Pandemic-era devaluations: What's happened to frequent flyer miles and what may come next

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In regards to points and miles, one major concern I had in the height of the COVID-19 pandemic was devaluations. Airlines were — and to an extent, still are — giving away miles like crazy. We saw great mileage sales, higher-than-ever credit card sign-up bonuses and more transfer bonuses than ever before. Plus, those who were flying were rewarded with exceptionally easy elite status.

Many of these things are still ongoing. On the transferable points side, many credit cards are offering super high sign-up bonuses. Cards like the Chase Sapphire Preferred Card and Citi Premier® Card are still offering their best-ever bonuses, which offer enough miles to fly almost anywhere in the world in business class.

At face value, this is fabulous news for the average consumer. But we all know there's no such thing as a free lunch -- or flight.

Many of us have racked up increased point balances during the pandemic while we're traveling less and earning more points thanks to bonuses and promotions. But digging deeper, you soon realize that this is creating huge balance sheets for the programs. In turn, this could lead to some less desirable consequences from the airlines, banks and hotel programs preemptively devaluing their respective currencies to lighten their load.

Let's take a look at the airline, bank and hotel programs that have already devalued their points currencies and discuss just how bad these devaluations are. Then, I'll discuss some currencies that could be devalued as we continue to move through the pandemic.

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The devaluations we've seen so far

Let's start with the devaluations we've already seen.

Airlines and hotels alike have devalued their points, and some devaluations have been worse than others. Some included revamping how the entire program works while others simply removed redemption sweet spots. Regardless, they're all bad for us consumers.

Delta gutted nearly all of its partner awards — twice

Delta SkyMiles has been the king of devaluations throughout the pandemic. We saw the airline massively devalue its best partner award redemptions -- twice. The most recent devaluation skyrocketed the price of partner awards to Asia and Europe, with partner business-class awards now pricing at 120,000 SkyMiles one-way in business class to both regions.

To make matters worse, Delta also essentially added de facto close-in booking surcharges to many partner awards. Booking a partner business-class award to Europe within 21 to 59 days prior to departure now costs 170,000 SkyMiles. This is incredibly expensive when compared to almost any other program.

And it makes sense for Delta to devalue its program. Its cobranded credit cards have offered record-high welcome bonuses and loads of spending incentives throughout the pandemic. Plus, Delta very clearly wants its members to redeem SkyMiles for domestic flights on its own planes, as these can be booked for under 5,000 SkyMiles one-way on some routes.

Emirates made it harder to book first-class awards

Earlier this summer, Emirates massively devalued first-class award tickets. It removed first-class Flex awards, which previously offered a cheaper way to book first-class awards as a part of a round-trip itinerary. Now, you'll spend a minimum of 272,500 Emirates Skywards miles for a round-trip first-class award ticket from the U.S. This same ticket cost 217,500 miles before the devaluation.

IHG eliminated award charts

IHG Rewards introduced dynamic pricing in 2020 and raised points prices in early 2021. Previously, the hotel chain had a standard award chart with set, largely reasonable points prices at most of its hotels. The 2021 devaluation raised the cost of nights at many popular properties and made points worth as little as 0.35 cents per point on some stays. This is a far cry from TPG's IHG Rewards valuation of 0.5 cents per point.

Not all is lost for IHG Rewards, though. TPG senior writer Katie Genter recently found a lot of great deals out there, so make sure to read her full guide to navigating the IHG devaluation.

Southwest made its points less valuable

Southwest has a revenue-based loyalty program. This means that the cost of an award is based on the price of a paid ticket, so points should be worth roughly the same amount from one Southwest Wanna Get Away award ticket to the next. But in April, the airline devalued Southwest Rapid Rewards points by 6%.

This may not seem like much, but it caused TPG strategic travel reporter Benji Stawski to rethink his Southwest award booking strategy.

United moved to dynamic partner award pricing

United MileagePlus had one of the most devastating devaluations of the pandemic.

The United MileagePlus program dropped its award chart in favor of dynamic pricing in 2019, but kept standard award pricing for partner awards. This all changed in April 2020 when the airline switched to dynamic pricing for partner awards and immediately raised partner award prices by 10%. Then, the airline again raised award prices for close-in bookings last October.

I was once a huge fan of MileagePlus, but these constant devaluations have made me move my focus elsewhere. I'd argue that United has had the worst devaluation of the entire pandemic for American travelers since the program is popular among many who live near and fly out of United's various hubs.

Virgin Atlantic's Delta award chart

Virgin Atlantic Flying Club used to offer the best award pricing for international Delta award tickets. It had standard award pricing for flights to all regions that Delta served, and this pricing was often a fraction of what Delta charged. For example, you could use just 60,000 Virgin points for a one-way ticket from the U.S. to Asia in Delta One business class before the devaluation.

This (mostly) came to an end this January when Virgin Atlantic moved Delta awards to a distance-based award chart. This award chart is a lot more expensive than the old award chart too. A flight from Seattle (SEA) to Shanghai (PVG) that used to cost 60,000 points now costs a whopping 130,000 points one-way.

On the bright side, Virgin Atlantic kept pre-devaluation pricing for flights from the U.S. to Europe. You can use 30,000 and 50,000 points for a one-way ticket on these routes in economy and business class, respectively. Only time will tell how long this sweet spot will last.

Related: Travel is back. Now, points and miles devaluations are (likely) coming

Who may devalue next?

I want to preface this by saying that this section is solely my opinion formed by years of combing over this stuff. I've earned and burned points and miles since 2014 and worked as a journalist covering the points and miles since 2017. In turn, I've seen dozens of devaluations and award chart changes. These are the points and miles currencies I expect to see devalued next based on my past experiences.

Alaska Airlines Mileage Plan

Alaska Airlines Mileage Plan has long been one of my favorite loyalty programs. It has a ton of great global airline partners, includes free stopovers on one-way tickets and has published award charts with very reasonable redemption rates. But only time will tell how long this lasts.

Alaska Airlines joined the Oneworld alliance earlier this year. Since then, it dropped Emirates as a partner and axed redemptions on the airline this summer. This is likely due to the fact that Qatar Airways is a Oneworld partner, and being partners with two competitors in the same region doesn't make sense for the alliance.

I think we could see Alaska make more Oneworld-friendly, consumer-unfriendly changes in the coming years. While I very much hope to be wrong, we may see Alaska drop distance-based mileage earning to match American Airlines, its closest Oneworld partner. We may also see the airline drop other non-alliance partners like Singapore Airlines and Icelandair.

American Airlines AAdvantage

Speaking of Oneworld, American's AAdvantage loyalty program is another favorite among U.S. travelers. It has continued to offer standard award charts for many awards, and its dynamically priced Web Special awards frequently offer great deals on popular routes. Things may not stay this great forever, though, as the airline works to adapt to a changing loyalty climate.

In terms of solid devaluations, we already saw American eliminate its infamous Reduced Mileage awards. These awards offered discounted award tickets to its cobranded credit card holders on specific domestic routes. Many TPG staffers used these to score excellent deals on domestic trips.

But I think the worst is still to come -- and potentially sooner than we'd wish. This June, TPG senior reporter Zach Griff spoke with Rick Elieson, the president of AAdvantage, about the future of the loyalty program. In this discussion, Elieson said that American is working on a replacement for the standard award chart and that he wants members to be able to "redeem miles for more and more things, not just awards,"

In other words: Dynamic pricing is coming to AAdvantage.

How bad this will be for consumers is unknown, but if the past has taught us anything, it's that this could skyrocket the price of high-value business award tickets. Again, I'd love to be wrong on this.

World of Hyatt

World of Hyatt is another staff favorite here at TPG. It's one of the last hotel loyalty programs to offer a predictable award chart without peak and off-peak pricing. Even though I'm not a Hyatt loyalist myself, I think that World of Hyatt offers the best elite-status benefits and most valuable points of all the hotel point currencies.

That said, awards are about to get more expensive for some stays.

Hyatt was set to introduce peak/off-peak pricing in March 2020 but delayed the change (twice) as the coronavirus pandemic ravaged the travel world. Unless it delays a third time, the extension is soon coming to an end, and peak pricing will be introduced in mid-October for stays starting March 2022.

How bad this is will depend on your travel patterns. Thankfully, the hotel loyalty program will continue to publish award charts for standard, off-peak and peak hotel stays after the change is implemented. As it stands now, peak and off-peak award nights will be up to 30% more or less expensive than a standard award, depending on the award category. Only time will tell how many dates turn peak and of course, those tied to traveling on peak dates (such as families on a school calendar) may be affected the most.

Possibly: American Express Membership Rewards

Full disclosure: Here's where I really start to speculate.

American Express Membership Rewards points are a transferable points currency, so their value largely depends on the value of the program's transfer partners. Membership Rewards have long been my favorite type of points because of this, with super valuable transfer partners like ANA Mileage Club and Etihad Guest.

But it's hard to ignore that Amex has been issuing points like crazy since the start of the pandemic. Its flagship cards have been offering exceptionally high welcome bonuses, there have been tons of incentives to earn more points and now the program is offering more transfer bonuses than we've ever seen at once. This has landed me with a huge Membership Rewards balance that I'm itching to use.

The only concrete devaluation we've seen so far is Amex cutting the rate at which The American Express Platinum Card® for Schwab cardholders can cash out their points to brokerage accounts. Cardholders saw their redemption rate drop from 1.25 to 1.1 cents per point on Sept. 1. The use-points-at-a-fixed-value option for most Amex cards is already not great, so I don't see the program using that particular tool in the devaluation kit across the board.

The information for the Amex Platinum Schwab card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

Off the top of my head, we could see Amex drop transfer partners or reduce transfer rates to popular transfer partners, though of course, we're seeing the opposite trend at the moment with all the transfer bonuses.

On the flip side, the points proposition might stay the same, but we could see Amex continue to raise the annual fees on its popular cards. For example, The Platinum Card® from American Express recently saw its annual fee jump from $550 to $695 (see rates and fees).

As with everything discussed here, only time will tell if any additional changes actually happen. Perhaps the competitive nature of these transferable points programs will continue to play out in the consumer's favor.

Related: Chase, Amex spending millions on points and miles — what it means for the future of loyalty programs

Bottom line

While points and miles got exponentially easier to earn during the pandemic, many currencies saw devaluations follow. This is likely done to help airline and hotel programs reduce the liability on their balance sheets — and as much as I hate it, it usually makes sense from a business perspective.

If anything, this continues to show us that points and miles are a bad long-term investment. While it's easier said than done in a pandemic, earn them, burn them and then start again.

Keep this in mind as you earn points throughout the next year or so. Like a stock portfolio, diversify which types of points and miles you earn. Plus, redeem them as frequently as you can so you can enjoy the fruits of your labor ... before the next devaluation.

For rates and fees of the Amex Platinum, click here.