5 points and miles predictions for 2020
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The last decade or so has seen award travel explode in popularity, moving from relatively obscure online forums onto the front page of the internet and the top travel rewards credit card slot in many people's wallets. This growth has also triggered seismic changes in the way airlines and hotels operate their loyalty programs, in order to keep them efficient and sustainable when high value redemption options are published online for everyone to see.
Many of these changes (think the dreaded dynamic pricing) have accelerated in recent years, and I have no doubt that 2020 will be as action packed as 2019. Here are five predictions for how the world of points and miles will change over the coming year.
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First-class awards will get even harder to book
A long-haul first-class flight on a five-star carrier can make the journey as exciting as the destination, but first-class award availability is getting squeezed on both ends. For starters, many airlines are reducing the number of planes on which they offer first class, and some like Asiana are eliminating their first-class product entirely.
This trend is exacerbated by a significant improvement in the quality of business class — which now features direct aisle access from every seat and even closing doors on many airlines — and by an industry-wide switch towards smaller next-generation aircraft like the 787 and A350. A first-class cabin takes up a lot of real estate, and these planes don't have as much space to spare as the 777s or 747s they're often replacing. Here are a few examples of the cuts in first class service we're seeing:
- Asiana stopped selling first class entirely last August
- Korean Air cut first class from 27 international routes
- United retired its Global First cabin, making Polaris the most premium cabin it offers
- British Airways, while still broadly committed to a first-class product, opted not to install it on the 18 A350-1000 aircraft it has on order. These planes are meant to replace old 747s and 777s, nearly all of which offered first class
- Lufthansa won't be offering first class on its 777X aircraft, which is surprising as those are larger planes with plenty of room for a first-class cabin
The list goes on, but the trend is unmistakable. On the other side, airlines are getting much stingier with how many first-class award seats they're willing to "give away for free" to those paying with points and miles. We've seen this take the form of devaluations (Singapore KrisFlyer and Alaska's Emirates devaluation both come to mind as recent examples), booking restrictions (Qatar added language blocking first-class award redemptions entirely on its Doha (DOH) to London (LHR) route), and simply making less first-class inventory available for awards, like almost every airline has done.
2019 was a bit of a freebie as many award travelers were able to fly Cathay Pacific first class for just a few hundred dollars thanks to an incredible fare. I expect 2020 to be much harder, with airlines around the world finding new ways to protect their valuable first-class seats instead of giving them away to award travelers.
Award sales and transfer bonuses will become the new "sweet spots"
It would be easy to simply predict that in 2020 dynamic pricing will continue to expand, but the truth is dynamic pricing is already here, and it's here to stay. Airlines have started making so much money off their loyalty programs (especially the credit card partnerships) that they need to keep travelers engaged, which means looking for creative ways to ease the pain of dynamic pricing. Delta, which kicked off this whole grand experiment in 2016 when it pulled its award chart and became the first U.S. carrier to adopt dynamic pricing, has also been leading the way on providing some kind of relief in the form of increasingly frequent award sales.
Airline executives know that their customers want to travel during peak dates, they want to travel to popular destinations like New York or Miami, and they do occasionally want to redeem their miles for a comfy seat up front. While dynamic pricing normally makes these types of trips prohibitively expensive, the solution seems to be offering limited-time award sales and transfer bonuses. 2019 saw Delta offer some pretty crazy deals, including round-trip flights to Australia for just 40,000 miles, and American joined the party later in the year, with its limited-time Web Specials.
As more airlines ditch fixed award charts, we're inevitably going to see a shift away from predictable award chart sweet spots. Moving forward, I expect a lot of the best redemption values to go to those who are patient and have flexible travel plans that allow them to take advantage of flash sales and transfer bonuses as they pop up. The world's a big place and there's a lot I haven't seen yet, and to a degree I'm very okay letting the tail wag the dog and booking my travel based on where I can find a good deal.
Redemption rates will hit new record highs and lows
While Delta has its dynamic pricing system pretty much down pat, United and American came later to the party and that means there are still plenty of kinks for them to work out. In the years since Delta first launched its dynamic pricing, we've seen a number of stealth devaluations that raised the maximum price of an award, especially on premium long-haul routes. United and American haven't had a chance to go through this process yet, though I expect that in the next year we'll see redemption rates continue to shatter records on both ends of the spectrum.
What that means, unfortunately, is that the 480,000 mile one-way business class awards to Sydney (SYD) we've started to see from American Airlines may not be as bad as it gets. Australia is an incredibly popular destination with both leisure and business travelers, and there aren't all that many direct flight options. This gives airlines a ton of pricing power, and I wouldn't be surprised if we saw one-way awards cross the half-a-million-mile mark at some point soon.
On the flip side, I think award sales will continue to stun us with unfathomably cheap flights. I wouldn't be surprised to see a lot more 10,000-20,000 mile awards to far away places.
Resort fees will hit a tipping point
While resort fees started out in a limited number of markets where they almost made sense, they've quickly metastasized to almost every major city in the U.S. and many international destinations as well.
In some cases these daily charges give you a credit at the hotel bar or restaurant (essentially forcing you to spend more money on your stay to recoup the cost), but there's no denying the fact that they amount to a hidden tax. Many third-party travel agencies don't display resort fees until the final checkout page, so many travelers miss them entirely and are in for a rude surprise when they check out and receive their bill.
Related: How to avoid resort fees
Over the last year we've seen a number of lawsuits alleging that resort fees are an unfair business practice, we've seen Expedia lower the search ranking of hotels that charge them, and we've even seen Congress weigh banning them altogether. It's rare to see a business policy galvanize action across so many different fronts, and I expect 2020 to be the year that resort fees finally get reined in. This could take a lot of forms, including an outright ban or requiring more transparent disclosure of them (including earlier in the booking process) but it's clear that something needs to be done.
More companies will offer airline point transfers
The biggest news of 2019 (well, technically December 2018) was Capital One's announcement that it would be adding airline transfer partners to its Venture and Spark Miles family of cards, turning solid credit cards into top contenders for individuals and businesses alike. There's a lot that goes into a decision like this from both a business standpoint and an IT standpoint, but it's certainly getting easier. This is part of the reason that we've seen such a convergence of transfer options (i.e. all five major transferable points currencies partner with both Singapore KrisFlyer and Air France-KLM Flying Blue). If an airline is selling miles to one credit card issuer it means that they have the technology in place to support transfers and have decided on a fair price for the sale, making it easier for other card issuers to partner with them as well.
One noticeable holdout is Bank of America. The Bank of America® Premium Rewards® credit card used to be a direct competitor to the Capital One Venture Rewards Credit Card, as both had modest annual fees, fixed value rewards and a solid return on everyday spending. While Bank of America has given no indication that they're considering adding airline transfer partners, I will say that the Premium Rewards card has definitely been edged out by the Venture over the last year, and a decision like this could go a long way towards closing the gap.
The end of the year is always a good time to take stock, both of your own personal travel plans and goals and how the broader loyalty industry is changing around you. While these predictions may not all come true, thinking big picture about the trends we're seeing will help you stay prepared no matter what happens so you can keep enjoying free travel throughout 2020 and beyond.