Is this the end of Frequent Flyer Programs?
Jul 18, 2008, 4:03 pm
#16
Join Date: Jun 2008
Location: SFO
Programs: AA LTP 2MM, Marriott/SPG Rabid Plat w/Ambassador, HHonors Gold
Posts: 696
Agreed about connecting through LHR, but isn't MIA also in the English-speaking world? I know Florida has a lot of support for the Spanish language and all, but the official language of the United States is still English, last I checked.
Jul 18, 2008, 4:28 pm
#17
FlyerTalk Evangelist
Join Date: May 2002
Location: Pittsburgh
Programs: MR/SPG LT Titanium, AA LT PLT, UA SLV, Avis PreferredPlus
Posts: 31,008
Ongoing attempts to make English official language
Jul 18, 2008, 5:08 pm
#18
Join Date: Apr 2006
Location: Ohio and Colorado
Programs: AA Gold MM, DL Gold, US MM, HH Gold, Starwood
Posts: 953
A great ride so far
Fortunately, I am one of those people who have been in the game since the beginning and have had lots of great "free" trips. In two weeks, we will be traveling in Biz Class to LHR and back from VCE on AF for less than $100 and 90000 miles each.
Which ever way it goes, I find you can still get some good deals with your miles if you are willing to be flexible.
OTOH, if they all FF programs go the way of the dodo bird, at least I had a great ride along the way.
Cheers
Which ever way it goes, I find you can still get some good deals with your miles if you are willing to be flexible.
OTOH, if they all FF programs go the way of the dodo bird, at least I had a great ride along the way.
Cheers
Jul 18, 2008, 11:42 pm
#19
FlyerTalk Evangelist
Join Date: Jan 2000
Posts: 15,347
Robert, I disagree with much of what you say, especially the commodity part. It is absolutely a commodity has been at some time and priced as such, this is not new. The "worse" it gets the more valuable FF programmes are to airlines as it is what differentiates them. Regrading fees and the like, the will reduce as oil goes back between $60-80 over the next two years (see previous thread where some predicted $200 by now, when in fact its fallan under to under $126 in four days). Ultimately if a fare goes up by $400 plus a charge, and the FF fare goes up by miles just the charge, then the FF is still ahead. Also consider that there are a bunch of us very FF transoceanic travellers that almost never use our hordes for tickets, but just for upgrades in any case.
Jul 19, 2008, 1:47 am
#20
Join Date: Jan 2003
Location: Dallas, TX, USA
Posts: 651
Agree that we've seen the top
Well I have no idea of what the future holds, but on a gut feel level I agree with the OP that my miles will bring less benefit in the future.
My reasoning goes along the lines that I believe that we've experienced the high point of air travel over the past 10-12 years. When I say that its from the perspective that the number of flights/airlines were increasing as were their routes. I can easily see a future that is much like when I was a child. Then it was rich people and business people that flew, everyone else took a flight on a "trip of a lifetime" and that was it (at least it was to a 10 year old from a not-so-well-off family in the 70's). And if/when environmental taxes are introduced to air travel that will be the tipping point (IMO).
I think the programs will remain, as the airlines generate a lot of revenue from selling miles. But as with other things they will need to find ways to cut the cost of using those miles and the easiest way to do that is to scale back the number of seats, and raise the price for the remaining seats. Some of this happens naturally as they eliminate routes. They'll try even more to cater to their remaining high-end frequent customers and that will leave fewer reward opportunities for the general public.
Hotel programs on the other hand I see growing, simply because of the increase in the human population and people's desire to "get away" on vacation. I just think that people will travel to fewer far away places than over the past 10-15 years. They'll take more trips via boats, busses, trains, and drives within a 5-6 hour radius of their homes rather than flying.
My reasoning goes along the lines that I believe that we've experienced the high point of air travel over the past 10-12 years. When I say that its from the perspective that the number of flights/airlines were increasing as were their routes. I can easily see a future that is much like when I was a child. Then it was rich people and business people that flew, everyone else took a flight on a "trip of a lifetime" and that was it (at least it was to a 10 year old from a not-so-well-off family in the 70's). And if/when environmental taxes are introduced to air travel that will be the tipping point (IMO).
I think the programs will remain, as the airlines generate a lot of revenue from selling miles. But as with other things they will need to find ways to cut the cost of using those miles and the easiest way to do that is to scale back the number of seats, and raise the price for the remaining seats. Some of this happens naturally as they eliminate routes. They'll try even more to cater to their remaining high-end frequent customers and that will leave fewer reward opportunities for the general public.
Hotel programs on the other hand I see growing, simply because of the increase in the human population and people's desire to "get away" on vacation. I just think that people will travel to fewer far away places than over the past 10-15 years. They'll take more trips via boats, busses, trains, and drives within a 5-6 hour radius of their homes rather than flying.
Jul 19, 2008, 8:42 am
#21
Original Poster
Join Date: Dec 2001
Location: Coconut Creek, FL
Programs: AA Lifetime Platinum-2 MM Starwood Plat,Delta DM
Posts: 975
Robert, I disagree with much of what you say, especially the commodity part. It is absolutely a commodity has been at some time and priced as such, this is not new. The "worse" it gets the more valuable FF programmes are to airlines as it is what differentiates them. Regrading fees and the like, the will reduce as oil goes back between $60-80 over the next two years (see previous thread where some predicted $200 by now, when in fact its fallan under to under $126 in four days). Ultimately if a fare goes up by $400 plus a charge, and the FF fare goes up by miles just the charge, then the FF is still ahead. Also consider that there are a bunch of us very FF transoceanic travellers that almost never use our hordes for tickets, but just for upgrades in any case.
With less seats and less choices as airlines cut flights and seats various routes lose competition. Therefore your choice of airline is very limited. Most of my comments about devaluing etc have been going on especially the past few years. However the current market situation adds even more issues to the problem. There are a zillion miles out there. While many flyertalkers use miles for intl flights, the majority of people with miles are using them domestically. I jsut priced out some recent AA flights. The normal non stop MIA to LVS is not available. Only flights with lousy schedules and stops are offered. I have seen worse on CO or Delta where may flights are 50K for a domestic ticket. For example CO, I have never seen a domestic flight for 25K R/T. Dont figure that you can get a $500 value ticket for 25K miles.
rob
Jul 19, 2008, 9:00 am
#22
Join Date: Apr 2005
Location: Central Texas
Programs: Many, slipping beneath the horizon
Posts: 9,859
B. I've spoken fair Spanish - the archaic TexMex "Post Hole" vernacular -most of my life, but the idioms and accents heard at MIA can be a challenge. Meanwhile, even the French would have problems with the Haitian Creole patois. Meanwhile, at MIA, both Spanish and Creole seem to be spoken more loudly or more often than what passes for English among South Floridians and airport transients.
C. MIA, at best, is at worst. I can think of more hospitable penal institutions, and night time connections there are a Dantean prospect during which Hades seems uncomfortably close. While the atmosphere at LHR is different, the resulting depression and aggravated stress levels are comparable.
Jul 19, 2008, 9:58 am
#23
Join Date: Jul 2008
Location: Colorado
Programs: United -1K, Emirates, China Southern, AA
Posts: 17
one of the lucky ones
I reckon I must be one of the lucky ones that continually uses the ffmiles for family. My ff stockpile stays pretty low with college kids back and forth from home, sending my daughters to the grandparents in the Big SKy, and taking the wife to overseas on business trip at least once a year. These "family" options may not be always directly beneficial to the ffmiler, but it is the only way to spend the miles in my opinion. Yes, seats are going to be tougher to get an upgrade for, especially on flights that UA currently uses 747-400s on. The new BC configuration is going to kill a number of use 1Kers. But that is the way it goes. Tough to fight, eventhough we all don't think the changes are fair. Use your miles for more then just self, take the entrie extended family on a trip they never thought you would ever spring for.
Jul 19, 2008, 3:54 pm
#24
FlyerTalk Evangelist
Join Date: Jun 2008
Programs: Formaldehyde Medallion DL DieMiles
Posts: 12,646
Another possible end
What could end, or at least significantly impact, the industry FF programs would be if a crusading state attorney general (sort of like Elliott Spitzer was before he found bimbos) decided to investigate the system (perhaps it might require a Justice Department federal investigation).
With all the miles now being sold to and, effectively awarded by, credit card companies, florists, restaurants, magazine subscription services... the list goes on ad naseum... do the airlines really provide redemption opportunities commensurate with the rate that they are dispensing miles?
It would be intriguing to see an objective analysis of:
How many miles are awarded each year?
How many miles are redeemed each year?
How many miles expire each year?
Are the redemption seats offered each day sufficient to consume the miles awarded each day (doubling the miles required for ticket certainly, on paper, helps the airline satisfy this one)?
Consider a hypothetical example...
Assume 250 people on a plane (virtually all flights are full these days) Yes, I realize that all PAX will not be FFs... let's assume 100 are (sign up for a credit card and you become a "FF")
Assume 4-leg RT with total of 2500 FF miles awarded to each FF (not unreasonable considering some airlines still award a minimum of 500 miles per segment)
So, up to 250,000 miles FF awarded (does not take into consideration whether the ticket was purchased with an airline credit card... more miles awarded there. I travel a lot, but there are months where my credit card earned miles far exceed my mileage miles).
If an award award ticket requires 25,000 miles, it would take only 10 seats to "consume" all of the FF miles awarded (5 seats at 50,000 miles per seat).
One could do a sensitivity analysis of the different variables, but the point remains... how many award seats are available on a typical large jet? I have no way of knowing, but others must.
Are there enough in aggregate on all flights to "comsume" the miles as fast as they are awarded... or are the airlines counting on most of the people letting their 25,000 mile credit card enrollment bonuses expire before they are used?
Thoughts?
With all the miles now being sold to and, effectively awarded by, credit card companies, florists, restaurants, magazine subscription services... the list goes on ad naseum... do the airlines really provide redemption opportunities commensurate with the rate that they are dispensing miles?
It would be intriguing to see an objective analysis of:
How many miles are awarded each year?
How many miles are redeemed each year?
How many miles expire each year?
Are the redemption seats offered each day sufficient to consume the miles awarded each day (doubling the miles required for ticket certainly, on paper, helps the airline satisfy this one)?
Consider a hypothetical example...
Assume 250 people on a plane (virtually all flights are full these days) Yes, I realize that all PAX will not be FFs... let's assume 100 are (sign up for a credit card and you become a "FF")
Assume 4-leg RT with total of 2500 FF miles awarded to each FF (not unreasonable considering some airlines still award a minimum of 500 miles per segment)
So, up to 250,000 miles FF awarded (does not take into consideration whether the ticket was purchased with an airline credit card... more miles awarded there. I travel a lot, but there are months where my credit card earned miles far exceed my mileage miles).
If an award award ticket requires 25,000 miles, it would take only 10 seats to "consume" all of the FF miles awarded (5 seats at 50,000 miles per seat).
One could do a sensitivity analysis of the different variables, but the point remains... how many award seats are available on a typical large jet? I have no way of knowing, but others must.
Are there enough in aggregate on all flights to "comsume" the miles as fast as they are awarded... or are the airlines counting on most of the people letting their 25,000 mile credit card enrollment bonuses expire before they are used?
Thoughts?
Jul 20, 2008, 12:50 am
#25
Join Date: Dec 2002
Location: eastern Europe & NC
Posts: 4,527
Wrong. With the prices of airline tickets going up the return on using points is that much more appealing even if you have to pay a fee. Some ballpark examples: DCA to CDG/LHR in Y $800-1600 used to be $350-900; BWI to HNL $1000-1300 used to be $500-800; Hawaii YUP $2200+ used to be $1100-1300; WAS to SYD in F $26000 used to be $16000, in J $20000 used to be $12000.
Jul 20, 2008, 1:53 am
#26
FlyerTalk Evangelist
Join Date: Nov 2006
Location: SZG, Austria
Programs: LH(OS) HON, IC RA
Posts: 33,194
No, it´s not the end of the frequent Flyer Programs. It´s more the end for some people, who make on their own money the status. For them it is getting worser and worser.
For business traveller (like me) it doesn´t matter. I have to fly from A to B regardless of a frequent flyer program.
For business traveller (like me) it doesn´t matter. I have to fly from A to B regardless of a frequent flyer program.
Jul 20, 2008, 2:01 am
#27
Original Member
Join Date: May 1998
Location: CH-3823 Wengen Switzerland
Programs: miles&more, MileagePlus
Posts: 27,041
Also I am not aware yet of any decline of flying activities in and out of western Europe - but on the contrary all major hubs over here show air-traffic increase.
Don't judge the future of FrequentFlyer programs (and their ever growing importance as marketing tools for major airlines) solely by the domestic US market.
Jul 21, 2008, 9:55 am
#28
Join Date: Dec 2005
Programs: NWA Platinum, World Club Member, Former Delta Platinum
Posts: 82
I used to think that too. But the way things are going now, they might actually be more valuable.
1) With the cost of airline tickets dramatically increasing? The basic cost of tickets obviously cost more. That means there are fewer people flying. True, airlines are cutting back but if you can get a seat using FF miles, the cost of the ticket for those flights has gone up. that means the cost/mile has gone up and the ff miles had more value.
2) I had no problem recently securing 3 tickets to Rome, for family members. I also bought my ticket, for the same flight. My purchased ticket was $1700. And that was the lowest price I could find on my airline choice. My 3 tickets using miles obviously were worth the same amount. That's about 3 cents per FF mile.
3) The higher price the actual cost, the more valuable the ff miles become. Since most only use them for international flights, they still have pretty good value.
4) The other thing that has always been problematic for me is the fact that it's so easy to get FF staus, making it harder to find flights or get upgrades. with the cost of tickets skyrocketing, that means there will be fewer people able to make the higher levels (i.e. I will have fewer platinum to contend with), which again makes my level more valuable.
1) With the cost of airline tickets dramatically increasing? The basic cost of tickets obviously cost more. That means there are fewer people flying. True, airlines are cutting back but if you can get a seat using FF miles, the cost of the ticket for those flights has gone up. that means the cost/mile has gone up and the ff miles had more value.
2) I had no problem recently securing 3 tickets to Rome, for family members. I also bought my ticket, for the same flight. My purchased ticket was $1700. And that was the lowest price I could find on my airline choice. My 3 tickets using miles obviously were worth the same amount. That's about 3 cents per FF mile.
3) The higher price the actual cost, the more valuable the ff miles become. Since most only use them for international flights, they still have pretty good value.
4) The other thing that has always been problematic for me is the fact that it's so easy to get FF staus, making it harder to find flights or get upgrades. with the cost of tickets skyrocketing, that means there will be fewer people able to make the higher levels (i.e. I will have fewer platinum to contend with), which again makes my level more valuable.
Jul 21, 2008, 4:02 pm
#29
Join Date: Oct 2002
Location: Houston
Programs: AA EXP; Hyatt Globalist; Marriott Titanium, Hilton Diamond, UA 1.56MM (fmr UA1K)
Posts: 5,770
I think FF program will be around a bit longer. However, the airlines will play more and more games....lots of outrageous fees like those that CO just instituted.....harder to redeem unless you want to travel to the middle of nowhere on a Sat morning at 5am .....etc.
They can't loose them...they just make too much money selling the miles to the CC companies and they are hooked on that revenue.
They can't loose them...they just make too much money selling the miles to the CC companies and they are hooked on that revenue.
Jul 21, 2008, 8:16 pm
#30
Join Date: Jan 2005
Posts: 123
Several key points for U.S. legacy carriers:
1) The economics of FF miles have significantly changed for the airlines based in the U.S due to the price of oil. The airlines can not continue to add mileage liabilities via FF credit cards in particular without adjusting their reward structure. Whether fees are tacked on as fuel surcharges or called something else, they are necessary (the other option would be to change the mileage requirements but there appears to be more hesitation in going that route on a wholesale basis).
2) The risk of holding massive FF miles in a single legacy airline has gone significantly higher, because a bankruptcy this time around could mean shutdown. But it is very unclear which carrier may be the first to fail.
3) Some airlines seem to continue to provide good value on awards, DL and AA are mentioned frequently, and I have had good luck with UA (US is ok IF you can get a *A award).
4) A FF mile that I plan on redeeming immediately I would value at 2-3 cents minimum on AA, UA, etc.; but a mile I wasn't planning on redeeming for 18 months I would probably value at less than 1 cent due to uncertainty.
5) With less flights and more people trying to burn miles, awards and upgrades will likely be more challenging to obtain. However, is it possible that loads have fallen so much that more awards are currently available for certain routes just to fill seats and remove the liability?
6) You can't ignore the impact WN is having on the legacy carriers in your thinking about the future.
I am not status anywhere, but still have about 100k on both US and UA that I will be burning down when possible over the next 18 months, after just being able to get 2 IAD-Hawaii *A awards on UA metal using US miles.
I probably will eliminate my airline credit cards in the next year as well.
My 2 cents FWIW.
1) The economics of FF miles have significantly changed for the airlines based in the U.S due to the price of oil. The airlines can not continue to add mileage liabilities via FF credit cards in particular without adjusting their reward structure. Whether fees are tacked on as fuel surcharges or called something else, they are necessary (the other option would be to change the mileage requirements but there appears to be more hesitation in going that route on a wholesale basis).
2) The risk of holding massive FF miles in a single legacy airline has gone significantly higher, because a bankruptcy this time around could mean shutdown. But it is very unclear which carrier may be the first to fail.
3) Some airlines seem to continue to provide good value on awards, DL and AA are mentioned frequently, and I have had good luck with UA (US is ok IF you can get a *A award).
4) A FF mile that I plan on redeeming immediately I would value at 2-3 cents minimum on AA, UA, etc.; but a mile I wasn't planning on redeeming for 18 months I would probably value at less than 1 cent due to uncertainty.
5) With less flights and more people trying to burn miles, awards and upgrades will likely be more challenging to obtain. However, is it possible that loads have fallen so much that more awards are currently available for certain routes just to fill seats and remove the liability?
6) You can't ignore the impact WN is having on the legacy carriers in your thinking about the future.
I am not status anywhere, but still have about 100k on both US and UA that I will be burning down when possible over the next 18 months, after just being able to get 2 IAD-Hawaii *A awards on UA metal using US miles.
I probably will eliminate my airline credit cards in the next year as well.My 2 cents FWIW.