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TO THE POINT: The points and miles game is certainly evolving, but it’s far from dead. Read on to learn why points and miles still matter to all kinds of travelers.
Pictured above from left to right: Brian Sumers (Skift), Brian Kelly (TPG), George Hobica (Airfarewatchdog).
Yesterday, TPG faced off against Airfarewatchdog’s founder and Editor-in-Chief George Hobica in a debate moderated by Brian Sumers at Skift Global Forum 2016 on the state of the loyalty industry and whether you should use points to book travel or just pay the cash value for tickets and accommodations. Right off the bat, the two agreed that there have been many changes to frequent flyer programs that aren’t customer-friendly in the slightest.
While many would argue that these changes make it prohibitive to stay loyal to one airline, TPG maintained that there’s still a significant amount of value to be found in pursuing elite status with an airline. If you achieve elite status, you’ll be able to earn extra miles each time you fly, you’ll have access to seat upgrades and, perhaps most importantly, you’ll save a ton of time traveling.
And if you’re involved in a situation where you’re facing a significant delay due to mechanical problems or weather, the airline will be much more likely to work to accommodate an elite member than it would to help another flyer without any status. Take TPG’s recent experience with United as an example. He’d paid full price for a first class ticket from Austin to New York, but was placed in a coach seat on a regional jet after an aircraft swap. Had he been a United 1K member, it’s likely that the whole situation could have been avoided entirely because the airline values its elite members more than price-sensitive flyers who book the cheapest ticket on any airline.
Early on in the debate, Hobica brought up an example of a recent flight he’d purchased between Los Angeles and Honolulu. He would have reached Executive Platinum status with American Airlines had he purchased the AA flight, but ended up going with Delta because it was about $300 less. TPG values Executive Platinum status at a whopping $7,490 — well worth the extra $300 spent on one round-trip ticket.
It’s no secret that airlines have massively devalued their miles and have increased the cost of award travel with seemingly no end in sight. Hobica brought up a very real example of this: American’s massive increase in the cost of redeeming awards on transcontinental first-class flights. However, it’s also much easier to earn miles than ever before — the Sapphire Reserve card offers an incredible 100,000 points as its sign-up bonus! With that one sign-up bonus alone, TPG will be flying on a $7,200 first-class flight between Bali and New York for fewer than 95,000 Korean Air SkyPass miles (transferred at a 1:1 ratio from the Ultimate Rewards program). There are still plenty of other award redemption sweet spots that make a lot of sense, like flying in Singapore Suites to the Maldives for just over 100,000 KrisFlyer miles and about $400 out of pocket.
Hobica later made an interesting point regarding the fairness of points and miles for consumers, claiming that people who don’t participate in loyalty programs are ultimately subsidizing them, also mentioning that banks and credit card issuers have to spend massive amounts of money to administer the programs. However, banks, airlines and consumers have all continued to profit from points and miles. Although merchants have to pay a 2-3% transaction fee in order to accept credit cards, statistics have shown that people who hold credit cards tend to spend more than those without them, so eliminating points and miles programs ultimately won’t save everyone a significant amount of money for each transaction.
Points and miles can be tremendously valuable for everyday flyers as well. Southwest Airlines has one of the most valuable loyalty perks in existence — the Companion Pass — which is now easier to get thanks to the Marriott and Starwood merger. From time to time, airlines will offer promotions to buy miles with a bonus — sometimes of up to 100% — and opportunities like these allow travelers to achieve a travel goal faster than ever before, whether it’s on a transatlantic business-class flight or on several round-trip economy flights.
With so many programs taking away value and benefits from consumers, the moderator asked a question that’s sure to be of importance to all flyers: Which airlines are doing loyalty right? JetBlue is a great example of an airline that has been adding to its loyalty program, Mosaic. The airline makes it clear that Mosaic isn’t about scoring free upgrades, but rather to make your experience on JetBlue easier and more seamless by offering greater flexibility with flight changes and enhanced earning potential.
At the end of the day, points and miles aren’t going anywhere. The industry is certainly evolving, but loyalty programs still generate millions of dollars in revenue for airlines as well as credit card companies. Yes, airlines have consistently devalued their points and miles, making them harder to use, but if you’re willing to put in a little work, you’re going to find that using them can open up a whole new world of travel opportunities you never thought were possible.