Emirates finally offers an explanation for why they keep raising the price of awards while also adding $1,600 co-pays when you spend your miles. And the answer is, basically, because once you acquire their miles you’re stuck and they can.
According to Dr. Nejib Ben-Khedher, Divisional Senior Vice President of Emirates Skywards, there are 32 million Skywards members (note: this is not ‘active’ members, just names on their file) and this is how they spend their miles:
- 35% of Emirates miles are redeemed for award tickets
- 28% were redeemed as partial payment against tickets (cash and miles)
- 18% were used for upgrades
- With the remaining 19% used “on the ground, in one way or another.”
Credit: Emirates
Only 35% of miles are used for free seats! That’s insanely low. Yet it’s free travel in premium cabins that he says drives “stickiness in the program.”
The aspirational rewards – the ones where we see a good engagement from members – are the upgrades and the classic rewards. If you want to gain that loyalty and have that stickiness in the program, these are the things that people are looking at. Especially upgrades and classic rewards on Business and First Class.
Yet revenue management at Emirates has been unwilling to make award inventory available, even though the Skywards program is the biggest single buyer of seats at the airline and they sell their miles to banks at home and abroad, including as part of points transfer relationships with all the major U.S. currencies.
- Only 38% of flights have availability for “classic rewards”
- And that’s not “saver” reward seats, that’s saver and flex awards (the extra miles seats that some programs make available on all flights)
- And it’s much more flex than saver. Why?
We have to make that equation work for us internally as well, as we kind of buy these seats from our revenue optimisation (team).
However he does think award availability will get better in “another year or two, where we get back to where we were before and can cater totally to our membership (with) these aspirational (rewards).”
And about those fuel surcharges?
One way business class from LA to Dubai runs 132,500 miles… plus $838.
Roundtrip business class LA to Bangkok via Dubai?
Emirates charges a very large number of miles for award travel (first class is even more outrageous, but rarely ever available) and also adds fuel surcharges to redemptions, equal to the surcharges on comparable paid tickets. And those are high. So what’s up there?
[I]t is aligned with what we do on the commercial side of things. And second, truly, it’s about the cost that we’re incurring as well – and the costs have gone up. We’re trying to find the right balance between the cash portion that you’re paying in terms of these fees, and then the number of miles.
He says costs are up, but fares aren’t nearly up as much as redemption pricing. He does say that since they’ve recently devalued they want to hold “the main number of miles as stable as possible.” That’s not a promise not to devalue again!
Ben-Khedher argues that sure they’re expensive – but worth it (“keeping in mind the product that we’re offering as well, there is a premium”) except Emirates has a great first class but their business class product is actually inferior to most competitors without true lie flat direct aisle access even on much of their fleet.
All these programs depend on customer faith. Without it the currency crashes. Emirates warrants none.
I feel like this argument somewhat works for those who directly acquire Emirates miles by flying, but as someone who has little interest in flying their economy or inferior business class products and who is unlikely to pay cash for first, I (and I suspect most readers) do/would acquire emirates miles by transferring credit card points, and none of this gives me any reason to want to do so.
Essentially they adjust their “surcharges” to make their miles about 1 cent each. How is that aspirational?
It’s a garbage loyalty program and likely always will be. They’re in no alliance so there’s no option to credit miles to a better or more useful program.
They basically want to be able to say that they have a mileage program without having to actually provide any value from it.
Outside competitive pressure is the only force able to change this situation.
That pricing is insane, especially considering their lackluster product (in C). I would switch my loyalty to another carrier ASAP, and hope that others do the same.
@lars
You can credit them to Aeroplan, Qantas, JAL and even BA if you book them though QF and they and Qantas Codeshares.
I’m surprised the upgrade % of redemptions is so high
When he says ‘want to get back where we were before’ for saver / classic awards in premium cabins, they have a long way to go back. If they do that they have some viability as a program that can grow partnerships and remain viable. Otherwise no faith in the currency credit elsewhere.
What is QF? I have 100k Skyward and would like to use in Aeroplan or JAL
Am
@lars
You can credit them to Aeroplan, Qantas, JAL and even BA if you book them though QF and they and Qantas Codeshares
I have Amex Plt, gold and Delta business platinum.
What do you suggest for this Dec .Florida to Abu Dabi or Dubai , returning from Mumbai around Jan. 9th . . Business or Premium
Thank you
Emirates is the WORST loyalty program in the airline industry. It costs 157,000 miles plus $882 cash to get a ONE WAY business class ticket from SFO to Dubai. Want to fly Economy? That’s 71,200 miles + $257 cash one way. You are better off buying the Economy class ticket for $1024 cash. That is what they want you to do; just by a ticket, don’t redeem anything.
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Why? Because 71,200 miles more than the 30,000 miles you’ll expend on a Star Alliance Award for a ticket from US West Coast to any major European city like Rome. Plus, those redemption typically have a $20 to $50 fee not $257. Emirates charges 2.4x the miles and 5~10x the fees. That means their points are worth less than a quarter that of most airline loyalty miles.
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If your points are in a Credit Card, don’t ever transfer to Emirates. Don’t be stupid.