devaluation

Tag Archives for devaluation.

Hilton Raises Award Prices To Over 100,000 Points Per Night At Popular Resorts

by Gary Leff on March 10, 2022

Mar 10 2022

Marriott is getting heat for eliminating award charts at the end of this month, but Hilton already did this in 2017 while claiming award prices wouldn’t go up. And every time a program has dropped published price lists, that’s meant an irresistible temptation to raise the cost of awards. They don’t even have to tell members that they’re doing it.

Hilton has just increased pricing at some of their best properties, though it will take a comprehensive review to identify just how many and how much.

Why One Mile At A Time Is Wrong To Excuse The Alaska Airlines Devaluation

by Gary Leff on February 5, 2022

Feb 05 2022

The value of a currency is based on trust – how well it will hold value. So it makes me downgrade how much I value an Alaska mile. Although seeing the direction of award pricing with new partners I’ve begun to do that anyway, since they clearly appear to be on a downward trajectory (as I predicted would be the case as part of joining oneworld), and I tend to expect that as bilateral contracts for award redemption get renegotiated we’ll see more increases even for legacy partners

Alaska Airlines Raising Some Award Prices, Effective March 1

by Gary Leff on February 4, 2022

Feb 04 2022

Imagine spending 190,000 miles roundtrip just to fly Alaska Airlines!

The cost of first class awards on Alaska Airlines flights may in some cases be 37% higher on March 1 than they are today and throughout the month of February. So if you redeem Alaska Airlines miles for Alaska Airlines travel in first class, potentially paying more than the lowest published mileage price for the flexibility of choosing your day of travel and preferred flight, you’ll want to do so now. Here’s what concerns me most, though —

The Economist Issues A Warning To Frequent Flyer Programs

by Gary Leff on November 20, 2021

Nov 20 2021

Make the currency worth less, consumers chase it less at some margin. Reduced consumer interest is bad for the long run proposition of the currency, which is bad for the price of financial instruments derived from that currency. Now that airlines have issued upwards of $30 billion in debt backed by their loyalty programs, this is a new issue for them to manage.

The Top 5 Reasons To Expect An American AAdvantage Devaluation

by Gary Leff on October 4, 2021

Oct 04 2021

The AAdvantage program is the annuity that’s been driving free cash at the airline for years. They’d be wise not to kill the goose, and the odds they’re good enough to extract even more value out of it for themselves without killing it seem less than 20%.

How Credit Card Rewards And Business Travel Influence The Value Of Miles

by Gary Leff on June 23, 2021

Jun 23 2021

In the June 23 Airlines Confidential podcast, former Spirit Airlines CEO Ben Baldanza lays out his framework for the circumstances under which to expect airline frequent flyer programs to devalue. He sees strong airline credit card performance as working against devaluation, which I think is incorrect, and he sees the future of business travel doing a lot to determine the value of miles.

Experts Are Predicting Frequent Flyer Apocalypse From Too Many Miles Chasing Too Few Seats

by Gary Leff on May 20, 2021

May 20 2021

There are several scary stories out there about a coming frequent flyer apocalypse, but an underlying truth remains.

Now that airlines have moved towards more revenue-based redemption pricing, award price inflation is baked into the model. As demand rises and prices go up, so too do award prices for much of an airline’s inventory. And travel has picked up.

Delta Dunks On Southwest Airlines Devaluation, Says Not Considering Reducing Value Of SkyMiles

by Gary Leff on April 15, 2021

Mary Schlangenstein who covers airlines for Bloomberg asked CEO Ed Bastian during Delta’s earnings call about Southwest’s no-notice 6.5% devaluation of Rapid Rewards points yesterday and whether they’d considering doing something similar.

Bastian offered SkyMiles as a contrast to Southwest, “we’re not considering that, and we’re very excited about the value [of the SkyMiles program].” Wait, wut?

Why Outrage Is The Right Reaction To Southwest’s No-Notice Devaluation

by Gary Leff on April 15, 2021

Apr 15 2021

If it’s true that we shouldn’t trust loyalty programs, and that ought to become our base case, then the way that information gets out to the public is precisely by shaming loyalty programs when they behave badly. Rather than shrugging our shoulders at no-notice devaluations, it is important to shout it from the rooftops so that members know to build lack of trust into their base case.

Southwest Devalues Rapid Rewards Points By 6.5%

by Gary Leff on April 14, 2021

Apr 14 2021

Effective immediately and without notice, Southwest Airlines has started requiring 6.5% more points for flight redemptions. The change comes as Southwest celebrates its 50th anniversary this week. Award tickets used to cost 78 points per dollar of base fare and now cost 83 points per dollar.