Do points and miles resources bear some responsibility for point devaluations?
 

The business model of blogs and seminars is to make points and miles hacking accessible to everyone. And their credit card overlords partners reward them for it.

But in doing so, are they strangling the goose that lays the golden eggs?

I am torn.

On the one hand, I see Smisek's mile devaluation as little more than an accounting trick to try to make up for his pathetic management of UNITED.

On the other, by increasing the number of points and the ease with which they are hacked by all, it seems like bloggers and their credit card sponsors have created an inflationary environment for points and miles. Especially when they are featured on mainstream media.

And in either case (or even if it's a little bit of both), as Delta and United make travel hacking less profitable for the masses, do bloggers worry that they are going to be out of business sooner rather than later? Or will the need to collect twice as many miles just cause the cc companies to double their promos?

You give us far too much credit Koko.

I don't know... I'm not convinced that most people are really maximizing their collection and redemption of miles, outside of the FT community. Granted, the numbers have probably increased over the past few years with the proliferation of blogs and such. I think there are still a lot of people redeeming their miles for a flight to Disney World or maybe Hawaii, in Y.

I've come across a few co-workers who I discovered got Chase Sapphire Preferred cards and I was excited to talk to them about what they're going to use them for...one redeemed for revenue tickets and the others just got cashback.

Just my observations, I could be wrong. Though if it is the case that all of the things you mentioned have led to this, is it ultimately bloggers, or the banks & airlines that shoulder the blame? Or all of them?

It was a bubble.... and as we know, bubbles are neither created nor popped by any one entity. This time it was the airlines, banks and bloggers all contributing to the orgy until the airlines realized that they were getting the short end of the stick. And they ultimately controlled the product.

The interesting question to me is where things go from here. The UA devaluation hasn't entirely killed the model -- such as a revenue based award chart would -- it's just made it a lot more work.

FT is a miles and points resource that makes money off of the hawking of credit cards and desire of people to travel in premium cabins, so this is definitely p/k/b here. Don't delude yourself into thinking that it's all the fault of those EEEEEVIL bloggers, and we're all so innocent that sugar couldn't melt in our mouths that are enjoying our 4 mile trips to HKG. The maximization and exploits get done here too, folks.

So, no, I don't buy it. This is a matter of airlines realizing the value of selling a fiat currency that can be inflated at will. Just like when MIT teams figured out how to make a bunch at blackjack, it was a matter of time before the loopholes get shut down. Might as well be someone who gets to fly the planes. Who is to say a blog reader is more or less "worthy" than you or I?

I agree, it was a bubble fed by lots of players.

But credit card churning and manufactured spending certainly did drive the inflationary environment. Would devaluation have happened even without those factors? I lean toward yes...but I am not entirely convinced.

In any case, I feel worst for folks that hoarded millions of miles. What a terrible, terrible investment, stocking up on a currency whose worth is 100% controlled by an entity that profits most by your not spending them.

Did UA end honoring those 4 mile trips to HKG? Serious question because I actually booked a couple but they were summarily canceled!

It's correct that many have taken advantage of the things the blogs talk about. But my hypothesis is that blogs and seminars opened up the game to the masses...including 'rubbing it in the faces' of the airlines themselves. No way in hell Smisek cares about what a bunch of nerds talk about in an IBB. But when a blogger gets quoted in USA Today or appears on Travel Channel talking about gaming the system for premium cabin travel, well, he might notice. And to reiterate, it's just a hypothesis, not an assertion.

I agree with you Koko. Getting that free vacation has gone too mainstream. Just look at all the newbies with hundreds of thousands of miles from credit card signups. They only post here when they can't figure out what to do with them.

Not only ha UA devalued, but IMHO, Hyatt will as well. I don't follow other airlines, but it appears that the bulk of miles are coming via the Chase UA cards.

I also place the blame squarely on the bloggers and their schemes to get people to the maldives for $100 ;) BTW - FT itself has a hand in the problem. There are referral links everywhere you look these days. But I said it when IB bought the place, Randy did it for love and IB is doing it for profit. In the end, it is us, the longtime members who built this place (& newbies too) who pay the price.

Right now, it doesn't affect me (much), but I'm burning my miles, and will be looking for alternatives to the places I travel most often. Too bad I'm pretty much an EWR captive (out of laziness).

I am personally not worried about “going out of business” anytime soon, as none of the weblogs which I author will be affected in the very least by these developments.

They officially only honored those booked for travel by a certain date (forget exactly, but it was around 5 or 6 days from the day the deal went viral), and of course including folks who departed before UA even noticed.

I've seen a few posts claiming to have been successful in keeping their trips even though they didn't fall into that category, for whatever reason. Mine were certainly canceled by UA right away!

VFTW has a post on the "real reason for the UA deval"...

http://boardingarea.com/viewfromthew...-explanations/

I don't think bloggers who rely on credit card referral income have any room to complain about United's devaluation. When you have the United cards, Chase Sapphire, and the Ink cards (all which have generous sign up bonuses) it was bound to happen.

It will be interesting to see if they change their opinion of which is the best credit card to sign up for.

There is certainly no denying that by far the hugest devaluation took place on ‘aspirational’-type travel: F and C on non-UA star carriers.

That aligns with lots of theories, including UA’s explanation that they are paying more for F award seats on LH, Swiss, etc. It also aligns with the theory that those promoting aspirational-type travel via cc churning and manufactured spending helped drive this devaluation.

In any case, if you want to do economy domestic, or stick to UA metal, you are annoyed but not devastated. If you are into aspiration, you are pissed.

Either way, points are worth less to MP members.

But what I would really like to see some fact/analysis about is how the devaluation in the customer direction affects the price of mile to companies like Chase that buy them and give them away as incentives. Because if that price goes down we can expect cc bonuses, etc that are much higher and it’s still game on. But if the price of a mile sold to Chase stays the same then it seems like it may be game over for churning and manufactured spending for UA, same as it is for DL’s sky pesos.

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.

Interesting discussion here about this topic:

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.

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. @:-)

if we don't do it, someone else will do it