The Most Generous US Airline Program Won’t Go Revenue-Based

Alaska Airlines is arguably running both the best airline operation (based on mainline on-time statistics for a non-Hawaiian U.S. carrier) and the most profitable one (based on operating margin). That’s in spite of their intense ‘Battle for Seattle’ with frenemy Delta, the partner that’s been building up a hub in their home town. Alaska has been growing significantly, and rewarding their Mileage Plan members.

At a time when everyone else is cutting back marketing spend through less generous frequent flyer plans, Alaska Airlines has been doubling down with a generous rewards program.

It wasn’t always going to be that way. Three years ago there was speculation that the first US airline to convert from mileage-based accrual to revenue-based accrual would be Alaska Airlines if it wasn’t US Airways or Delta.

Delta had gotten the most speculation, at least since they put up a job posting for someone to work on the project back in March 2012. US Airways had a program on the shelf before they got distracted by the American Airlines acquisition. Remember of course that Alaska Airlines was the second carrier, after Delta, to adopt a three-tier award chart (to better approximate ticket cost for redemptions).

So it was interesting to see — as Delta had announced its revenue-based program and United followed suit — Alaska Airlines explained a little over a year ago what was obvious to most members, that the majority of frequent flyers would do worse under such a system.

  • Alaska believed only 5% of flyers would earn more miles under a revenue-based program.
  • 79% of flyers do better under their mileage-based system. In other words, 79% would do worse with revenue-based.

And that’s before even accounting for gutting the value of points, which Delta, United, and American have all done along with their shift in how miles for flights are earned.

Alaska Airlines of course,

  1. Hasn’t gutted its award chart (yet?)
  2. Allows one-way awards with a stopover
  3. Partners with airlines in both Skyteam and oneworld like Cathay Pacific, Air France, and Qantas. They partner with Emirates as well.

You cannot combine partners in a single one way award (one partner plus Alaska Airlines only) and they do not publish awards for all possible routes. As a very US-focused airline they have no awards for travel like Europe-Asia or intra-Asia.

With full planes, airlines haven’t needed to spend as much in marketing to fill incremental seats. There aren’t very many incremental seats. Nonetheless, Alaska sees their more generous mileage-based program as a competitive differentiator. And they aren’t about to change at least unless evidence convinces them in the future that they should.

Brian Sumers highlights comments by Alaska Airlines at the JP Morgan Aviation and Transportation conference:

“We like where we’re at,” CFO Brandon Pedersen said at the JPMorgan Aviation, Transportation & Industrials Conference. “We’re sticking with the traditional model. It gives us an opportunity to look at how we perform versus how others perform. And we wouldn’t say that we would never go to that, certainly.”

CEO Brad Tilden suggested Alaska may try to advertise its program as a competitive advantage, similar to what Southwest Airlines has done with checked bags. You’ve probably seen Southwest’s “bags fly free” campaign.

“It is a lot like Southwest with bag fees,” Tilden said. “We could argue about its merits five years ago. Today, it’s very differentiated from what the other guys offer. So I think its value actually has gone up.”

Alaska Airlines deserves your business, and of course will only continue to invest in their program if it demonstrably earns them that business.

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, 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. Alaska Airlines has earned my business. I’m 3MM with DL and formerly DM since they had it but last year did a status match with AS and have flown them over DL ever since. Flying Emirates (AS’s partner) to DXB 4 times in last 4 months and perhaps more to come.

    Have always loved these people at AS, their metal and their customer-facing people.

    thanks Gary for your postings

  2. Delta destroyed their FF program. United gutted out their program, and now American is getting ready to eviscerate my Aadvantage program. So, after 2 million miles with American Airlines I’m going to dump them in favor of Alaska Airlines. If the airlines want to slap their customers in the face, their customers can take action. Good bye AA.

  3. At what point is it worth it to fly on American and Delta but credit to Alaska for all mileage and status earning? 90k flown on partners gets you MVP Gold 75k Alaska status, and that gets you preferred seating on DL and AA and even gets you on the upgrade list on Delta operated flights. Is the mileage earning less when you credit to Alaska than if you just credit to AA or DL when flying on their metal? How does that crediting work now that SkyPesos and AAdvantage miles are based on revenue?

    For reference, I am a DCA-based AA EXP who ditched United when they went revenue-based, and now I’m similarly torqued at AA for going the same route. Thanks Gary.

  4. Alaska Airlines has the BEST service of any airline. Every interaction I have with them leaves me amazed at how customer orientated they are, and I don’t even have any status. Unfortunately, to get from LAS, my home airport, to most destinations I have to route through Seattle or Portland. As a result most of my travel remains on AA metal, where I do have status but the service is no where near as good as AK. We should all use AK whenever possible, particularly when flying to, from, or through SEA. We need to support the airline that supports us.

  5. The problem if I have it correctly is that the Alaska partners may prohibit them from crediting full mileage on flights flown on AA or DA. So unless you fly a lot of AK flights you’ll not get any more miles than if you were flying on the partner. Of course you still benefit from no close-in booking fee which itself is compelling. But I’ll need to see if my AA flights will get full mileage credit on AK before I make that decision, because if not I may want to go to JetBlue for its nonstop on many routes I fly that I connected to get AA miles, or SW for its refundability which trips me up a lot. I do hope Gary soon has a comparison on the earn for each of these as I see none that are current online.

    It also strikes me that what is happening is very similar to the US economy where a tiny sliver are reaping all of the new growth (miles) but yet the masses needed to elect those doing this are not paying close enough attention to even know their own economic interests here, or too ignorant to vote their actual economic interests. The parallel to mileage programs is that educated, aware and on the ball consumers should have already made it clear that changes in a plan that so disproportionately stack toward the high-end flyer would immediately cause them to walk. But when I’ve communicated this to UA or DA in the past they acted as though it isn’t something they heard much, DA was quite arrogant about it telling me to go away (after 40 years) if I didn’t like it. So once again the 1% which only has that much of a vote, is able to roll over the 99% due to Americans not paying attention, knowing or caring their own economic interests. They now even teach this in the schools elsewhere in the world, as I learned from my Australian and Brazilian surfing students, and the impression is that we’re not smart enough people here to sustain what once-engaged generations achieved.

    Feeling Trumped? Don’t be surprised with a billionaire coup because that’s where the level of intelligence of the US has gone.: at least a half are Dumb and dumberer.

  6. @Greg for some reason Greg compares the myriad complicated miles and points programs to politics? Weird to say the least. This is a blog for miles and points not weird political angles which are no way related to these programs.

  7. If Alaska does not change their chart, that would mean they would be the best program for Cathay business and first awards.

  8. Alaska seems like an all-around great airline. But unless you are a west-coast hopper (which admittedly is a huge population – 50 million) it seems unlikely you will ever need to fly that airline.

    I wonder if it would be worthwhile for them to add some transcons between NYC and Oakland, Burbank, Ontario and some other satelite cities to grow without having to compete at LAX and SFO.

  9. Thanks for proving my point about how ignorance is letting the top 1% reap all economic gains which is exactly replicated in the miles economy.

  10. I love AS, but sadly their network is very limited.
    If only AS had international presence to Asia and Europe…

  11. I have been flying AS for 15 years after moving west, other than missing the convenience that belonging to an “alliance” does for you internationally it’s a great program. As I approach my 1mm looking back I have seen AS grow and they have for the most part done well and hope they stay independent, after the onslaught of DL, I think that will subside, and whatever AA is thinking. On the others side I personally would prefer revenue based but for me I come out better.

    One gripe area all the “status matchers” that come over to slide points in and take EK.

    Anyway AS is the best out there! I am now on AS to BOS

  12. Is there a good current summary about crediting DL and AA flights to Alaska’s ff program? I’m generally not chasing elite status in those programs, and usually fly those airlines on cheap fares. I vaguely recall that DL flights earn half-miles. True? I do collect Alaska miles through the credit card sign-ups and, obviously, they’re a very versatile and valuable currency. So “topping off” my Alaska account with a few DL and AA flights (especially now that AA is going revenue-based) would seem like a potentially good strategy.

  13. As a CVG based flyer, until we see them anywhere in the Midwest all I can do is say I wish I could fly them. I’ve always wondered why they don’t consider CVG-LAX. DL prints money on the route. Other markets that I know they serve that they could make an impact here would be SEA, BOS, and JFK. If F9 can make it here, AS would work too especially with all the DL elites salty about the hub being dismantled and SkyMiles being less than generous.

  14. I love AS – even better since I haven’t seen any of those hideous prayer cards for a while. However I am bemused by the always glowing VFTW report which fails to point out the difficulty in redeeming AS miles for domestic saver awards. It’s almost as bad as DL.

    Yes, AS has a great program with great elite benefits, good earnings on discounted fares, a few decent lounges and a nice TOD upgrade program for non-elites. But if you can’t redeem for peak dates to peak locations it really limits the value of miles. Not all of us want to fly Emirates, much less accumulate the miles to fly our families in Cathay business class, etc.

    Really the more interesting questions is how long AA will permit AS flyers to game the system by crediting miles to AS? I put the over/under at 2 years.

  15. I agree with Gregg. The legacies have succeeded in boiling the frogs into a stupor. The bit-by-bit destruction of ff programs to the benefit of the privileged 5% has been a success so far. The main reason is the other 95% haven’t woken up to what’s going on. Some say don’t be emotional about the destruction of these programs…just accept that loyalty is dead.

    That’s exactly what the airlines are counting on — customer ignorance or apathy. The airlines knew exactly where they wanted these programs to end up when they started this fiasco. So why didn’t the airlines just make all the changes in one fell swoop? Its because customers would have been horrified and would have objected strongly. That risked legislative and potentially even judicial intervention, things the airlines fear perhaps more than high gas prices.

    The sad fact is there is no reason for the onslaught to spare the 5% who are sitting pretty today. There is no reason to assume that they will be exempt from future segmentation and exploitation at the hands of the oligopoly.

    Alaska Air is a great airline. I wish it had more options for those of us in the East and Midwest.

  16. If you are on the East coast and Midwest Fly American and credit the miles to Alaska. Get the Alaska credit card and you have 25K miles there. Use SPG while you can to transfer miles to Alaska. Spend Alaska miles to Europe or DXB etc. There you go. Push as many miles to Alaska as possible. Fly Delta and American and credit them the miles.

  17. @Boraxo

    AS does make miles tickets available at the lowest levels at peak times. I personally have redeemed regular rewards for Xmas tickets for SEA- KOA. Granted, it was literally at midnight, 331 days in advance, and I was hitting refresh every 10 seconds to score those ($700 one way was the fare). Unlike one other airline (let me single out AA), there was award space. That flight, I might add, sold out in March, so it was high demand.

    I love AS – it’s a great operation. And I feel very lucky to have them as an option to AA.

  18. Wait until May to apply for AS CC. Goes to 30k mile bonus instead of 25k.
    I have switched over to AS from AA. Already have 50k EQM banked in AS program.
    The value of my lifetime Plat status on AA seems to have gone downhill fast.

  19. I live in Australia and am an AA ExPlat… With both the earn and the burn on that program about to be severely curtailed I was lookng around for what next.. AS also offers some very nice awards from Australia to USA, but unfortunately being so US centric their status is not accepted with Qantas or One World and I don’t think I can credit QF flights to AS so membership of their program just doesn’t offer much benefits down in this part of the world plus no US credit card sign ups… Pity as they do now look like the pick of the bunch in the US…

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