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It was a very newsworthy week in terms of frequent flyer programs, with Delta’s huge SkyMiles revenue-based changes announcement, American Airlines dropping bereavement fares and jacking up pricing on its Choice Fares, and more. That led the New York Times to publish this article by Ron Lieber titled, “Now May Be A Good Time To Bail Out on Frequent-Flier Programs.”
In it, Lieber, analyzes the “seismic” changes Delta instituted through the lens of its relationship with American Express, and notes that Delta sells $675 million worth of miles for Amex to give to credit cardholders every year and that because of this preferential relationship, the airline will necessarily have to cut back on the perks and benefits it gives to other flyers. Lieber sums it up rather succinctly, saying: “In order to toss 10 or 11 miles at some travelers for every dollar they spend, however, Delta will have to do less for plenty of others on many of its routes. The opposite of rewarding a good customer is penalizing a bad one.” And that, in effect, is what Delta is doing.
However, Lieber doesn’t present Delta’s move as the end of miles as we know them. Instead, he quotes Rob Rosenblatt, a former Amex and Chase executive, who says, “Airline miles have been surprisingly durable in terms of people continuing to ascribe major value to a product that really has had less and less value over time,” because customers continue to be charmed by the idea of being able to redeem miles (even hundreds of thousands of them) for premium tickets that can cost upwards of $10,000.
Lieber comes back to the point and says, “For those who want out, now’s not a bad time to bail. After all, many airline perks, like getting to use a shorter security line and board the plane early enough to get your wheelie in the overhead, are now for sale on an à la carte basis at a fairly reasonable price.” And he’s right, but his view is incomplete, in my opinion. While it’s true you can buy more of these perks a la carte – though it’s getting less beneficial and more expensive per AA’s Choice Fares changes yesterday – it’s also true that more and more airline credit cards offer these perks, and at a better value since you’re paying a one-time annual fee of $95 on the Gold Delta SkyMiles Amex, for instance, instead of paying fees each time you fly. Not only that, but as Delta’s moves make extremely clear, airlines are prioritizing their cardholders with these perks, bonus miles and various other benefits, so it’s more apparent than ever that credit cards are (and are going to continue to be) central to any successful points strategy.
The bottom line is that Delta’s changes are negative – but it’s not the end of the world, or mileage programs as we know them and the fact that they can still hold value. One of the best ways to leverage miles is on those premium international fares like my recent redemption of 140,000 US Airways miles for a roundtrip first class ticket to Australia, and even being able to redeem 150,000 Delta miles for Eric’s roundtrip business class ticket to Australia on Virgin Australia. I even bought Alaska miles for a first class award on Emirates.
However, traditional mileage programs are getting less and less valuable for the domestic economy traveler, so if you fly and redeem for inexpensive domestic flights, you might be better off checking out a fixed-value program like Southwest or Virgin America and diversifying with credit cards like the Barclaycard Arrival. Above all, credit cards are going to be an even more important part of any miles and points strategy.
So that’s my take on it, but I’ve also put in quite a few media appearances this week to talk about Delta’s changes, American’s new policies and more. I’ll cover those among other topics later today and tomorrow at the New York Times Travel Show at the Javits Center. I’ll be appearing on Saturday at 5:00pm discussing “Maximizing Credit Cards for Free Travel,” and on Sunday at 3:00pm to talk about “Beating the System: Travel Pointers for a First Class Lifestyle on a Budget“. Tickets are still available on the show’s website, and I hope to see many of you there!
And then for a roundup of some of my other media appearances this week, check out the links below.
And that’s just a fraction of the news from the past week – I’ve been talking to reporters all over the country about all the frequent flyer program changes lately, so stay tuned for more appearances, interviews and articles, because we’ll be discussing all of this for some time to come!