award chart changes. And even that’s hardly doing members a favor.
They will refund mileage purchases if you want.
If you bought miles in March they’ll refund those miles if you ask.
I’m not sure that by deflecting blame, and making such a weak promise about the future, they do themselves any favors retaining the trust of members. Are you persuaded to trust them going forward?
Well said, sir…
And how was it “not possible” to communicate this change in advance?
As you always say Gary, exceptional values don’t last, so we all knew at some points these would go up, but I bet no one expected this level of increase with zero notice.
I actually wanted to book this award, but wasn’t going to for some time, but it still stings.
Say it with me… Regulation is needed.
This just proves again how Private Industry cannot regulate itself.
Bloggers have spread the word and made a killing off it . TPG is even writing for Travel and Leisure. Mag. You get quoted by some mainstream travel journals. But it is too many hackers so airlines and credit card companies reacting to close down the abuse. Get it while you can. It will be harder to hack and for bloggers to pitch when everyone needs to spend 80,000 points for domestic economy and the sign-ups are severely restricted. Bloggers need to prepare to bridge to mainstream travel topics. TPG is well placed to not have to rely on pitching miles and points in the future. Interesting cycle. It has been a good ride. Last 12 months have seen rapid closure
I wonder why it is shocking? Other airlines have done it, why shouldn’t Alaska? The bloggers say earn them and burn them quickly. That is probably their best advice!
This is a shame. I was rooting for them in the VA takeover and wanted to defect from DL Diamond if it happens.
Did I miss WHY they couldn’t give advance notice?
I wonder how much it would cost to buy Alaska miles (with their 40% promo) to get 400K? I never did, I’m just curious. Probably, close to the paid ticket in F ?
And to top it off, they blame hackers when they have the lowest credit card offering at 25K of any major airline. I would need 16 of these credit cards to “hack” a 1st class cabin. REALLY
This is about as dumb as the Chase 5/24 rule, where I learned today meant 5 of anyone’s credit cards, not just Chase. I am on the verge of closing all my non CC accounts with Chase, moving the mortgage, etc. just for the smugness they have shown.
you can blame topmiles who sent this article to mashable about emirates:
http://mashable.com/2016/03/30/etihad-apartment-a380/#yJ4FY_1978qu
I think this is the reason why they made the devaluation. One thing is for this community to be aware of how to use our miles, the other thing is to let all the world know. Im pretty sure Alaska saw that article and they were pissed. I bet they didnt mind hundreds of people doing the 100,000 EK flights but now they opened the flood gates with those mainstream articles.
@Sergey
I think with 40% bonus one was buying AS miles a 2.1 cents so if my math is right (never a sure thing with me) you’d pay $8400 for 400k miles. Don’t know what a paid EK F ticket costs though so your on your own there.
This is a shame. I don’t have AS miles, but I thought of AS as a better airline, somebody above the fray or with integrity and positive customer experiences.
Now I find out AS is no better than Delta. What a shame.
Sergey,
400,000 miles would run you about $7800. Most Emirates FC flights run closer to $20,000-$25,000 if you want to buy it outright. So by that standard, it’s still a good value.
400K miles at 2.11 cents/mile works out to $8400, so I would guess that’s significantly less than a paid F ticket for a round trip originating in the US.
Liars. Untrustworthy people.
Do not do business with such folks.
Bloggers, Lucky especially with his F reviews of Emirates, complete with picture galleries, has done much to increase people’s desire to aspire towards on of those flights. That’s his thing.
Alaska could have handled this much better. Hell, could they have handled it any more worse than they did? “They made us do it!” is the excuse of 6 year olds.
Emirates, never having to really turn a profit, has made huge availability on the AS site, so why suddenly suggest it’s in any way unsustainable? Just cut back on the award seats on offer (like Qantas has done in an extreme way!) and make some lass draconic increases in miles needed. Will be interesting to see the increase in empty F seats on their flights when this begins to bite. I am unconvinced that Alaska’s blame shifting is genuine.
If there are to be more devaluations some notice is needed. If AA can do it, so can Alaska.
My goodwill and fondness towards Alaska is in hold right now, as are my buying intentions for more miles. Can we trust you Alaska? Well, plainly there is some-one in the decision-making loop who we can’t trust, and employees come and go, as they track dog shit on their shoe through the office! Will heads roll?
“perhaps not to allow more than one Emirates flight segment”
So basically you could redeem to fly USA-DXB or USA-MXP? That’s not very useful.
It’s all about supply, demand and profit. That’s what corporations try to do is make a profit for shareholders. I don’t blame them except they should have give at least some notice and maybe not made such a big increase all at once. Bad PR I think.
If “hacking” was the problem, they could also have required some number of Alaska B-I-S miles or AS elite status in order to redeem for Emirates premium class. As an MVPG with hundreds of thousands of miles earned mostly the old fashioned way over the past 20 years, and with some loose plans to use some for EK F, this stinks. I did BA to SYD the long way in F, because AS gave warning that that award was going away. I did CX F to JNB because CX was pulling F service on that route, with notice.
Earn and burn, yes. Thinking I will book some CX F tickets, somewhere, if I can, soon.
I may just send this post to AS Customer Care.
This blog reminds me of my 9-year old who blamed a 15-5 little league loss on “bad calls” by the umps. Umm, look in the mirror Gary and you will see why AS management did what they had to do. The only real question is why it took them so long.
I know I sure trust AS a lot more than DL, which won’t even publish award charts, or UA/AA, which are constantly taking back elite perks, or even WN, which devalues depending on the tides.
Do you think AS will lose any MVPs? Doubtful. AS does an excellent job delivering its product and keeps MVPs happy with upgrades, etc. They are not in the business of buying flights on EK, that was an aspirational award intended for very frequent flyers. Now you’ve ruined it for everyone.
“that was an aspirational award intended for very frequent flyers”
Exactly my point. The EK F award prices were already high; if access was the problem, restrict access to AS elites. Other airlines restrict premium class award bookings to their own programs, or elites (LH, KE off the top of my head).
This just locks out those awards to people with truly enormous, rather than simply large, balances; or, as noted up thread, people willing to buy even larger piles of AS miles without flying AS.
I got an Alaska credit card and took Alaska on several routes this year solely because of the Emirates awards I wanted but hadn’t yet been able to book. (Should’ve gotten more than one card!) Now I will cancel the card and not renew. I also will no longer go out of my way to book Alaska.
While Alaska won’t exactly feel a great loss or anything, they will have lost the business of the kind of customer you would think they would want — someone who wasn’t taking advantage of anything, just trying to be loyal in exchange for a benefit they yanked with no notice.
I don’t disagree. I’m disappointed because I’ve amassed a fortune of Alaska miles through BofA.
But let me ask you this, Gary, since you’ve just returned from a flight in Emirates’ first? How many miles of those that you redeemed, were BIS miles that you credited to Alaska?
$1 million self-inflicted PR damage, right before AA is about to announce the date for its full mileage customers to drop dead.
Despicable. I wonder if Brad Tilden was aware of this. I sent off an email to him. Wife and I have been planning this for a long time and were within days of booking.
I wonder if they will make this right to loyal customers who earned BIS miles.
Well said. Most industries give its customers or clients some kind of notice if something will change. What is most trouble some is the lack of creativeness and marketing appeal. If they would have limited one redemption per every two year for first class I would like Alaska and credit my AA flight to them; however, I am looking elsewhere. I live in DFW and will be looking at ways to burn my Alaska miles ASAP. I would like to see your thoughts on Turkish, JAL, and Singapore for elite status and earning miles. I given up hope. But I am flying Spirit Airlines next week!
Thanks but Alaska could have done better.
increasing the mileage requirement is within their rights, even by amount of increase. The key question that Alaska staff weren’t able to address is the lack of advance notice.
Did they given any information on what other redemptions they found “exceptional” and “unsustainable” ? Cathay US to Asia ?
@Chris S – while I’ve flown Alaska quite a bit [my wife’s family lives in a city served only by Horizon..] Alaska makes a ton of money on their frequent flyer program completely apart from rewarding flying. Revenue from the mileage program drawfs the profit earned by the airline.
I believe the guy quoted in the blog just started at Alaska Air in Sep 2015.
I’ve never earned or purchased a single Alaska mile so this isn’t a direct impact on me. I’ve also never flown Emirates and don’t know if I ever will. I have other options to most places I could get to on Emirates that are, currently, available with a more convenient currency like AAdvantage.
But, this does strike me as completely bizarre. Forget the weird explanation, holy hell are those some expensive rates, especially to Africa, for 1st Class. The business class prices aren’t terrible, except to Africa. What’s the deal with Africa being so outrageously expensive?
I must admit i had to look up intertemporal
Alaska needs (needed) to work with Bank of America in order to tighten the rules on the churning of their co-branded credit card. It was really the only card out there that people could apply for 4-5x in a single sitting (check out MMS for proof). I know they’ve made applying for the card a little more difficult lately, but it’s still no where near as difficult getting multiple AS cards as it is now for any number of AMEX, Chase, or citi cards. Even instituting a 1 card every 12 month rule would have shown progress to that end.
Patience for the closure of loopholes to play out is what Alaska needed. Most loopholes that allowed people to MS have closed. Alaska is also implementing a minimum spend requirement on their cards starting April/May. Final step would have been to limit the number of cards one could apply for within a given time period. All three steps in concert would have manifested itself in a much lower number of award redemptions, which could have preserved the current award chart.
Alaska “begs for forgiveness”? Spare me; this was Alaska (rightfully, sadly for me) closing a loophole that was probably costing them and/or Emirates a ton of money and explaining exactly who was to blame – i.e., those who were taking advantage. Why would they give advance notice when all it would do is encourage a costly run on Emirates awards by the same people who were causing the problem in the first place?
As the saying goes, pigs get fat. Hogs get slaughtered.
I think the consensus here is not that they devalued the redemption rate for Emirates it’s that they devalued it in such a gargantuan way (100%! Really?!)
In my opinion, the worst sin they made was giving no advanced warning. Vote with your dollars, folks.
How can I get refund for mileage purchase? I am afraid they will devalue CX route next time without any notice. I purchased 450K in March and don’t feel like I can trust them any longer.
DL is a scum bag. But they admit to it loudly and often so no surprises. AS pretended not to be one and this some got suckered. Nothing worse than a scum bag pretending to be an upright citizen.
For all you crying tears, buy a C or F-class ticket if you want to fly in the pointy end. I’m so tired of you working class folks sitting next to me!
I am totally with Alaska on this (even though it sucks because I was getting ready to grab some space on one of these flights…)
The “travel hacking” community is going after some of these redemptions so aggressively that the airlines have to be losing money on them. Sure, they are fine if a few people do it, but when you have sites and articles that explain it to everyone…then it is just not sustainable.
It’d be nice if things like this and the other devaluations didn’t happen. But when you go to some sites and see pictures and posts of people bragging about how much they churned some given card…then of course things are going to get tightened down. It’s just like if you were a kid sitting on the counter eating cookies. Your parents are eventually going to take them away or limit how many you have…same thing here. The community needs/needed to show a little restraint…but alas, we know that won’t happen….so earn and burn it is.
Expect much more of these changes across all programs. I got lucky and book some tickets a few weeks ago. More proof that you need to book and lock in awards as fast as possible. And the comments about travel hacking? I am no hacker. I earned the Alaska miles though credit card spend, credit card bonus etc. I collected them for quite a while and finally a few weeks ago decided to cash in some for JFK-DXB-HKG in First since AA did not allow stop overs any more. The airlines set up the programs and then state they dont want to put up their end of it?
It’s easy to blame the travel hackers, BOA, the bloggers…etc., but at the end of the day Alaska prints their own money.
It shouldn’t be a surprises that points they created (when they generated revenue off of) are getting used, but this is an easy way for them to improve their financials overnight.
It would be interesting to see how this change impacts their stated liabilities.
Why do companies keep offering products that have unsustainable features? It’s their own fault. Fix your programs and then maintain moderate changes with notice to your members. Or put in requirements that you can use one redemption of a certain kind after achieving some other hurdle to make it sustainable (common sense).
Alaska saw no benefit to giving people who read these blogs but never buy tickets from Alaska time to make a run on the bank. Thus no advance notice.
That’s what they meant with “Given the dynamics of this particular award, we were unable to announce changes in advance.” Blog readers aren’t the kind of customers Alaska wants to reward. They are demon customers. It take a willful obtuseness not to see that.
Actually, I found their explanation refreshingly candid.
And I rather suspect that they may need to rethink some of their other redemption options as well.
AS has every right ot do so but as an MVP it reduces trust and value of the program. Put in redemptiuon limits to elites or otehr rules. Slash and burn of this partner award redemption, worse that UAL is bad. Not what I expect from an airlines that tries to inspire true loyalty.
@frank: you are pretty sure the driver of these changes were the mashable article. You think these changes can be developed, approved, and implemented overnight?
Well I dont think they put a lot of thought into the changes. If they did they could have increased it by maybe 50%? So definitively it was a quick change. Not only that article but mainstream media covering these loopholes. One thing is a thousand bloggers, the other is a CNN article showing you how to go around.