Why Do We Still Care About Airline Miles?
I'm currently in beautiful Palm Springs, California, at a conference for loyalty programs and co-branded products, namely the co-branded credit cards that we all know and mostly love. At this conference I did a talk on the consumer perspective of the state of co-branded cards that I may share a few more thoughts from in the coming days for anyone curious, but what got me thinking the most while I have been here surrounded by the folks that run some of these loyalty programs and manage the card relationships is essentially...why do we care airline miles anyway?
I mean, you can make that statement broader to questioning why do we care about miles and points in general, but I think the airline miles example is good enough all by itself.
Would you purchase airline miles at 2 - 2.5 cents per mile?
Some of you would and probably do on a fairly regular basis, but many people would say no, they would never purchase airline miles for 2+ cents per mile. However, as I said in my talk, with cash back cards readily available in the 2 - 2.5% cash back range, you are essentially purchasing airline miles at a 2 - 2.5 cent per mile rate every single time you swipe a co-branded airline card that is earning one airline mile per dollar instead of a cash back card.
I know that lots of us are getting more than one mile per dollar on many purchases by maximizing our wallets, so it isn't a fair apples to apples analysis for everyone, but still, as airlines devalue, restrict saver awards, and go more revenue-based tying the value of a mile to a specific redemption value, the main competitor to airline miles is really no longer a different type of mile or co-branded card, but rather cash itself.
This is a reality that I think is truer today than even five years ago, but even when the math points to cash back being a viable competitor against, or even victor over airline miles from a value perspective, miles and airline cards still have a greater draw to many, including me, than flat cash back.
I'm sure the reason is complicated on some level, but it is also very simple. Airline miles represent the opportunity to dream about a future experience. Getting 2% cash back may be more valuable and pragmatic, but it isn't nearly as fun or exciting. Dreaming is emotional in nature and therefore doesn't have to be totally logical. I think there is also value in the dream itself, even if it doesn't exactly materialize in the way you hope. Without goals and dreams, life is pretty boring.
With airline miles you can dream about playing on the beach in Hawaii with your family, or flying first class around the world, or visiting relatives more frequently, or strolling the streets of Paris with your spouse.
Those aren't pipe dreams as airline miles can and do make all of those dreams and more a reality, though how many miles it takes to get to those dreams may come as a surprise when it comes time to finally pull the trigger. Some airline loyalty programs and their co-branded credit cards, I feel, are getting dangerously close to disrupting the dream by making some aspirational travel out of range or too complicated to secure.
My number one recommendation to airline loyalty programs was and is to not take away the dream by making it impossible for the 'average' person to achieve. Without the dream and the ability for miles to be aspirational in nature, people may get out the calculators and realize that being more pragmatic might be a better choice.
For now, I still prefer airline miles and points to cash back by a wide margin because I like the chase of maximizing my redemptions and stretching my miles, but if the dreams ever become too hard to achieve, then a dangerous tipping point may be reached for the co-branded cards and the loyalty programs they represent.
Why do you still care about airline miles?