jediwho

My thinking always was that the airline devaluation (DAL/AA/UA) was not the smartest idea and will not continue and most likely reverse. Either because frequent flyers would become agnostic and hence create pricing pressure, focus on hotels, another domestic airlines such as AS or JBLU, foreign airlines will get aggressive with their loyalty program and also issue strong credit card products to attract customers. Keep in mind that almost 2/3rds of the miles are earned through credit card spending.

Little did I expect most of this to happen within a year after AA devalued their program.

With the December Alaska frequent flyer program improvement, coupled with Amex's massive improvement (5x for airfare and 2 cent redemption for Business Platinum), it looks like the glory days are back.

Regarding Alaska, what to me is the most interesting is the jump in miles you earn when flying business in partner airlines. It almost feels very uncanny that this announcement came a month after Amex's announcement. Basically what they are doing is strengthening their partner's position by making their business class product much more attractive.

A good example is business class on Emirates from LAX to Africa/Asia. Even at $4,000 there will be way more people for whom buying business class will now make sense as the actual cost (counting the benefits of extra miles you earn), will be equal to a bit more than premium economy. At $3K for the ticket, the net cost would be little less than PE.

What's very interesting is that if you use Amex membership rewards points for the ticket, you will need 150K Amex MR points for a business class ticket on Emirates and you will get 75K Alaska points and flying business class to India -- so for a net 75K points, you are getting a business class ticket to Asia or Africa.

These are simple back of the envelope calcs and actual numbers would vary but I think we hit the bottom a year ago and now we could see continued improvement as airlines compete to get higher loads and revenue per mile.

Any thoughts?

DaveH

I'm not sure that these real improvements by AS and Amex portend real airline competition this year. But they are exciting for we AS flyers nonetheless!

I will certainly be looking for business/first bargains on partner airlines in 2017 in a way I didn't in 2016.

A nitpick: you'll need 300k MR points for that Emirates flight, then 150K will be refunded back.

channa

I wouldn't say the glory days are back, but the things that are rewarded are certainly different.

If you're willing to drop $450 on an annual fee, you can enjoy perks and rebates not available to everyone else. Even if it makes economic sense, quite few people are not willing to jump over that $450 fee hurdle. And they don't necessarily have the spend needed to generate the points needed to purchase higher cost tickets with rewards.

But you're right in that more and more people are trying other airlines or becoming more airline agnostic. The spiral that the Big 3 have started is going to get worse unless they improve the rewards. UA just sent out a survey asking about opinions on the MileagePlus program and how it impacts business.

When I get more United miles from renting a car than flying an air ticket, I told them do a great job getting me to choose Hertz, but they don't do a good job getting me to choose United.

Orwaid

Hi -

I completely agree.

The past 12 months my international trips were on Air China to Singapore, Xiamen Airways to Australia and Avianca to Europe. All business class, all lie-flat, all at 1/3 to 1/2 what the US carriers wanted. Add in the 100K RDM for the three flights and it became a no-brainer. In the past, I would have flown US carriers for the RDM and elite benefits including upgrading to F.

As you have suggested, I am totally loyalty-neutral on my long-haul business class trips now. On my domestic trips I try to fly AS when feasible. So much for my Million Miler status on UA/DL/AA.

eponymous_coward

The "glory days" didn't require you to spend $4-5k to get a pile of EQM/RDM or fly in longhaul business class. This is nice if you have $4-5k in entirely disposable income, but it's not the same as turning $2k into EXP.

There are indeed smart options on longhaul J, but it's not the same, and airlines learning how to sell F better and how much F to have to sell domestically will influence the experience more and more in the future.

Not unique to UA. WN rebates $15-20 in WGA credit on a lot of my Alamo rentals. Way more than I would get buying a WN ticket. Oddly enough I rent from Alamo a lot more than I buy WN tickets...

cardinalkid1891

If you're a high spend personal/business traveler, these might be the best days, or at least the days you get better rewarded relative to most everyone else.

I don't know if the true glory days will ever come back, but there will always be opportunities to maximize and get outsize value, which is why I'm still in this come 2017 and onward.

jediwho

Amex is further tying you down into their ecosystem -- you will need lots of MRs and even after redemption, you will have plenty remaining!

mczlaw

Do you (does anyone) think this is merely a return to the original intent of the frequent flyer programs? In the earliest days, weren't miles and spend pretty closely aligned? Serious question.

Baze

I think the big 3 have made it quite clear to the FF community. If you are not a heavy spender on the airline or have a certain CC you really are a burden to them. They have devalued the FF tiers (except the top spenders) to a point that is almost forcing us to kayak. They feel we already spend on price so why should they shower us with benefits for buying the cheapest tickets? Even though Alaska is still based on miles (for now) these latest changes show they want you to spend more money. Though allowing complimentary upgrades on Z fares is a puzzler in that regard, a nice puzzler mind you. The big 3 are seeing their planes still fill to capacity no matter how much they devalue their FF programs. They WANT those kayakers that they can nickel and dime for everything. They know they don't have to shower us with benefits to get the planes full so why should they spend the money to provide those benefits except to the big spenders?

jediwho

Agreed that the $450 annual fee -- $900 for Personal and Business and $1000 for an EDP -- is a huge stumbling block, at least mental. But at least it's not the one way downward path we have seen for the past 2/3 years.

SFOPeter

I think we are on the last gasps of frequent flyer programs, I have had to switch every couple of years from UA -> AA -> AS to stay ahead of revenue based. I figure AS will last a couple of years as it is, and that the foreign airlines will also switch to revenue based as well over the next few years. BA is well on its way for example. This game has max 5 years left.

Agree that this is the glory days of paid discount business class. Especially if you wait for the int'l deals and are willing to connect domestically. And AS is a great program for crediting discount business fares, and is especially great for me living at SFO with the VX acquisition, despite losing DL.

Also the glory days of credit cards that give you a lot of earning potential and flexibility. Amex has a $200 credit for airline fees so it's really only $250 per year for anyone who flies a lot. This has been similar to airlines for me, I have switched from Amex -> Chase -> Citi and am now going to switch back to Amex although I was going to switch to Chase Reserve.

jediwho

A very similar story. Got more miles making 1 $200 end table at Pier 1 (2300 UA miles) than had I credited mine and my wife's miles on our LAX to Sydney flight to United (under 2,200 combined). We credited the flight on United to Singapore and got just under 30,000 miles.

jediwho

There are a few reasons for frequent flyer programs (or any loyalty program) are there to reward customers for there loyalty and that could be one or a combination of high spending, filling empty seats (mileage runners), and these days credit card spending.

What has surprised me over the last three years is that the airlines have not learned much from history -- no company wins when they race to the bottom or you can't have two feet in two different boats for a long time and expect to get to your destination. Look at the PC industry or cell phones. Free agents means more fare wars.

I just don't know how the airlines can win by trying to compete with Spirit. Also, by diluting their FF program, they are leaving a huge door open for anyone to walk in, be it a foreign airline launching a high end credit card or a private equity firm funding another start up similar to JetBlue or Virgin America.