MilesBuzz! - Universal Miles vs. Airline miles

with all the concern on the airlines going BK, I was looking into switching my credit card from a single airlines card to a MasterCard that offers "universal" miles. My question is that when I go to use the "universal" miles will I have the same priority getting a seat as I did when I was using miles that were for a single airline?? Have you gotten any feedback from others??

This is a topic that has been discussed in some detail.

Generally speaking, when you earn miles in a credit card company's proprietary program you get the ability to claim a ticket which the bank actually purchases from the airline you fly.

The good thing is you can fly on one of a number of airlines. And I don't believe these are capacity controlled -- at least they certainly don't come out of the airline's award inventory.

However, the tickets are restrictive in other ways.

The specific restrictions are going to vary by card, but they often include things like a requirement to book 14 days in advance, a requirement to have a Saturday stay on the ticket, and a maximum cash value for the ticket.

To me, those restrictions make the proprietary credit card programs next to worthless. But it's all about how you plan to use your rewards.

I use my rewards for upgrades (not possible with a credit card's proprietary program generally), international first class travel (most credit card programs only give you coach), and last minute travel (also precluded either by a requirement to book in advance or by a maximum ticket value).

On the other hand, if you plan to use the tickets for leisure travel planned well in advance, these cards may work fine for you.

That's just not how I use awards, and it's not how I tend to think one gets the most value out of awards.

A simple illustration: a 2-week advance purchase ticket from the East Coast to the West Coast is likely to run $350-$500. That's the value of the ticket you're likely to get in a credit card's own program.

On the other hand, the three things I use awards for..
* Last minute travel. DC-Los Angeles can be as much as $2000. I used one instead of a bereavement fare which, though it was going to be half off, was still $1000.

* Upgrades. Domestically, I spend $350 for the ticket and use roughly the amount of miles for a ticket so that I'm in First Class. Probably about $1500 in value. Internationally, I may be getting $4000 or more in value for the miles it would take to get two domestic coach tickets.

* International premium class travel. 120,000 miles gets an F seat IAD-LAX-SYD. That's maybe 6 domestic tickets, or $2500-$3000 value from the airline card but $10,000 value for what I'm getting instead.

Just seems more lucrative to have airline miles.

Now, if the concen is airlines going bankrupt and then losing your miles --

First, Randy is pretty confident in the programs at the moment. Why? Because the programs themselves make money (remember, the credit card companies, phone companies, etc. buy those miles) and because the programs generate huge loyalty. Air Canada spun off their program and brought in a nine-figure sum. Randy even thinks the United Mileage Plus program may be worth more than $3 billion.

Second, you don't have to accumulate miles in a program that's teetering on the edge. Now, I don't think there's much risk of American Airlines liquidating. And some analysts are getting more positive about United. But why not accumulate miles on Alaska airlines (and redeem on Alaska, Continental, Northwest, Qantas, Cathay Pacific, etc.)? Or for that matter get a Starwood American Express which can be used for hotel stays or converted to miles in your choice of program later?

Both of those options strike me as superior to a credit card proprietary program.

Best,
Gary

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View from the Wing (http://www.webflyer.com/blog): A blog about Free Miles and Free Markets

Wow, you have given me something to think about. Thank you for taking the time to respond!
Brad

Excellent analysis by gleff. Not much more to add, other than one other downside of bank proprietary "miles" programs. If you do any flying, car rentals, hotel stays, cereal purchases (Kelloggs in the AAdvantage program), etc. or accumulate miles in any other way, you can't combine those miles with the airline proprietary miles toward a ticket.

So, for example, if I stayed three times a year at a Hilton and earned points and Miles, rented a car three times and got some airline miles, bought enough Kelloggs cereal to get 1500 miles, and flew a few paid times on an airline and earned 5000 miles a year for flying, perhaps I might have 10,000 miles a year. If I charge $1000 a month on a card, that's another 12,000 miles a year. If they are all put into the same program, that's almost a free ticket a year if you combine all the miles. If you put them into different baskets (the credit card miles from the airline miles), you have to wait until the charge-related miles alone (and the airline related miles alone) earn you a free ticket.

While this doesn't change things overall if you earn enough airline tickets by charges or other miles on a fairly rapid basis (except for possibly better value uses, as noted by gleff), if say you only earn 5000 airline miles a year, you wait an awfully long time for a free ticket on those miles alone if you don't pile your charge miles into the same basket. Thus, you may have orphan miles that you can't easily use when you want to.

Djlawman

And where are my manners? http://www.flyertalk.com/forum/redface.gif

Welcome to Flyertalk, jadman! http://www.flyertalk.com/forum/smile.gif

Djlawman makes the other very key point -- it's one that Randy has often made with respect to these cards.

You can only earn points via credit card charges with these proprietary bank cards, as opposed to the myriad ways (car rentals, hotels, iDine, shopping, etc.) that you can earn miles in traditional frequent flyer programs.

So it's easier to earn rewards in the traditional programs than with the credit card company programs.

Gary

Thanks for the welcome Gleff. One thing to clarify, I am not dropping my AA account, just considering switching my visa from an AA card to a Miles one. I generate alot of AA miles from business travel and did not want to be in a situation where if I want to travel with miles on a certain date and AA won't let me, I can dip into my universal miles from the Milesone M/C.
Brad

Consider accumulating miles in a second frequent flyer account instead.

If you earn enough miles for the reward tickets you want just by flying, then perhaps put all of your partner miles in another program. That way you will have two good options for award redemption. And you'll be able to take advantage of the PremEx technique (http://www.flyertalk.com/forum/Forum1/HTML/007854.html) for obtaining awards even when American says none are available.

Of course, American may be the one exception to the rule. Since they give out lifetime status based on total miles accumulated in their program (1MM = Lifetime gold, 2MM = Lifetime platinum) you might want to consider putting all of your miles you possibly can into American to take advantage of lifetime status more quickly.

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View from the Wing (http://www.webflyer.com/blog): A blog about Free Miles and Free Markets

The above pros and cons are very clear and as far as I know accurate. One thing perhaps worth mentioning is that if the bank buys you a ticket, that flight will earn airline frequent flyer miles which an award ticket will not.

In my opinion, if you are going to opt for a card that give "bank miles" I would use the one provided by MBNA. Their Quantum card with the "worldpoints" program is probably the best of the bunch.

That's an interesting point that I did not know. Are you sure that you get FF points when you use universal miles?

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by jadman:
That's an interesting point that I did not know. Are you sure that you get FF points when you use universal miles?</font>

You should, since the bank is purchasing a ticket for you.

It's possible (and others with more experience with these cards can weigh in) that banks may get some consolidator-type tickets/bulk fare tickets that don't earn miles.

But I assume that the tickets earn miles.

May I suggest the Starwoods AMEX card? You earn miles just like any other mileage earning card. You can use the miles for hotel stays at Starwood properties or transfer the miles to any number of airline programs. (Currently you can xfer 20,000 *wood miles and get 25,000 airline miles.)

I have a really good points-based Visa CC deal through my credit union (rewards program administered by ScoreCard). A point for each dollar charged, and you can get $325 toward a free ticket anywhere for 20K points or a 48U.S. RT on USAir for 25K, among other rewards. Card has no annual fee.

The two things I like about this are the flexibility (it really rewards you for scouting out low fares yourself) and the fact that freebie tickets EARN miles and are upgrade-eligible with elite programs!

I've used tickets with this to go to Alaska, Las Vegas and, most recently, Europe (using a CO $215 RT ATL-BRU fare special to get it for just 20K points and the $10 security charge). With elite benefits, the CO ticket earned back over 17K OnePass miles. Not bad for a free ticket and a card with no annual fee.

I don't think they are quite as bad as Gleff seems to thing. But there are considerations.

For one thing, there are no blackout dates and no capacity controls and the "free" or subsidized ticket is an actual revenue ticket, so its an upgradable ticket (depending on destination and program rules of course) and the "free ticket" earns status miles and bonus miles if you have status in that airline. Also, the "free ticket" can be on any airline.

I've had experience with the scorecard program through my credit union and miles one. Both programs used to be much better. In recent years they have raised redemption rates. They used to have very lucrative domestic zone awards, and the domestic award wasn't too bad, but the Hawaii awards and other awards weren't very good .. the points required for Hawaii were much higher than the airlines saver award schedules, and the schedule for Hawaii to Europe is ridiculous. On the other hand, I used a universal program zone award to fly my brother-in-law and niece from NY to St. Louis for a family gathering a couple of years ago, and that came in very handy. I had choice of flights and choice of airlines. A few years ago, I used a miles one Hawaii award with up to $800 value for a holiday ticket from Hawaii to Florida, that had a cost of around $1100. I paid $300 cash, got to upgrade the ticket with miles, got 10k status miles and 10k bonus miles and I think that was the year after the summer from hell, so I got another 10k miles since the trip gave me enough miles to make it to Premier Exec.

I agree with Gleff that for last minute travel, the universal programs won't do you any good, but this just adds another option and another weapon to your arsenal.

-David



[This message has been edited by LIH Prem (edited 04-18-2003).]

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by LIH Prem:
For one thing, there are no blackout dates and no capacity controls...</font>

While this is technically true, the price cap means you are effectively limited to deeply discounted economy fares (unless you want to pay the difference, which misses the point of a "free" ticket unless the fare is just a bit over the cap). These tickets are subject to capacity controls. On popular routes at popular times, there may be so few of them available that for practical purposes they are blacked out.

This is not to say that these programs are evil. It depends on your travel patterns, your award needs, and on whether you can earn enough points solely through credit charges to earn the awards you want. They do what they claim they do. If you fit the right pattern, they can work well. The sad part is that many people don't think through them carefully and end up disappointed.

The other piece to consider is whether a cash back card might work just as well or better.

I choose traditional mileage cards because I get more value out of the awards than I would get out of, say, 1% back.

But I'd also rather just get a $200 (1%) or $300 (1.5%) cash rebate on $20,000 in spending than a very restrictive $350 coach ticket. Again, just my preference.

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View from the Wing (http://www.webflyer.com/blog): A blog about Free Miles and Free Markets

That's what I like about this Miles one m/c. It gives me the option to take cash or miles. No annual fee, and up to 5,000 for transfering balance over (and I still get the miles on the balance I moved over from my AA visa) and not payment or interest until Aug. No annual fee. I was paying $95 per year for my AA visa.

LIH Prem makes a good point in that the defined-benefit awards on ScoreCard have been eroded. The $325 "full option" alternative (i.e. a defined contribution) I find handy because you can call them and pounce on a fare sale and even reel off specific flights you want to book (which you've priced yourself online, so you know how the fare should come out). That's very empowering.

But it benefits mainly those who can work the online systems to research & do their own bookings. Quite a few FTers can do that, but FTers aren't typical of the general public.

CapOne actually has a higher fare-value cap with their MilesOne, but they have this annoying zone system that really destroys it for me. They're trying with that to make it more likely that a novice won't try to book something and be disappointed with an out-of-pocket add-on, but the rigidity of the system penalizes people who can work the on-line systems. It means I can fly to Maine on the lowest award level, for example, but not California.

[This message has been edited by RustyC (edited 04-19-2003).]

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by gleff:
The other piece to consider is whether a cash back card might work just as well or better.

I choose traditional mileage cards because I get more value out of the awards than I would get out of, say, 1% back.

But I'd also rather just get a $200 (1%) or $300 (1.5%) cash rebate on $20,000 in spending than a very restrictive $350 coach ticket. Again, just my preference.

</font>

With miles one, it's your choice. You can either get 1% cash back ($200 for 20k points) or an airline award.

-David

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Efrem:
While this is technically true, the price cap means you are effectively limited to deeply discounted economy fares (unless you want to pay the difference, which misses the point of a "free" ticket unless the fare is just a bit over the cap). These tickets are subject to capacity controls. On popular routes at popular times, there may be so few of them available that for practical purposes they are blacked out.
</font>

Well, there really is no difference in trying to use a universal award within the cap amount and trying to get an airline "saver" award for a time of peak travel. At least with the universal award, you can get a discount, if you can't bring the ticket in under the cap. With the airline award, you are SOL if you don't have the miles for the "standard" award.

I agree with you about understanding the rules of these programs up front.

Remember, there's a reason why there is no one best program or credit card rewards program for everybody.

-David

Well I would agree with gleff on this one, I would rather the miles in a program instead of the cc's proprietary program. Of course as he said, it depends on what you are looking for and your mileage earning opportunities. The two biggest drawbacks to me are the restriction to essentially domestic coach tickets and the inability to combine the "miles" with real miles in a program. Not that the airlines are a model of financial security, but wasn't there one of these types of "fake miles" programs that went under and everyone lost? I thought I heard it.

As also mentioned above, I would recommend the Starwood program and SPG Amex since you can get hotel stays if you want and also get the ability to convert the miles to the airline of choice. Unless you are bent toward UA (which I am not) this is the best plan IMO. FYI, if you did not know, UA's SPG conversion rate changed this year from 1:1 to 1:2 which essentially cuts earning in half.

In summary, I think that a lot of people who say that they "do not fly enough" do not always realize that you do not need to fly a lot to acquire a lot of miles. Miles can be earned for quite a lot of things apart from flying, and the occasional flight will pump some good miles into a program. With expiration essentially a non-issue with most programs (most allow you to never lose miles to expiration if you use the program once per three years) it really does not matter how much you fly. If you are in a cc program, you cannot do this.

I just picked up an MBNA Worldpoints card for reasons unrelated to points (namely, they were offering me a ten-month 0% teaser), but after looking at the program I think it has a couple of valuable aspects.

- 2500 points = one day car rental, up to $60
- 5000 points = one night's hotel stay, up to $80 (obviously this is less useful in an area well-served by Priceline)

And the usual:
- Airline rewards, with the pros/cons already discussed in this thread
- A sort-of 1% cashback option (20,000 pts. = $200).
- A merchandise catalog that I probably won't ever use.

After I cross 1MM on AA, I will likely dump my AA Citicard and keep a no-fee card instead. I'm considering keeping this one for those free rental cars and hotels.

My only remaining question: since the airline awards are capped by a dollar amount, why do they insist on a 21-day advance purchase and a Saturday night stay? Those tickets are usually more money, but not always. If I can sniff out a 7-day fare that I want for just under the cap, why can't I have it? (Assuming it's an eticket.)

Leaving my final question: is there any home-grown points card that has the usual dollar-caps on the awards, but no advance-purchase/Saturday night restrictions?