At the beginning of the year I wrote The State of Frequent Flyer Miles in 2015.
- Award charts are more expensive. Miles are easier to earn. The products we cna redeem for are better than ever.
- The economy and travel business are relatively good which makes programs less generous with us.
- And they’ve gotten smarter, there are fewer opportunities to game.
- But as they continue to get more complex opportunities emerge. And the economy won’t stay strong forever.
Something else has changed. Some of this is driven by the economy, that programs aren’t as worried about our loyalty in good times. But that’s not all of it.
At some programs, the gloves are off, there seem to be no constraints, things that were unthinkable for programs to do in the past are now just ordinary course of business.
Delta has frequently made its award chart changes without notice. But significant changes to its terms and conditions, eliminating published award charts entirely, and imposing de facto 21 day advance purchase requirements for saver awards on Delta flights and not telling members about any of this is truly brazen, even for SkyMiles.
There have always been less than trustworthy programs.
Amtrak was long known for devaluations and fundamental program changes without notice. They’ve taken away redemption options overnight, even leaving question about whether they’d honor redemptions already made. Expedia has been super-brazen in its devaluations. Goodness knows little can top LatinPass becoming a shopping program and declaring that members had to earn shopping portal points equivalent to their existing account balances in order to redeem accrued miles.
But the major core airline programs? In November I wrote that you should never believe an airline when its lips move.
I’ve been thinking the past few days, who can we still trust (in some relative form)? Instead of untrustworthy programs being outliers, it seems they’re the most common.
Trust is increasingly important even with a revenue-based program. You have a currency, the program is the central bank. There’s no external authority out there any more, not even really the threat of lawsuit except if you explicitly violate your own terms and conditions in a post-Ginsberg world.
The only constraint on program behavior is that at some level changes could be counterproductive to the bottom line. What can a program get away with without a material number of customers heading for the door? It’s about future business, without regard to past promises.
Programs all devalue, some have a history of giving notice and doing it a bit more fairly than others.
- I trust Starwood and Hyatt relatively more than Marriott, Hilton, and IHG. SPG has devalued but relatively slowly and still has most airline transfer partners fixed at 1:1 [gone are the super generous transfers, of course]. Hyatt introduced category 5 then 6 then 7 and increase suite redemption prices from a 50% premium to a 60% premium. But I believe they aren’t sitting around thinking up ways to screw their members.
- I trust Alaska a little more than other programs right now, but I attribute that to competition from Delta as much as company culture. They’ll play games at the margins but they don’t want to be chasing away loyal customers since that loyalty is strong in Seattle and their best tool right now against the onslaught.
- I trust American relatively more than Delta and United, but still believe their miles will be worth less in the future. I think the April 8 program changes without notice last year taught the program the importance of trust and advance communication. And they’ve been much better since. But they’re offering superior value now, and that’s not something that tends to last — when something is orders of magnitude better than what most others are offer, we get mean-reversion. We always have.
The best advice doesn’t change, really the current environment doesn’t mean you should do anything different than you already should have been doing.
- Focus on quality programs.
- Take a diversified approach. My advice for awhile has been accrue in credit card programs that transfer to a variety of airlines, to hedge your bets. But then take a portfolio approach even to programs with transferable points and accrue in a variety of these, because even they can devalue. I want points with Chase/Amex/Starwood. And all 3 of those.
- Earn and burn in the same period. You can still win but it’s more important than ever to earn, redeem, earn more, redeem more – rather than accumulating and holding your points. That way devaluations don’t affect the value proposition under which you earned your points.
I don’t think you can explain it better.
Bottom line — mega-million-mileage holders like ourselves should have the lube ready.
Stop using the word ‘loyalty’. Travellers have no loyalty to programs, and the travel companies/banks certainly don’t have loyalty to their customers. Don’t know that they ever did, or ever should have. In a capitalist system, companies should be loyal to their shareholders.
Instead, call these programs what they are and always have been – incentives. Then start looking at the profits, the competition and the economy, and that will give you a pretty good idea where a program is going…
I’m confused. Didn’t Chase finance United out of bankruptcy with the purchase of Mileage Plus miles?
Didn’t Citi take do the same for AA?
Don’t airlines make Billions selling miles?
Why would they kill the goose that lays the golden eggs?
Forget loyalty, isn’t this big $ for the airlines?
I can earn an easy 2% or more all day long in cash for my (substantial) credit card spend.
The game has come to an end, like so many other opportunities only this time the whole game will be a sunset industry. If the airlines and travel industry are able to weather a downturn in the economy without relying upon these programs they will be the stuff of publishing clearing house sweepstakes. Soon enough the only ones participating will be those too stupid to know any better.
Gary, I agree with your conclusions as generic advice but only as generic advice. There are millions of FFers and thousands of readers of your blog who all have different individual circumstances and aspirations for their involvement in the miles and points game. Bloggers tend to offer advice as if it is what everyone should do rather than a personal opinion that must be evaluated in light of each person’s individual circumstances and goals. Maybe it is assumed people understand that.
@Gary – why should your view or advice be any better now, considering the rather rosy picture that you’d painted in your “State of Frequent Flyers Miles in 2015” when some of us had pretty much predicted what was coming once it was clear that DL had decided that revenue and NOT people or loyalty was the best thing for airlines? In fact, DL’s overreach of late appears to have shocked even UA, since they seem to have paused to deliberate rather than mindlessly copying DL’s every move…
So, how do we know that you’ll get it right this time? For starter, the notion that one can trust Hyatt because they did not “devalue” their program as much as some other program is is demonstrably false and reflects a biased rather than an informed view… From devaluing their points by about 37% when they added a category 7 and stuffed in it their most aspirational properties, to charging for suite upgrades per night rather than per stay, to the demise of My Elite Rate and puliing of the Diamond Challenge, to a chronically unreliable website that still does not offer the ability to book cash&points awards online, some of us are not convinced about your rosy assessment of Hyatt GP. The devaluation of Hyatt GP has been quite severe. And don’t even get me started on SPG!
@DCS my advice is consistent with what I wrote there. Your myopic love for Hilton HHonors colors your views, Hyatt’s devaluation of its award chart a year ago was about 4%.(http://viewfromthewing.com/2013/11/13/hyatt-gold-passport-devaluation-really-just-4-hit-cost-award-nights/) albeit concentrated heavily at the top end of its portfolio.
@Gary – I did not even mention Hilton at all. But if you excuse hyatt’s devaluation at hitting hardest at the top, how is that different for the so-called Hilton “devaluation”? And if my “love’ for Hilton were myopic, how do you account for the fact I have stayed at the following iconic Hyatt properties within the last couple of years: Park Hyatt Siem Reap, Park Hyatt Saigon, Park Hyatt Seoul, Grant Hyatt Jakarta, Grant Hyatt Taipei, among others? No my mind is completely open and I try to pass my judgement based on objective measures rather how I “feel” about a property or a program. It is folks like you, who have drunk too much of the Hyatt Kool-Aid and are completely myopic to the program’s many shortcomings, who are working hard (witness this very post) to convince everyone that Hyatt is the stellar program that it is not. Hyatt properties are great, but as a loyalty program, Hyatt GP is a joke.
I agree with @John above who said very thoughtfully: “There are millions of FFers and thousands of readers of your blog who all have different individual circumstances and aspirations for their involvement in the miles and points game. Bloggers tend to offer advice as if it is what everyone should do rather than a personal opinion that must be evaluated in light of each person’s individual circumstances and goals. Maybe it is assumed people understand that.”
I am here to present the alternative view that your readers would never get otherwise 😉
Not excusing Hyatt’s changes, just noting that it was a 4% devaluation rather than the 30-someodd you claims. And it was much much much lighter than Hilton’s, which involved doubling the cost of many of the best properties which is far worse than what Hyatt did.
@Gary – You did the math. Based on the value in Spend Per Free Night, which allows objective comparison of the programs, Hilton’s “devaluation” simply brought the value of HHonors points to part with Hyatt’s and other programs, but SPG which offers the wost value by far.
The top Hilton standard redemption rate is 95K points. When the relative earning abilities are taken into account, 1GP point equals about 3 HHonors points, so that 95K HH points are about 31K GP points, which is about exactly what a cat 7 Hyatt property would cost per night. See? Things are not worse at Hilton and you know it, but most of your readers are SURE that Hilton’s “devaluation” was cataclysmic. It is a myth. In fact, if one figures in the points from on-property CC spend, the HHonors points have a slight edge over GP points.
Now, what do you estimate the devaluation was in the cost of suite upgrades going from paying per stay to paying per night? I estimate at least a 300% loss of value. See again? Hyatt’s devaluation was not as mild as you claim. It was quite drastic, but because Hyatt devalued last, after Hilton, who went first had taken all the flak, the impression – magnified by bloggers – was that of Hilton “killing” their program with the 203 “devaluation”, while the very drastic Hyatt devaluation never made much noise. The math is quite simple. Hilton’s purported seismic “devaluation” was and remains a myth created by bloggers…
G’day!
ItsGameOver got me thinking. The last thing comparable to FF miles (points, etc.) was the trading stamp promotions of the 50’s and 60’s. When you bought gas, groceries, or other merchandise, you received a stamp for each 10 cents of spend (often doubled). 1200-1500 stamps filled a book, which was redeemable for free merchandise from a catalog. Prices for the redeemable merchandise varied, with each filled book being worth about $3. (About a 4% promotional discount.).
So, where are trading stamps now? They died out as retailers found out they did not have to offer them to keep the customers they had.
Is Delta’s SkyDong (I just left Vietnam, and it seems to me that dealing with Delta’s program has become like dealing with the central bank in a communist country) about to go the way of S&H Green Stamps? Will American’s AAdvantage program become the successor to Kroger’s Top Value Stamps? We’ll see.
Several times over the last few months Gary has postulated that the ever increasing trend of FF programs eliminating benefits and taking other passenger-unfriendly actions is due to the airlines taking advantage of a relatively good economy and capacity discipline rather than reduced competition from airline mergers and an oligopoly in the US airline industry. Surprisingly, almost no one commenting has argued with the premise that the economy is in fact in relatively good shape. Of course that flies in the face of the incessant assertions we have heard for the last six years from a certain news outlet and various politicians that the current administration is wrecking the economy. If it is indeed the state of the economy that is primarily responsible for airlines gutting their FF programs, packing us into smaller seats with less legroom, and charging more while cutting services included in the ticket price, then, as passengers and FFers, we are all truly screwed should any administration ever take office that actually gets the economy firing on all cylinders.
@John – I never bought the premise that DL and then UA have taken the wrecking ball to the legacy FF system because of the improving US economy. To do lasting damage to such enduring system, considering the cyclical nature of the world economy, would be a very short-sighted. Also, while the US economy has definitely been doing much better than the rest of the world, it has not been the tide that has lifted all boats and it has not been humming. You are doing much better if you are a CEO or a corporation. The majority of Americans have not yet tangibly benefited from the US economy’s turnaround. In fact, at the time that DL and then UA had proposed the revenue-based FF system, which had started the current race to the bottom, the US economy had barely begun to show signs of turning around. So, it could not possibly have been the reason for DL to propose the revenue system.
The best explanation for the US airlines’ recent disregard for the legacy FF system and for the consumer is the loss of competition that has resulted from the last three mega-mergers. They have created three huge airlines that can call all the shots, including very bad shots for the consumer, and not suffer any consequences, since the flyers are trapped and must keep flying with the Big 3 since they have nowhere else to turn…
Gary does not believe that there is currently an oligopoly run by the US Big 3, since we have WN and AK and VN to compete. Yeah, right…
@DCS. I tend to agree that oligopoly is the main reason behind the ability of the airlines to rip off their customers. Some point to high load factors, but it is a lot easier to control capacity with the consolidated industry structure.