Long Term Value of miles/points with Airfare Inflation
#1
Original Poster
Join Date: Jun 2016
Posts: 52
Long Term Value of miles/points with Airfare Inflation
Does anyone think this is accurate saying that points and miles gain value over time as airfare inflates faster than rewards charts? I know the article is a little old, but looking for some of your expert opinions
It kind of makes sense, but some data also backs up the opposing argument.
http://qz.com/345644/the-simple-reas...more-valuable/
http://www.foxnews.com/travel/2014/0...-counting.html
It kind of makes sense, but some data also backs up the opposing argument.
http://qz.com/345644/the-simple-reas...more-valuable/
http://www.foxnews.com/travel/2014/0...-counting.html
Last edited by mia; Oct 24, 2016 at 4:20 pm
#2
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#3
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I have been flying the same city pair for 30 years. Cash price is the same or less now. 5 minutes ago I booked this city pair for less cash than I did 30 years ago.
In 1985 flew SYD-SFO (on PanAm) Cash price today is less.
The freq flyer miles & cash surcharges (where applicable) have continued to rise over the time I have been a member of ffp's (1993)
In 1985 flew SYD-SFO (on PanAm) Cash price today is less.
The freq flyer miles & cash surcharges (where applicable) have continued to rise over the time I have been a member of ffp's (1993)
#4
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Internationally, I'm seeing a lot of fares coming back into their traditional ranges. Not quite as sky-high as 2-3 years ago, perhaps thanks to stronger LCC competition on routes that didn't have them before.
I think the original premise holds true in limited areas. Simple U.S. and U.S./Canada is one example where ten years ago I'd have never redeemed an award but now I do semi-often. Lack of competition has driven prices high, but the airlines have so much marketing capital invested in the "25,000 mile award" that they haven't yet adjusted that part of the award chart. They can (and do) tighten availability, but if you're flexible you can get your seats. Fly a less-popular route where a monopoly exists and you can get over 2cpm without working too hard.
The problem with the rest of the award chart is that if airfares go up too much they'll just reset the chart. They never featured the "90,000-mile J seat to North Asia" in their mainstream credit card offers, so it was easy to crank up the miles required without anyone noticing (except us, of course).
I think the original premise holds true in limited areas. Simple U.S. and U.S./Canada is one example where ten years ago I'd have never redeemed an award but now I do semi-often. Lack of competition has driven prices high, but the airlines have so much marketing capital invested in the "25,000 mile award" that they haven't yet adjusted that part of the award chart. They can (and do) tighten availability, but if you're flexible you can get your seats. Fly a less-popular route where a monopoly exists and you can get over 2cpm without working too hard.
The problem with the rest of the award chart is that if airfares go up too much they'll just reset the chart. They never featured the "90,000-mile J seat to North Asia" in their mainstream credit card offers, so it was easy to crank up the miles required without anyone noticing (except us, of course).
#5
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When airline miles were awarded mainly based on distance flown, inflation wasn't an issue
but with credit card miles (not even looking at sign up bonuses), you are earning more miles as prices of stuff you buy goes up. so if credit card and portal miles (not sure how revenue miles would work) remain a large fraction , then yeah, inflation on the charts ...
but with credit card miles (not even looking at sign up bonuses), you are earning more miles as prices of stuff you buy goes up. so if credit card and portal miles (not sure how revenue miles would work) remain a large fraction , then yeah, inflation on the charts ...
#6
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This game can continue forever if banks increase cards' earning rates to 1.5 or 2 miles per dollar and keep increasing it in step with award chart inflation.
#7
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Internationally, I'm seeing a lot of fares coming back into their traditional ranges. Not quite as sky-high as 2-3 years ago, perhaps thanks to stronger LCC competition on routes that didn't have them before.
I think the original premise holds true in limited areas. Simple U.S. and U.S./Canada is one example where ten years ago I'd have never redeemed an award but now I do semi-often. Lack of competition has driven prices high, but the airlines have so much marketing capital invested in the "25,000 mile award" that they haven't yet adjusted that part of the award chart. They can (and do) tighten availability, but if you're flexible you can get your seats. Fly a less-popular route where a monopoly exists and you can get over 2cpm without working too hard.
The problem with the rest of the award chart is that if airfares go up too much they'll just reset the chart. They never featured the "90,000-mile J seat to North Asia" in their mainstream credit card offers, so it was easy to crank up the miles required without anyone noticing (except us, of course).
I think the original premise holds true in limited areas. Simple U.S. and U.S./Canada is one example where ten years ago I'd have never redeemed an award but now I do semi-often. Lack of competition has driven prices high, but the airlines have so much marketing capital invested in the "25,000 mile award" that they haven't yet adjusted that part of the award chart. They can (and do) tighten availability, but if you're flexible you can get your seats. Fly a less-popular route where a monopoly exists and you can get over 2cpm without working too hard.
The problem with the rest of the award chart is that if airfares go up too much they'll just reset the chart. They never featured the "90,000-mile J seat to North Asia" in their mainstream credit card offers, so it was easy to crank up the miles required without anyone noticing (except us, of course).
Domestically, my flight costs have become more extremely varied, but on average I'm paying more than 5-8 years ago when it comes to non-award tickets.
For international award tickets, the value I see out of miles is now the worst on average than it's ever been.
#8
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#9
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Now there are smoke and mirrors where they can fool consumers into thinking they're getting over 2c of value per $1 spent (and some get that value) but most never see that return from miles.
#10
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Join Date: Jun 2016
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If an airline mile devalues to 1c, do you want 10,000 miles or $100 cash back? Obviously, the cash back is a much better value at that point unless you're the earning potential is great enough.
#11
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The big U.S. legacy airlines have largely normalized around what 1 mile means. For better or worse, they've created this system and it'll be hard for one of them to really break hard from it. They've long used the notion of the 25,000-mile domestic award in their marketing, and they've mostly aligned other "big" rules and primary facets of their award charts with each other. We find bigger variances in partner award charts, but that's more of a niche case compared to the everyday awards that most users redeem.
Thus it won't be easy for them to reset the whole thing down (or up) a notch. Too much marketing capital built-in already.
Hotels, for whatever reason, never coalesced around a single standard or baseline award. There's no regularly-marketed level that people associate with hotel points (e.g. 1 room equals 10,000 points or something like that) industry-wide. Thus nobody (aside from nerds like us) really thinks about how 1 HH point relates to 1 SPG point, and the programs have greater freedom to rapidly adjust up or down with huge promos/bonuses and huge devaluations when necessary.
Thus it won't be easy for them to reset the whole thing down (or up) a notch. Too much marketing capital built-in already.
Hotels, for whatever reason, never coalesced around a single standard or baseline award. There's no regularly-marketed level that people associate with hotel points (e.g. 1 room equals 10,000 points or something like that) industry-wide. Thus nobody (aside from nerds like us) really thinks about how 1 HH point relates to 1 SPG point, and the programs have greater freedom to rapidly adjust up or down with huge promos/bonuses and huge devaluations when necessary.
#12
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Amex has two different Hilton HHonors cards. It sounds like you described the $75 AF Surpass card, not the no-AF card (but you didn't say so).
#13
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Join Date: Jun 2016
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I believe carriers have created an interesting dynamic where they keep the economy award prices low, which is great for people who earn miles via credit cards. The inflation affects the premium cabin space, but people who book those awards usually are flying for business, and therefore are now earning more miles than ever before. If the award costs 20% more miles, but your earn them 50-100% more per flight then why is that a bad thing?
Yes it's much harder for the average joe to save up for a premium award seat, but there are a lot of people who would rather fly 2x in economy vs 1x in first.
#14
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Those are the people who aren't sitting on hundreds of thousands of points. I used to be one of those people.
#15
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Am I not correct in thinking that people who travel for business earn more, so it offsets the inflation of award charts, but leaving the 25000 economy award alone works great for credit card earned miles?