'The next bubble' - travel loyalty programs (Elliott)
Apr 22, 2013, 10:15 am
#1
Original Poster
Join Date: Feb 2002
Location: NYC: UA 1K, DL Platinum, AAirpass, Avis PC
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'The next bubble' - travel loyalty programs (Elliott)
Chris Elliott raising a headline ruckus again...
http://elliott.org/what/the-next-bub...alty-programs/
Uses Delta as the case in point. Though something more concrete on the Hilton deval would have been useful.
http://elliott.org/what/the-next-bub...alty-programs/
Uses Delta as the case in point. Though something more concrete on the Hilton deval would have been useful.
Apr 22, 2013, 10:37 am
#2
Join Date: Jan 2010
Location: Stockholm, Sweden + Austin, Tx
Programs: "But, I'm a GLOBALIST guest...."
Posts: 2,848
... I dont understand why people keep referring to miles as some sort of currency... there's no inherent value to your miles and stockpiling them like some sort of 401k plan is nonsensical.
Whole article has this bitcoin undertones in it as well...
Whole article has this bitcoin undertones in it as well...
Apr 22, 2013, 10:45 am
#3
Suspended
Join Date: Jan 2013
Location: LAX/SNA
Programs: AA, Hilton Gold
Posts: 3,887
I agree though, that stock piling is bad, just take a look at the Hilton devaluation.
Apr 22, 2013, 10:51 am
#4
Original Poster
Join Date: Feb 2002
Location: NYC: UA 1K, DL Platinum, AAirpass, Avis PC
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Interesting response analysis here of the Delta program using their annual report. Didn't realize the miles turned over as quickly as they did. Not so much stockpiling as you'd expect...
http://milecards.com/6002/are-delta-...umbers-say-no/
http://milecards.com/6002/are-delta-...umbers-say-no/
Apr 22, 2013, 11:08 am
#5
Join Date: May 2012
Location: NYC
Programs: AA, UA, SPG
Posts: 105
I sort of agree with the article - usually there is sufficient time to burn a few 100k points when a deval is announced, but stockpiling more points in any program than you could use in 15 months (3 month notice of deval + 12 month out booking) is risky IMO.
Apr 22, 2013, 11:17 am
#6
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Agreed, it's well done, but here is one factor they mentioned, but did not explore:
Compare that to Delta's load factor:
2010 83.95% load 8.3% awards
2011 83.10% load 8.2% awards
2012 84.86% load 8.0% awards
The initial premise of frequent flyer programs was that airlines would use seats which would otherwise remain unsold. As the airline industry reduces capacity, and load factors rise, the space made available for awards becomes more valuable, and redemptions are pushed into less desirable times and routings. Can Delta continue to redeem ~8% of the seatmiles as the load factor climbs?
% of miles flown on awards 8.0% 8.2% 8.3%
2010 83.95% load 8.3% awards
2011 83.10% load 8.2% awards
2012 84.86% load 8.0% awards
The initial premise of frequent flyer programs was that airlines would use seats which would otherwise remain unsold. As the airline industry reduces capacity, and load factors rise, the space made available for awards becomes more valuable, and redemptions are pushed into less desirable times and routings. Can Delta continue to redeem ~8% of the seatmiles as the load factor climbs?
Last edited by mia; Apr 22, 2013 at 11:21 am Reason: Fix Delta load factors
Apr 22, 2013, 11:21 am
#7
Join Date: Oct 2009
Location: Land of the parrots and parrotheads
Programs: Several dozen
Posts: 4,820
Miles are not currency. That is our story for the taxman, especially since the companies say we don't own the miles and they can take them away. And we're sticking to that story.
Dollars are legal tinder. Rolled up they are great for firing up your Texas BBQ.
Dollars are legal tinder. Rolled up they are great for firing up your Texas BBQ.
Apr 22, 2013, 12:27 pm
#9
Moderator: Mileage Run, InterContinental Hotels
Join Date: May 2004
Posts: 5,918
Total awards (millions) 11
Avg miles per reward 23,818
How do we arrive at that number, considering that DL's cheapest award (assuming you can find it on the "low" level) is 25,000 miles? Is this telling us that a significant portion of the 11 million redemptions is for giftcards and other junk?
Apr 22, 2013, 12:39 pm
#10
Original Member, Ambassador: External Miles and Points Resources
Join Date: May 1998
Location: Digital Nomad Wandering the Earth - Currently in LIMA, PERU
Posts: 58,626
As someone who has racked up about 400,000 Hilton points so far this year without going anywhere NEAR a Hilton, it sure feels like a bubble to me.
And of course, UA million miler was de-bubbled after the merge.
My prediction is that in 5 years or so all of these programs will have suffered hyper-inflation on points, but that true revenue loyalty will still be rewarded.
And of course, UA million miler was de-bubbled after the merge.
My prediction is that in 5 years or so all of these programs will have suffered hyper-inflation on points, but that true revenue loyalty will still be rewarded.
Apr 22, 2013, 1:16 pm
#11
Original Poster
Join Date: Feb 2002
Location: NYC: UA 1K, DL Platinum, AAirpass, Avis PC
Posts: 4,599
And here's another one:
Total awards (millions) 11
Avg miles per reward 23,818
How do we arrive at that number, considering that DL's cheapest award (assuming you can find it on the "low" level) is 25,000 miles? Is this telling us that a significant portion of the 11 million redemptions is for giftcards and other junk?
Total awards (millions) 11
Avg miles per reward 23,818
How do we arrive at that number, considering that DL's cheapest award (assuming you can find it on the "low" level) is 25,000 miles? Is this telling us that a significant portion of the 11 million redemptions is for giftcards and other junk?
Apr 22, 2013, 2:38 pm
#12
Moderator: Southwest Airlines, Capital One
Join Date: Sep 1999
Location: California
Programs: WN Companion Pass, A-list preferred, Hyatt Globalist; United Club Lietime (sic) Member
Posts: 21,625
A change to revenue-based redemption (not merely revenue-based earning) would greatly curtail the programs' ability to devalue their currency repeatedly. That makes me wonder whether the programs are too addicted to devaluation to allow them to switch to a boring but sustainable model like the new Southwest, JetBlue, and Virgin America programs.
Apr 22, 2013, 3:31 pm
#13
Join Date: Jan 2007
Programs: Many
Posts: 335
Elliott just isn't knowledgeable about how programs work. He doesn't belong to them, makes erroneous assumptions about them, doesn't even read FlyerTalk, and is simply trying to stir up controversy to improve his traffic. He's offering bait, and some are taking it. I like Elliott on TSA, and his ombudsman work can be informative. On loyalty programs he offers little insight. I've always wondered if once he didn't dabble in Delta and found his skypesos worthless.
Apr 22, 2013, 7:41 pm
#14
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Join Date: Jun 2000
Location: Benicia CA
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Does Delta have any awards like that?