IkeEsq

Where do people think the frequent flier/stayer programs and earning go from here? It seems like we are in a trough or perhaps on a downward slide into oblivion.

Chase now denies you if you have had 5+ personal credit cards opened in the last 24 months; Citi denies you if you have opened or closed a card with the same type of points in the previous 24 months; AmEx is once-in-a-lifetime on personal cards . . .

Meanwhile, manufactured spending has become far more complex and difficult, often requiring 3-4 steps and a lot of time for many people and the airlines and hotels are moving to revenue-based models.

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My thoughts . . .

I found FT in April 2011, around the time that a number of the bigger-name travel bloggers were going fulltime. The next several years, through last year and maybe early this year, it was possible to get a LOT of signup bonus miles. My wife and I got more than 100 credit cards between us in those five years. It was rare that I had to do MS, and I never bothered other than when I was shy on spend for a signup bonus.

But the rise in viewership on blogs, FT, Milepoint/InsideFlyer, Dan's Deals, Reddit, and elsewhere has ballooned the number of people going after these deals and almost any idiot could take advantage of these programs. So they cut back the bonuses, they eliminate the easy MS opportunities.

There is going to be a huge drop, I think, in those actively churning and doing MS. It is just not within the reach of most people anymore. The bloggers who live off of credit-card referrals are going to go under unless they can find another source of income. My wife and I might get a couple of cards in the next year instead of 20. Even those just starting out can only really get a handful of cards and bonuses. Maybe enough for a trip or two.

With fewer bloggers, less to say on the sites, and a lot less low-hanging fruit, the credit card companies are going to be issuing a lot less cards and have to entice people to keep the ones they have. If there are not waived fees every year on every card, I'm going to cancel them all at once if the clock is going to reset anyway. I've already trimmed a lot of our cards this year, usually in large batches.

So, in another year or two, I think things are going to loosen up again. Maybe not completely but enough.

mahasamatman

It would be shocking, but maybe they'll go back to earning for actually flying or staying? Amex has the only policy that makes sense. The reason for the signup bonii is to get (potentially) good customers. Churners are not good customers, so I can see why credit card companies don't want them.

krazykanuck

I've been in the game since call it 2012/2013. Things are definitely getting tougher and I'll definitely be pruning some cards from the wallet in the next year. I'm starting to focus more on maximizing spend on my existing cards, since the sign up bonuses are getting more elusive. Also I'm not wasting new cards on good bonuses unless I either need them, or they're ridiculously good (100k Plat, 35k SPG, 70k Ink, fit in this category)

CPRich

Exactly my thought. The good old days.

sdsearch

Some long perspective:

In many ways, it got easier during the long economic downturn (because travel dropped off, credit card dropped off, etc), and is getting tougher now as the economy is improving (and travel is going through the roof, credit card use is going up to the point where not as many incentives are needed for the biggest banks anyway, etc).

So it's not likely to necessarily get better next year or the year after. When it is likely to get better, ironically, is when the economy (or at least travel and/or credit card use) goes down again. (Of course, if you lose you job then, you won't necessarily by in a position to take advantage of it then.)

Those of you who got into it in the past half decade got into it during the time it had all ramped up. Now it's ramping back down.

Each cycle, however, is different, so it's hard to predict how things will go solely based on history. For example, with airlines themselves, there were way more airlines a decade ago than today: Northwest and Continental and US Airways and AirTran were competing for your money with the airlines that are left today. (And today Virgin America is competing for your money with Alaska Airlines, but not much longer.)

And now what happened with the airlines is starting to happen with hotels (that have credit cards): SPG and Marriott are merging, Fairmont is merging with several other hotel programs, etc.

So it's not just the banks that are factor, but also the airline and hotel programs behind them. As those airlines and hotels merge and compete less, then compete less for bank customers through the banks.


Where do we go from here? Perhaps start by forgetting the "earn and burn" mentality. If you can're "earn" (much) any more, and you didn't "stash", then you'll have nothing to "burn", right? So if you followed an "earn and stash" approach in past years, you're hopefully sitting on a stash that can last you a while, even if you can't replenish that stash as fast as you use it. But if you followed an "earn and burn" philosophy, you presumably have little left, and now a harder time replenishing.

IkeEsq

Thanks! Very much what I was interested in. It is difficult for me to see the cycles because for most of my time here things have been relatively glorious. For all that lots of things have died, there have been plenty of easy opportunities left.

Although I have been tapering off somewhat over the last couple of years, I've certainly earned a LOT more miles, especially AA, than we've managed to use. So I suspect that we'll still be flying free for a few more years at least.

nineworldseries

If Trump wins: economy and market crashes, gold+silver skyrocket, awesome credit card offers come back, travel gets much cheaper similar to 2008-2009

If Hillary wins: Nothing changes, CC companies continue to crack down on churners, miles/points become more difficult to obtain, planes still go out full

Bttc

Maybe awards will become more available with fewer churners to fight over them?

BearX220

You've had some good perspective here. Typical wisdom is that this business runs in cycles, and when the economy is good and demand is high, bonuses and signup inducements obviously drop off... then when macro factors tank, the inducements get better.

But I think the underlying structural changes outlined above by sdsearch -- mergers, reduced competition, and capacity discipline -- are more influential, and detrimental to most customers, than cycle forces. So is overall waning faith in the value and usability of miles and points. The broad market is starting to grok that redeemability is worse and the issuers are turning up the scarcity dial.

The logical result -- and this is already happening -- is that the game yields real dividends for less and less people, and more, perhaps many, are pushing back from the table. When people suspend belief in the value of a currency, no amount of inducements can lure them to reinvest. (If I don't believe Delta SMs are worth enough to bother collecting, then SM is no factor in my booking decisions.)

And it's important to realize that dedicated MF manipulation of the programs is outlier / extreme behavior, and an unintended loophole the issuer-managers want to discourage if not outlaw. They have no incentive to facilitate this kind of consumer behavior, and given the increasing scarcity of awards, many good reasons to squash it. Award inventory is meant to reward loyalty, not gaming skill.

The real test will be when the economy goes south next, which may be sooner than we think, especially if Trump wins. Will the typical cyclical behavior emerge, with sweeter signup deals to propel consumer spending and -- the banks hope -- debt? I bet not. Just as I don't think the airlines will slash fares and run DEQMs, etc. in the next recession; they have now learned the virtues of capacity discipline. They will park planes rather than run discounts to fill them.

I think the New Normal is: mileage and points programs with much narrower appeal, and a decline in MF opportunities and rewards. Which, speaking as a traveler who earns his points and miles the old-fashioned BIS way, I regard as a good thing given award scarcity.

pinniped

Mergers. That's what killed the game. The cartel doesn't need to give away perks and freebies to fill planes. They control all the supply, and they've finally gotten good keeping supply in check.

I found it really telling that when the DoJ subpoenas airlines for collusive behavior, Southwest is firmly considered as an "insider" along with the other big three. It used to be that at least for domestic U.S. travel, we could count on Southwest to act as a legitimate competitor.

At the end of the day, *both* credit card and actual flying miles (not to mention all other partners) are on the decline. The endgame is that these programs all are greatly reduced in importance (and expense) to the airlines.

The only silver lining is that this has caused them to actually try to sell (and reward those who buy) J/F seats. As such, they now are more likely to price them to sell (on most routes) than price them artificially high to give out as upgrades. I've actually bought paid J/F a couple times in the past 2 years because the price difference (confirmed at booking time) was in the same range as the value of an AA 500-mile upgrade credit. Granted, I was nudged there by high Y prices to begin with, but it's another example of how the airlines are slowly killing off the upgrade game.

sdsearch

Are you finding this on longhaul or just mostly domestic? At first when you mentioned J/F I though longhaul, because there's little J on domestic (other than JFK-LAX/SFO), but then you mentioned the AA 500-mile upgrade, which is only usable domestically.

I generally just buy coach domestically and use miles mostly just for longhaul international in business. And while in some directions (like LAN for South America) I see tempting paid business class prices (at least during sales), in other directions (like to Europe from the USA midsection or west) I haven't found much of a change yet (not counting Norwegian Air and the like whose "business class" is more like just "premium economy" at legacy airlines). Have you?

Major G

Predictions are hard, especially about the future. - Yogi Berra

smurov

To me, mergers are the biggest deal. With the economy going up and down, I understand that the offers and such go up and down. But when you have a serious drop in competition, there is not much incentive for deals. Maybe I'm overly pessimistic, but I think that this hobby will die out, or at least greatly diminish, within the next 5 years. Even with large sign up bonuses such as the CSR today, so many more people are restricted from getting the card.

But don't get me wrong, I think that is just good business for the banks. As seen on FT various times, but not as often as I'd like, churners are not good business for banks. So we can complain all we want, but imagine if your customers were blatantly taking advantage and reducing your profit, and you could easily stop it - you'd do something about it too.

Another side would be that even when you have points/miles, it is becoming more and more difficult to use them. A bare bones look for the average person is this: I choose to put my daily expenses on card X because over time I can get a free Y (flight, hotel, etc.) from it - and, plenty of times I'm paying a fee to be able to do this in the first place. Now when I finally have earned all these points/miles, I feel like I have to jump through hoops while inside a maze just to use them.

Examples of this are everywhere, such as 1) Limited to non-existent availability of SAAver seats on American, 2) American playing around with dynamic mileage award redemptions, 3) high fuel surcharges on certain carriers and/or via certain airports, 4) a ridiculously high number of points needed for a some hotels per night, and the list goes on and on. I'm sure plenty on FT can think of more examples.

Obviously, the airlines and hotels can loosen up the rules (or games, really) in the future but they might not feel enough pressure to do so, at least partially due to a decrease in competition. Our complaints will fall on deaf ears because we will still use their cards, as its going to still be a better alternative than earning nothing.

So my pessimistic view of the future is that it is more or less all downhill from here...we may have some lifts, but new rules and the games being played by the cartels (I really like that terminology!), along with more mergers, are going to drive this hobby as we know it into the ground.

pinniped

A little bit of both. The cost of the 500-miler was simply a reference point for narrowbody/domestic upgrades.

We're flying to SJU this winter. Peak holiday cruise dates so we're stuck with crazy high Y fares...but strangely sane F fares. It was something like $550-ish vs. $800-ish. So confirmed F is basically $250 for 4 segments...10 hours or so in the seats. Something chaps my a.. about spending $550 in Y for something like this, but for some reason $800 in F seems palatable. I suppose that's precisely what the airline wants me to think, right?

This past summer, I saw MCI-BCN in J for $2500-ish per person...major alliance itins. Really, really wanted to buy it...but with 5 people traveling (2 of whom are children) it was just hard to pull the trigger on that much total cash. Ended up redeeming miles and flying Y.

84fiero

Thinking about the next 10 years or so, I think it will get worse before it gets better, and when it gets better it will be only small improvements. Beyond that, who knows...a lot of unexpected things could happen that would throw the travel world for a loop (good or bad!) in 15 or 20 years.

The consolidation has been one of the two death knells for loyalty programs. The other being the more widespread awareness of churning, MS'ing, and other techniques to maximize our return from these programs. .

I have been focusing more on maximizing spend on cards I do have, as others have expressed. Some banks, like Barclays, are pretty good about periodic regular spending bonuses - granted, not huge but it's something.

I see the legacy airlines moving to a WN-style revenue-based redemption within the next couple of years. DL will be first and I can already see the marketing spin "Our members asked for a simpler, streamlined and easy-to-understand way to redeem their valuable SkyMiles...." That will be a complete game changer/ender.

Hotel loyalty programs have become so worthless to me that I don't even really bother. Sure, I have a couple of annual free night CCs that so far still are worthwhile, but I may even ditch those soon. And when I travel for work I'll still earn points (I don't get to choose where we stay) and eventually use them for a modest redemption. But I don't go out of my way to earn on my own. Which in many ways has been liberating. I've found there is often better value - and a more fun experience - in non-chain hotels. Plus my travel the past year or two has been largely to areas without much of a chain hotel presence.

I used to MS a lot but haven't for awhile. For one it's become more of a hassle. But I've also been preoccupied with a couple of personal crises that leave me without the energy to devote to it.