Mileage aficionados don’t fret, President Trump’s tariffs will make frequent flyer programs great again.
Owner Of The Trump Shuttle On Letterman
The fundamental challenge with finding airline award seats – and why frequent flyer programs have gotten so much worse – is that there are too many miles chasing too few seats. Tariffs can fix that in two ways, solving for both the numerator and the denominator –
- there will be fewer miles as a result of lower credit card spending resulting from reduced economic activity, which means less competition for award seats
- and there will be more unsold airline seats to liquidate as saver awards as a result of reduced demand for air travel.
Tariffs on foreign goods raise the prices of imports. Those are the costs to U.S. businesses which affects what they need to charge to U.S. consumers. Higher input costs reduce outputs. Fewer goods and services, all things equal, raises inflation (since inflation is largely a function of how much money is chasing how many goods and services). Over time, domestic producers rely on protection rather than innovating or reducing costs.
Auto worker unions may favor tariffs, but the parts that go into cars are being imported, raising the price of cars and reducing car sales – and thus the number of people needed to make cars.
Sure, the goal may be to substitute domestic production for foreign production but that is not good for the economy or American jobs or consumers. That’s what Russia has been trying to do since sanctions (which are effectively extremely high tariffs) were placed on their economy. The goal of extremely high tariffs is to strangle an economy, not to save it!
Putting tariffs on imports – harming ourselves – because other countries harm themselves is like Cleavon Little putting a gun to his own head in Blazing Saddles. And the townspeople of Rock Ridge react, “Hold it men, he’s not bluffing! He’s just crazy enough to do it!”
Quote of the day—
David Kelly, Chief Global Strategist, JPMorgan AM: pic.twitter.com/leuwHX6mSu
— Morning Brew ☕️ (@MorningBrew) March 4, 2025
Sure, India’s tariffs are high and so are China’s. America’s tariffs are low. Where would you rather live?
But not every facet of the economy is worse! The best times for frequent flyer programs in the past 30 years have been during economic downturns broadly, and with individual programs when they’re in bankruptcy. Of course they devalue once they’re past the struggle.
- When Continental Airlines struggled in the 1990s they offered lifetime Infinite Elite for maintaining 5 years of Gold status, the highest level in the OnePass program at the time. When Continental introduced Platinum in 1998, Infinite Elites were bumped up, told that they would ‘always have the highest level in the program.’ With the United Airlines merger they received lifetime 1K status. (Of course lifetime status was then devalued.)
- When United was in bankruptcy in the early 2000s they were generous too. United even offered a quintuple miles promotion where a roundtrip to Singapore from the East Coast (perhaps upgraded to business class with a systemwide upgrade) earned enough miles for a business class roundtrip Australia award. Of course they devalued those miles in 2006 once they came out of bankruptcy.
United’s Old First Class - More recently many will remember that American Airlines was exceptionally generous during its bankruptcy, and that we saw loyalty programs doubling down on value during the Great Recession, at a time they loaded up on debt from their cobrand partners through the ‘pre-sale’ of miles.
American Airlines Flagship First At The Time Of Bankruptcy, Entire Cabins Could Be Claimed As Awards - When premium demand was depressed during the Great Recession it was often possible to book at least 9 first class award seats on Lufthansa – in advance – on routes like Detroit and Mexico City to Frankfurt. That’s the period in which I started my award booking business on the side, and could easily book 5 or 6 multi-person itineraries in the early morning and late evening hours. Bad economic times were good for me!
Lufthansa First Class During The Great Recession
Crashing the economy is a bad thing! But it’s not equally bad in all ways. In fact there are always some beneficiaries. It just so happens that one of those is likely to be the value of airline miles.
Ironically, it could be foreign carriers that provide the most value to American frequent flyers as demand dries up. Tariffs tax international economic activity, and that’s likely to reduce demand for international flights and especially on non-U.S. airlines.
Look for unsold seats to become available to partner airlines on foreign carriers, especially on routes that are ‘difficult to drop’ for non-economic reasons such as long haul flights to Washington, D.C. – on carriers like ANA, Qatar Airways, Etihad, Emirates and Saudia.
What a terrible take.
Yes, they will liquidate seats as savers, until they just axe routes altogether, and have less total inventory altogether. Airlines do not exist to hand out cheap awards, they exist to make a profit, and handing out cheap awards is not profitable.
If airlines are struggling to fill seats, they will simply just drop the route.
“Ironically, it could be foreign carriers that provide the most value to American frequent flyers as demand dries up”
This was true long before Trump and tariffs entered the equation.
Those people are so stupid that they believe that Canada, Mexico or China are going to pay these new tariffs…
Welcome to the Trumpcession!
Good analysis and prediction.
During my early AAirpass CK days you could always upgrade to F for $499 upon check in on AA’s then brand new 777-300ER T/A service to LHR in the early 2010s…and still be the only one in First. Would literally book ATL-LGA-JFK-LHR just for the experience (and one hell of a GTA cab ride experience between airports in NYC).
Treating this as a legitimate discussion and not pure shit-stirring (so hard to tell here nowadays), there’s a lot to be said for this argument. Unfortunately, I’m not sure it accounts for just how adept the airlines have become at capacity control — they seem to be more ruthless in the past about grounding planes and limiting schedules to keep the number of unsold seats down. We may see cash prices fall but it’s only a hope that award availability will increase.
But gas prices are likely to go down! People seem to believe that’s a good indicator when, in fact, they move inversely with the general health of the economy.
I would prefer the economy not tanking and having less seats available.
Tariffs are a negotiating tactic to achieve other goals, such as border enforcement and lower tariffs on their side, bc he knows it will hurt them more than us. If you believe high tariffs will be the new normal, then you’re not very smart. Maybe sit this one out.
As Chamath Palihapitiya says, people are not broke, they are asset light!
FWIW, Air Canada has already reduced capacity for this month on flights from Canada to Florida, Las Vegas, and Arizona as a result of Trump’s tariffs.
Gary, you must be trolling (or as LarryinNYC said, ‘shit-stirring’). I’m all for banter, but if your thesis comes true, we are in for a world of hurt. The succinct version of your ‘hot take’ is that we’re all going to be poorer, due to these tariffs and other horrendous policies, so there will be less demand, more suffering, and as a result, maybe some deals.
I’m with yoloswag420 (hilarious name), Ricardo, and Robert Evan Plummer (so far)–this does not end well for anyone, including the airlines. It’s just not worth it.
@LarryInNYC — Gas is not ‘down’ though. And tariffs will likely raise prices further, as Canada is a major exporter to us. He’s already forcing Chevron to pull out of Venezuela. OPEC still exists. We can drill to the last drop but it is a finite resource. His abandoning of renewables is also foolish.
@Mantis — I’ve heard enough of tactics. And it goes beyond tariffs. He’s given our adversaries win after win (now, China’s practically frothing for Taiwan and more), while harming our (former) allies and trading partners. This is not good strategy, short or long term. You can’t be serious.
But man, will those libs be owned!
@Denver Refugee — Nearly everyone be owned by this. Libs. Cons. Cucked.
Gary, your excitement over the ‘potential’ for such deals following what would be an ‘economic collapse’ is reminiscent of Dr Strangelove’s plan for sending the ‘important’ people down into ‘mines,’ with a ‘ratio of ten women for every man,’ as he described it, ‘a sacrifice for the required for the future of the human race.’ Bah! Admittedly, it’s a great film, and it’s a similar absurdity–accepting a calamity, and looking on the bright side of it, instead of trying to prevent it.
Then, us in the comments are like the generals, worrying about a ‘mineshaft gap’ and that the Russian ambassador will see the ‘big board!’ My favorite line, though: “Gentlemen. You can’t fight in here. This is the War Room!” I’d say that describes our discourse here perfectly.
You forgot to mention no other country wants ‘mericans in their country. People disliked ‘mericans before but liked the money. Now they don’t want to hear or see you.
I don’t know where some of these 2008/2009 fantasies come from. Days of $99 transcon fares, 100% upgrades, elite status based on miles flown, and DEQM promotions are never coming back. The airlines have shown as with COVID they will park planes before flying them around half filled. This ain’t 1970.
@George N Romey — ‘Great’ again, sir. Indeed, ‘2008/2009’ is much too hopeful. It’s been nearly 100 years, and apparently we’ve forgotten all the lessons of history, so 1929 is more appropriate. Well said. (I know that’s not what you meant—I’m just messing.) Never say ‘never,’ sir. Anything can happen!
@ All — If/when this occurs — I see the exact opposite as current trend, so I hope Gary is correct — just don’t be a sucker for the great mile-earning opportunities. Instead take advantage of the mileage BURNING opportunities. These always seem to occur together, as the airlines would rather collect some cash now and then screw you over via devalautions later. See: Hauenstien, G.
@GARY ” Fewer goods and services, all things equal, raises inflation (since inflation is largely a function of how much money is chasing how many goods and services).”
A tariff never has and never will cause inflation. To say otherwise is to totally confuse two different economic concepts. A tariff is a change in a relative price. Inflation is an ongoing increase in the level of prices over time. A tariff does not increase the supply of money, so cannot cause inflation.
@L3 – supply of money is not the only determinant of inflation, even in a monetarist framework.
mv=pq
supply of money and the speed at which it’s circulating is just one side of the equation (mv). The other side is the quantity of goods in the economy and price level.
in this simple formulation, hold money constant and reduce the supply of goods the price level will rise.
@L3 — You’re not debating ‘substance’ so much as ‘semantics’ at this point.
Tariffs will indeed raise relative prices, which, for most people experiencing that price increase, will ‘feel’ like…(say it with me)…*INFLATION*, whether it ‘technically’ is or not.
(I know, I know, the propaganda is strong… ‘He’s playing 4D chess.’ After all, ‘He has the best brain.’ Right… right… praise our dear leader…)
When things cost more, people will be upset, and may chose to sit out more purchases, which in turn likely cause businesses to offer ‘deals’–which was Gary’s whole point.
Whether all that is worthwhile was what a lot of us above were complaining about (like, I don’t think a trade war is worth the economic fallout, even if we may get ‘deals’ like Gary hopes for, but there is no guarantee of that, as others have pointed out, it could just lead to a ‘depression’).
@GARy: Once.
Prices may rise once.
That is not inflation.
The price level may not even rise! Tariffs need not raise the price level at all. It all depends on the eleasticities of supply and demand.
Your claim to generality is not correct. Like the claim that consumers pay all tariffs, it is economic nonsense.
@ L3 — Consumers will pay more due The Moron’s childish tarriffs and DOGE bs. I hope he wrecks the entire economy just like last go around. He already has the #1 worst economic record ever. Give the voters what they were promised!
@L3 I did not say ‘all’ tariffs, as in 100% of every tariff. Tax incidence depends on elasticities. But ultimately consumers will pay most in the form of higher prices or fewer goods.
@GARY: “But ultimately consumers will pay most in the form of higher prices or fewer goods.”
No. It may be zero increase in prices, and no fewer goods and services. When you say it depends on elasticities, believe it.
It depends on elasticities.
Everyone! Everyone! Shhhh…
L3 is about to explain to us, in detail, exactly how these tariffs are good for the United States. He’s not going to evade or engage in sophistry or over simplification.
Clearly, the economics genius is about to speak.
The floor is yours.
(As a PS, isn’t it refreshing that Gary hasn’t posted a video of a lynching or a photo of a poor person killed in an airport canopy collapse? Keep going, Gary! I know I struggle every. day. to refrain from posting graphic violence on my blog)
@L3 — My dude. I know we’ve turned politics into ‘sports’ and it’s not ‘great’ when your ‘team’ does something ‘stupid’ but take the ‘L’ on this one. He promised to fix everything on Day 1. Didn’t happen. And it’s only going to get worse. Mark by words, dawg.
@Construction — Spicy! Feed me more. I need more of this sarcasm.
Mantis nailed this. Simply and quickly. The majority of you should follow his advice.
Hey, Gary!
It will be only a matter of time before Austin imposes a city tax like Seattle to make up for the burgeoning bureaucracy and other hallmarks of mismanaged Democrat cities, especially those in no income tax states, like Washington.
Rejoice!
Love your take on trying to be Milton Friedman.
Of course, you don’t have to worry about your white color job!
Enjoy L.A. or NYC in Texas!
Tariffs are a great reason to be an expat. Singapore sounds great.
“You forgot to mention no other country wants ‘mericans in their country. People disliked ‘mericans before but liked the money. Now they don’t want to hear or see you.”
I spend more days outside the US than in it each year. I can confirm this is total BS. Maybe the writer isn’t a likable person.