Do points and miles resources bear some responsibility for point devaluations?
Nov 3, 2013 | 12:58 am
#16
Join Date: Mar 2011
Location: FL
Programs: AAdvantage Elite Plat, HH Gold, SPG Gold, Hertz Gold, BA
Posts: 498
Quote:
Originally Posted by Jenbel
We also don't have the same level of credit card mileage earning in Europe. The fact that UA has had to make it harder to book non-US premium classes could be a reflection of the inflation in mileage earning in the US - when booking on other carriers, it's not an isolated market, and any carrier would be stupid to disadvantage its own frequent flyers because another carrier is giving miles away like confetti.
Certainly if I were LH or whoever and I saw that UA was covering up its mismanagement on the travel provider side by selling billions of MP miles to credit card companies to give away, I would charge UA a premium for putting award travelers in my premium classes. Especially if my own customers had to earn those kinds of awards the hard way.
Originally Posted by Jenbel
We also don't have the same level of credit card mileage earning in Europe. The fact that UA has had to make it harder to book non-US premium classes could be a reflection of the inflation in mileage earning in the US - when booking on other carriers, it's not an isolated market, and any carrier would be stupid to disadvantage its own frequent flyers because another carrier is giving miles away like confetti.
Certainly if I were LH or whoever and I saw that UA was covering up its mismanagement on the travel provider side by selling billions of MP miles to credit card companies to give away, I would charge UA a premium for putting award travelers in my premium classes. Especially if my own customers had to earn those kinds of awards the hard way.
There is a badly groomed blogger more like a backpacker who flies F and takes pictures of himself wearing flip flops and torn shorts. Probably has worms by the way he looks.
Nov 3, 2013 | 7:00 am
#17
Join Date: May 2009
Location: South Park, CO
Programs: Tegridy Elite
Posts: 5,677
Interesting discussion here about this topic:
http://boardingarea.com/viewfromthew...-explanations/
Comment 15 by "what the" makes some good points.
Multiple subsequent posts make convincing arguments too.
http://boardingarea.com/viewfromthew...-explanations/
Comment 15 by "what the" makes some good points.
on this very page there are 5(!) advertisements for credit card offers to get you a ton of miles without doing any flying at all. that’s all the evidence you need that this blog contributes to mile inflation and the subsequent devaluation. you can’t have it both ways Gary – you want to be able to get people more miles while also arguing that airlines should not devalue their miles in response to said inflation. you are contributing to the problem, not the solution.
Multiple subsequent posts make convincing arguments too.
Even though for someone like me who redeems for international Y mostly, and not J/F, this deval doesn't affect me much directly... I could see a time where UA invokes a differential rate approach to Y partner awards, too.
Confucius Jackson said,
I’d argue that the alliance concept is slowly showing cracks around the structural differences between the partner markets. Credit card spend (manufactured or not) and signup bonuses are not exclusively an American phenomenon, but definitely more pronounced here. And airlines like the alliance when it brings money in, but not when it sends money out.
Look at what Delta is doing with cutting MQM-earning on some of its partner airlines. Now look at this UA move, along with how they treat *G differently in terms of perks vs. their own 50k fliers.
UA doesn’t want to pay to upgrade their F hard product to be the equal of LH or SQ. They want people flying UA to the foreign gateway, and the alliance partner beyond that. It’s not a real “alliance” but now they can’t undo things and not allow redemptions to the foreign gateway on the alliance partners.
Instead, they do ham-handed actions like cutting capacity themselves (Starnet, anybody?) and now setting differential rates.
At the end of their day, this is UA admitting that their J/F product isn’t as good as their alliance partners.
I’d argue that the alliance concept is slowly showing cracks around the structural differences between the partner markets. Credit card spend (manufactured or not) and signup bonuses are not exclusively an American phenomenon, but definitely more pronounced here. And airlines like the alliance when it brings money in, but not when it sends money out.
Look at what Delta is doing with cutting MQM-earning on some of its partner airlines. Now look at this UA move, along with how they treat *G differently in terms of perks vs. their own 50k fliers.
UA doesn’t want to pay to upgrade their F hard product to be the equal of LH or SQ. They want people flying UA to the foreign gateway, and the alliance partner beyond that. It’s not a real “alliance” but now they can’t undo things and not allow redemptions to the foreign gateway on the alliance partners.
Instead, they do ham-handed actions like cutting capacity themselves (Starnet, anybody?) and now setting differential rates.
At the end of their day, this is UA admitting that their J/F product isn’t as good as their alliance partners.
Nov 3, 2013 | 3:41 pm
#18
Join Date: Nov 2011
Posts: 6,458
You forget to say that airlines like LX, Lh are very snobbish and those German, Swiss country club elite members do not appreciate some badly dressed schmuck in their LH FCT or their cabin.
There is a badly groomed blogger more like a backpacker who flies F and takes pictures of himself wearing flip flops and torn shorts. Probably has worms by the way he looks.
There is a badly groomed blogger more like a backpacker who flies F and takes pictures of himself wearing flip flops and torn shorts. Probably has worms by the way he looks.
I'm fairly sure the devaluation is from the singups from cc's. There's no way spending 5k to get at least $650 in value (and if you value ua at 1.5cpm or more), at least $750-1000 is sustainable for the banks.
I would say MS is a very small portion of miles generated.
Nov 3, 2013 | 4:03 pm
#19
Join Date: Mar 2013
Location: Jackson, WY
Posts: 554
Two things I'm curios about.
The banks buy the points. Instead of inflating points needed, certainly United could charge Chase more for them. Why inflate instate of charge more?
Also, my guess is United keeps a reserve or escrow account for points issued. They are essentially a currency and U would need to pay for them. If you inflate them all of a sudden you can lower your reserves and the money can come out of escrow and into U's pocket. Wouldn't this be a great way to boost earnings short term?
The banks buy the points. Instead of inflating points needed, certainly United could charge Chase more for them. Why inflate instate of charge more?
Also, my guess is United keeps a reserve or escrow account for points issued. They are essentially a currency and U would need to pay for them. If you inflate them all of a sudden you can lower your reserves and the money can come out of escrow and into U's pocket. Wouldn't this be a great way to boost earnings short term?
Nov 3, 2013 | 5:29 pm
#20
Join Date: Nov 2011
Posts: 6,458
Two things I'm curios about.
The banks buy the points. Instead of inflating points needed, certainly United could charge Chase more for them. Why inflate instate of charge more?
Also, my guess is United keeps a reserve or escrow account for points issued. They are essentially a currency and U would need to pay for them. If you inflate them all of a sudden you can lower your reserves and the money can come out of escrow and into U's pocket. Wouldn't this be a great way to boost earnings short term?
The banks buy the points. Instead of inflating points needed, certainly United could charge Chase more for them. Why inflate instate of charge more?
Also, my guess is United keeps a reserve or escrow account for points issued. They are essentially a currency and U would need to pay for them. If you inflate them all of a sudden you can lower your reserves and the money can come out of escrow and into U's pocket. Wouldn't this be a great way to boost earnings short term?
Nov 4, 2013 | 8:38 am
#21
Join Date: Apr 2011
Location: San Francisco, CA
Programs: UA Plat, Copa Pres. Plat, Hyatt Diamond, Hilton Diamond, SPG LT Gold, Marriott Gold
Posts: 769
I think there's likely some truth to this theory, but it's hard to get a real sense for the scale. If VFTW's "monetary inflation" analysis is accurate (and it makes logical sense to me), then a group of people accumulating and redeeming huge stashes of miles is going to cause problems.
However, I don't have a good sense of whether we're talking about 1% of people causing a disproportionately high 10% of the "damage" due to playing the CC, MS, etc. game really hard vs. say a somewhat broader 10% of people doing a somewhat less disproportionately high (on a relative basis) 30-40% of the "damage". Whatever the number is, you can probably blame "those CC-whoring bloggers" for a reasonable chunk, but FT, Bank's advertising budgets, and even mainstream news coverage likely contribute in a pretty meaningful way.
It's really hard to estimate scale when we're talking about numbers this big, and I imagine all of us here have a pretty tilted view. I work in consulting, and while most everyone is mindful of points and miles and status and all that, I can't think of a single other person in my group of just under 100 that is anywhere near the level of crazy that I have (and I pale in comparison to many who I think are TRULY crazy
). I'd say no more than 5 who are even 1/4 my level of crazy. No one is manufacturing spend, and only a small handful are churning cards (and their definition of "churning" is probably 3 cards a year). These are the anecdotes that lead me to believe that the game still just isn't that pervasive, but again, they're only anecdotes.
However, I don't have a good sense of whether we're talking about 1% of people causing a disproportionately high 10% of the "damage" due to playing the CC, MS, etc. game really hard vs. say a somewhat broader 10% of people doing a somewhat less disproportionately high (on a relative basis) 30-40% of the "damage". Whatever the number is, you can probably blame "those CC-whoring bloggers" for a reasonable chunk, but FT, Bank's advertising budgets, and even mainstream news coverage likely contribute in a pretty meaningful way.
It's really hard to estimate scale when we're talking about numbers this big, and I imagine all of us here have a pretty tilted view. I work in consulting, and while most everyone is mindful of points and miles and status and all that, I can't think of a single other person in my group of just under 100 that is anywhere near the level of crazy that I have (and I pale in comparison to many who I think are TRULY crazy
). I'd say no more than 5 who are even 1/4 my level of crazy. No one is manufacturing spend, and only a small handful are churning cards (and their definition of "churning" is probably 3 cards a year). These are the anecdotes that lead me to believe that the game still just isn't that pervasive, but again, they're only anecdotes.
Nov 4, 2013 | 11:01 am
#22
Join Date: Nov 2011
Posts: 6,458
I think there's likely some truth to this theory, but it's hard to get a real sense for the scale. If VFTW's "monetary inflation" analysis is accurate (and it makes logical sense to me), then a group of people accumulating and redeeming huge stashes of miles is going to cause problems.
However, I don't have a good sense of whether we're talking about 1% of people causing a disproportionately high 10% of the "damage" due to playing the CC, MS, etc. game really hard vs. say a somewhat broader 10% of people doing a somewhat less disproportionately high (on a relative basis) 30-40% of the "damage". Whatever the number is, you can probably blame "those CC-whoring bloggers" for a reasonable chunk, but FT, Bank's advertising budgets, and even mainstream news coverage likely contribute in a pretty meaningful way.
It's really hard to estimate scale when we're talking about numbers this big, and I imagine all of us here have a pretty tilted view. I work in consulting, and while most everyone is mindful of points and miles and status and all that, I can't think of a single other person in my group of just under 100 that is anywhere near the level of crazy that I have (and I pale in comparison to many who I think are TRULY crazy). I'd say no more than 5 who are even 1/4 my level of crazy. No one is manufacturing spend, and only a small handful are churning cards (and their definition of "churning" is probably 3 cards a year). These are the anecdotes that lead me to believe that the game still just isn't that pervasive, but again, they're only anecdotes.
However, I don't have a good sense of whether we're talking about 1% of people causing a disproportionately high 10% of the "damage" due to playing the CC, MS, etc. game really hard vs. say a somewhat broader 10% of people doing a somewhat less disproportionately high (on a relative basis) 30-40% of the "damage". Whatever the number is, you can probably blame "those CC-whoring bloggers" for a reasonable chunk, but FT, Bank's advertising budgets, and even mainstream news coverage likely contribute in a pretty meaningful way.
It's really hard to estimate scale when we're talking about numbers this big, and I imagine all of us here have a pretty tilted view. I work in consulting, and while most everyone is mindful of points and miles and status and all that, I can't think of a single other person in my group of just under 100 that is anywhere near the level of crazy that I have (and I pale in comparison to many who I think are TRULY crazy
). I'd say no more than 5 who are even 1/4 my level of crazy. No one is manufacturing spend, and only a small handful are churning cards (and their definition of "churning" is probably 3 cards a year). These are the anecdotes that lead me to believe that the game still just isn't that pervasive, but again, they're only anecdotes.
Nov 4, 2013 | 11:03 am
#23
Join Date: May 2009
Location: South Park, CO
Programs: Tegridy Elite
Posts: 5,677
I think there's likely some truth to this theory, but it's hard to get a real sense for the scale. If VFTW's "monetary inflation" analysis is accurate (and it makes logical sense to me), then a group of people accumulating and redeeming huge stashes of miles is going to cause problems.
However, I don't have a good sense of whether we're talking about 1% of people causing a disproportionately high 10% of the "damage" due to playing the CC, MS, etc. game really hard vs. say a somewhat broader 10% of people doing a somewhat less disproportionately high (on a relative basis) 30-40% of the "damage". Whatever the number is, you can probably blame "those CC-whoring bloggers" for a reasonable chunk, but FT, Bank's advertising budgets, and even mainstream news coverage likely contribute in a pretty meaningful way.
It's really hard to estimate scale when we're talking about numbers this big, and I imagine all of us here have a pretty tilted view. I work in consulting, and while most everyone is mindful of points and miles and status and all that, I can't think of a single other person in my group of just under 100 that is anywhere near the level of crazy that I have (and I pale in comparison to many who I think are TRULY crazy). I'd say no more than 5 who are even 1/4 my level of crazy. No one is manufacturing spend, and only a small handful are churning cards (and their definition of "churning" is probably 3 cards a year). These are the anecdotes that lead me to believe that the game still just isn't that pervasive, but again, they're only anecdotes.
However, I don't have a good sense of whether we're talking about 1% of people causing a disproportionately high 10% of the "damage" due to playing the CC, MS, etc. game really hard vs. say a somewhat broader 10% of people doing a somewhat less disproportionately high (on a relative basis) 30-40% of the "damage". Whatever the number is, you can probably blame "those CC-whoring bloggers" for a reasonable chunk, but FT, Bank's advertising budgets, and even mainstream news coverage likely contribute in a pretty meaningful way.
It's really hard to estimate scale when we're talking about numbers this big, and I imagine all of us here have a pretty tilted view. I work in consulting, and while most everyone is mindful of points and miles and status and all that, I can't think of a single other person in my group of just under 100 that is anywhere near the level of crazy that I have (and I pale in comparison to many who I think are TRULY crazy
). I'd say no more than 5 who are even 1/4 my level of crazy. No one is manufacturing spend, and only a small handful are churning cards (and their definition of "churning" is probably 3 cards a year). These are the anecdotes that lead me to believe that the game still just isn't that pervasive, but again, they're only anecdotes.
Nov 4, 2013 | 4:08 pm
#24
formerly known as Frugal Travel Guy
Join Date: Jul 2001
Location: Greenville, SC
Programs: UA Gold, HH Gold, SPG Gold, Marriott Silver, Hyatt Platinum
Posts: 1,925
Just My Opinion
But I think you are all giving our group just a bit more credit than it deserves. Our blog readerships number in the thousands. UA passengers are in the millions.
Don't you all experience that 99% of the people you talk to about points and miles have their eyes glass over when you talk about credit cards and frequent flyer miles. Everybody is afraid of ruining their credit and they all know their are no seats available.
We are a tiny, tiny minority, that probably does nothing more than piss the airlines and banks off that we know how to work the system.
But the average traveler has no interest in our game.
Don't you all experience that 99% of the people you talk to about points and miles have their eyes glass over when you talk about credit cards and frequent flyer miles. Everybody is afraid of ruining their credit and they all know their are no seats available.
We are a tiny, tiny minority, that probably does nothing more than piss the airlines and banks off that we know how to work the system.
But the average traveler has no interest in our game.
Nov 4, 2013 | 6:17 pm
#25
Join Date: Nov 2011
Posts: 6,458
But I think you are all giving our group just a bit more credit than it deserves. Our blog readerships number in the thousands. UA passengers are in the millions.
Don't you all experience that 99% of the people you talk to about points and miles have their eyes glass over when you talk about credit cards and frequent flyer miles. Everybody is afraid of ruining their credit and they all know their are no seats available.
We are a tiny, tiny minority, that probably does nothing more than piss the airlines and banks off that we know how to work the system.
But the average traveler has no interest in our game.
Don't you all experience that 99% of the people you talk to about points and miles have their eyes glass over when you talk about credit cards and frequent flyer miles. Everybody is afraid of ruining their credit and they all know their are no seats available.
We are a tiny, tiny minority, that probably does nothing more than piss the airlines and banks off that we know how to work the system.
But the average traveler has no interest in our game.
Nov 4, 2013 | 9:54 pm
#26
Suspended
Join Date: Jan 2012
Programs: vx diamond
Posts: 377
Bragging about how you are beating the system on a national level is very dumb. And now you get your just desserts bloggers! Enjoy your remaining award booking business with no space and 400 dollar credit card referrals.
Maybe you can blog about how to scam southwest. Congratulations on teaching these grifters how to fraud the system.
Maybe you can blog about how to scam southwest. Congratulations on teaching these grifters how to fraud the system.
Nov 5, 2013 | 10:42 am
#27
A FlyerTalk Posting Legend
Join Date: Apr 2001
Location: PSM
Posts: 69,232
Many already do. Or did you miss the 30-days of WN Companion Pass posts throughout October??
Yes, as is FlyerTalk, MilePoint, DansDeals, BonusFeber, VFF, AFF and all the other online communities. When the game you play is based on winning at arbitrage it is rarely a good thing to have lots and lots of people aware of what is going on. That's a sure-fire way to draw attention to the "gaps" and engender change.
ETA: There is also the consideration that the programs have to deal with rising costs, just like other businesses, even without the "experts" who are gaming the system. Arguably the programs would be better off if they could adjust a little bit at a time rather than make huge changes every few years as customers wouldn't notice as much but that's a whole different can of worms.
ETA: There is also the consideration that the programs have to deal with rising costs, just like other businesses, even without the "experts" who are gaming the system. Arguably the programs would be better off if they could adjust a little bit at a time rather than make huge changes every few years as customers wouldn't notice as much but that's a whole different can of worms.
Last edited by sbm12; Nov 5, 2013 at 10:56 am
Nov 5, 2013 | 11:51 am
#28
FlyerTalk Evangelist
Join Date: Feb 2004
Location: London
Programs: BA, VS, HH, IHG, MB, MR
Posts: 27,232
Hotel schemes MUST devalue, because earnings are based on room rate, and as inflation pushes up room rates, points become too easy to earn. Logically, if IHG kept an IC at 50,000 points, you'd be getting a free IC night per Holiday Inn Express paid night in 2060, assuming room rates are $5,000 per night by then.
Airline schemes are different. In theory, they should be a stable currency, because they are based on distance flown and that doesn't change. It should be inflation-free. But it isn't ....
Nov 5, 2013 | 1:12 pm
#29
Suspended
Join Date: Jul 2001
Location: Watchlisted by the prejudiced, en route to purgatory
Programs: Just Say No to Fleecing and Blacklisting
Posts: 102,077
"Loyalty" program management is responsible for devaluations as there is nothing which prohibited the program owners/managers from acquiring, holding and investing in hard currency reserves/assets by using the cash they got from customers using the "loyalty" program and being credited "miles"/"points" and doing so in order to fund the programs' sustainability with the return from those holdings/investments. In other words, the "loyalty" program could have been handled by the program operators/owners more like a well-managed insurance company and/or pension/retirement fund, and thus devaluations wouldn't necessarily be a reality for those miles/points already issued.
Some may think the "loyalty" programs are a sort of Ponzi scheme if not for the unilateral devaluations, but they don't need to be any more that than they need a devaluation -- at least if the owners/operators of these programs behaved differently.
Hopefully, the government regulators will get around to these kind of programs and at least greatly increase the disclosure requirements applicable in such situations. I'd welcome something akin to a prospectus and periodical reports of a sort that give way more details to the public about the operation and finances of these programs.
Some may think the "loyalty" programs are a sort of Ponzi scheme if not for the unilateral devaluations, but they don't need to be any more that than they need a devaluation -- at least if the owners/operators of these programs behaved differently.
Hopefully, the government regulators will get around to these kind of programs and at least greatly increase the disclosure requirements applicable in such situations. I'd welcome something akin to a prospectus and periodical reports of a sort that give way more details to the public about the operation and finances of these programs.
Nov 5, 2013 | 2:15 pm
#30
A FlyerTalk Posting Legend
Join Date: Apr 2001
Location: PSM
Posts: 69,232
Put another way, the costs to me as a consumer to acquire nnn thousand points today is necessarily going to vary from the costs to acquire those last year, ten years ago or ten years in the future. The numbers are not stable at all.