Devaluation Plan B: How I’ll Keep Flying International First Class on Miles For Years to Come No Matter What US Frequent Flyer Programs Do

US Frequent Flyer Programs: on the Brink

United is devaluing its award chart. The program is still good for coach and business class awards, good for awards on United, but will not at all be good for partner airline awards in international first class. That’s why I need to look to alternatives.

I do not expect a major devaluation from American. Obviously facts will prove me right or wrong on that. For now it is by far my program of choice, and especially so within oneworld. But I still want to prepare myself and think ahead.

Delta of course has SkyPesos… a debased currency which does have strategic uses and that I do accumulate but that cannot get me excited at all, in part because of the limited quality airline products you can redeem for (and absolutely no international first class).

The Revenue-Based Stalking Horse: Things could even get worse

Delta has prepared a revenue-based frequent flyer program, they just haven’t launched it. Using miles as a low value currency, with award prices fluctuating based on the cost of a ticket, means members can use their miles but won’t get outsized value out of those miles.

Frequent flyer programs do worry that their model is unsustainable, with planes full members get frustrated that they cannot redeem their points. They’ve all toyed with ways they can reinvent themselves, and many have convinced themselves it would be better to see their points as cash.

The concept could easily spread, especially if Delta does launch it and their customers don’t leave.

There’s certainly been plenty of speculation that we could see something like this at Alaska Airlines. I love Alaska’s Mileage Plan for the ability to credit flights on both American and Delta to their program, for one-way awards with stopovers and that can be booked online for a great range of partners, and for reasonable pricing even for first class awards on airlines like Cathay Pacific (and less reasonable but still worthwhile pricing on Emirates). But their value proposition could change.

US Airways has certainly looked at the revenue-based model, and made early strides in that direction with a three-tiered award chart for redemptions on their own flights. Randy Petersen predicted that a merged US Airways-American could launch such a program right away, rather than harmonize and change later. I’ve predicted the opposite, that they won’t want to alienate customers after a merger. But there’s certainly a path towards things getting worse for folks who like to use their miles for premium cabin international awards.

Fortunately There’s Plan B: A Whole World of Frequent Flyer Programs

The game isn’t limited to the United States, and airlines around the world offer miles and points and many do so with some great undiscovered values.

Most non-US programs add fuel surcharges onto the cost of award tickets so your ‘free’ tickets get to be quite costly.

You may spend $1000 for long haul first class tickets to some destinations. These do vary by destination, though, redeeming to places like Hong Kong tends to be much cheaper.

I view fuel surcharges on awards as effectively being like buying a deeply discounted, non-mileage earning economy ticket and getting a double or triple upgrade to international first class. That can still be a value.

And not all programs have fuel surcharges, just as most North American programs don’t add them to awards on most partners, South American programs are a place to go to avoid fuel surcharges too. They’re most prevalent in Europe and in Asia Pacific.

Even if U.S. programs devalue, or change their structure, I’ll be able to bounce around the many foreign frequent flyer programs that still offer outsized value. They won’t all change, and certainly not all at once or for some time.

Where Do You Go in Each Alliance?

Star Alliance:

  • United remains good for international business class, even with their more expensive partner awards. There are no fuel surcharges and generous routing rules.
  • Aeroplan has some very very expensive awards but low mileage costs for nearer-Europe and half of their partners don’t incur fuel surcharges.
  • ANA has a distance-based award chart with some great values, such as US to Japan for 90,000 miles in business class albeit with fuel surcharges.
  • The hidden gem is Avianca‘s LifeMiles. When they joined Star Alliance last year I declared them the most generous program in the alliance. No fuel surcharges, reasonable award prices, one-way awards, and they sell miles dirt cheap — often for 1.5 cents apiece. They can be a pain to work with, don’t allow award flights in mixed cabins (first class connecting to business for instance) and they’ve made some program changes with no notice. But there’s great value here.

United is a transfer partner of Chase Ultimate Rewards. ANA and Aeroplan are transfer partners of American Express Membership Rewards (as is Singapore Airlines, useful for premium cabin awards on Singapore). And LifeMiles you straight-up buy.

oneworld:

  • British Airways is great for short-distance non-stop flights. Awards start at 4500 miles each way. US domestic awards, South America awards, and flights to Europe on Air Berlin don’t incur those. Aer Lingus fuel surcharges are low, and transferring British Airways points to an Iberia account gets you Iberia flights without fuel surcharges.
  • Japan Airlines Mileage Bank would become my go-to program in the event of a major American Airlines devaluation for my own goal of reasonably-priced international first class awards. They have a distance-based award chart, and do add fuel surcharges. For 155,000 miles you can fly on their partner Emirates (which has a realtionship to the program in addition to their having oneworld partners like Cathay Pacific) New York JFK – Dubai – Bangkok roundtrip.

British Airways is a transfer partner of the US American Express Membership Rewards program, Chase Ultimate Rewards, and Starwood Preferred Guest. Japan Airlines is a Starwood Preferred Guest transfer partner.

Skyteam:

  • Korean Air Skypass is really all I have to say. Their awards aren’t cheap although there are some routes that are (such as US-Tahiti 90,000 miles roundtrip on Air France). They add fuel surcharges to awards. But there’s pretty much no competition to get first class awards on Korean flights. Korean flies to more US destinations than any Asian airline and most flights from most cities on most days have first class award space. They also partner with airlines that offer good first class award inventory like China Southern.

Chase Ultiamte Rewards transfer to Korean.

There are places for us all to go. This game is not over and will not be over for a very long time. We may just have to pay closer attention to get what we want.


About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Gary: I am in a quandary with my two Delta Amex cards — Platinum and Gold. These are relics of good feeling and lots of use when my wife and I lived in Saipan. The routing back to the US and Europe was Northwest/Delta. I became a Diamond, she a Gold. And, in the old days, we used the miles to upgrade to the front cabin.

    So now, back in the States, we spend some time traveling between Detroit and DC. We have been buying $400/$500 tickets, “saving” the big hunks of miles. But your recent reports of the bad news devaluations at Delta makes me think we ought to just spend the miles down on domestic tickets, turn in the cards, and go with another program.

    We already have the Chase Sapphire Blue card, at your fine suggestion.

    Do you and the other Viewers think it is time to exit Delta and its cards?

  2. @Alan Barak – It’s hard for me to come up with a reason for you to stay with Delta. Burn the miles for international business class, collect points with SPG, Chase, and/or Amex (really depending on the awards you’re after).

  3. For a lot of households who want to signup for a bunch of credit cards and fly for free, it’s going to get a lot harder.

    Ah well.

  4. I know DL put in a provision where the revenue requirement for status only applies for US-based members. I’d assume UA is similar. Do you see major movement of members’ addresses to other countries to circumvent the requirement?

  5. I’m sorry Gary, but when I read this all I can think is: “View is getting ready to shill more credit card offers.”

    I am glad to see you criticizing UA and DL for their devaluations, but aren’t you biting the hand that feeds you?

  6. Sorry Gary, but this much attention to detail sounds like a job in itself. I guess it’s better to just treat the meals as a bonus. If lucky, ok, if not, not. It’s just too much work to pay attention. Life’s more important than worrying about hyperinflated FF programs. There’s huge opp costs to my time and attention span.

  7. I think the lesson in all of this, credit card hawking aside, is exactly the idea that you’re far better off primarily accumulating points through programs/credit cards that have transfer partners. At the very least, you can pick your poison when it comes time to redeem. Then, earn and burn whatever you accumulate directly with the airlines.

  8. Gary I consider the United devaluation an even bigger blow to their program than you have mentioned. I’ve been a 1K as long as I can remember and I’m giving a second thought to even worrying about qualifying for 2015. With first class mileage awards on partner carriers doubling it’s going to create more demand for United awards making them virtually impossible to find. At least to destination like Asia you could typically count on finding an Air China, Asiana or Eva air award at a reasonable award level. At double miles it’s highly unlikely people will be booking those awards. Instead they will be grabbing all of the available United awards making it nearly impossible to book one. What’s the point of flying 100,000 + miles a year plus spending a minimum of $10,000 a year if you can’t even book an award ticket if you want one?

  9. @Antonio – not really, they may raise them on ANA’s own flights but the mileage program will continue to charge whatever fuel surcharge applies to a paid ticket (on the carriers you actually fly)*

    * Occasionally their pricing engine does misprice the fuel surcharges but I have gotten that overridden.

  10. Mark’s point is real world economics. I just “watched” my wife and I schedule our next domestic and Euro trips — without considering our old standby Delta. The miles are virtually useless to us, and the cost of buying the refundable fare plus miles for the upgrade far exceeds alternatives.

    So, today, just a few days after Gary’s news, we look at Virgin to fly from DC to San Diego and, later, Icelandair Saga Class for a trip to Geneva.

    Ask me 5 years ago, even, and I would not have considered spending money, or miles, on anyone but Delta. How many Marks and Alans will it take before the US domestic carriers revise their freq flyer programs backwards?

  11. Gary — don’t forget Alaska! Even if you don’t live in their hub (Seattle), they offer a great mix of redemption options.

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