The (Bleak?) Future of Miles and Points
 

I've been considering the future of gaming the miles and points system as many (American) flyertalkers have done, including myself. Short answer: the whole thing feels dead to me.

2016 seemed like the last hurrah, and then nakedly revenue-based schemes replaced distance in the air sector. In the hotel sphere, I've watched as the Hilton Honors program has effectively become a rebate scheme. I think that I speak for many when I say that many of us are/were in it for the aspirational redemptions. Beyond a passing smugness, is getting a great cents per mile redemption on ORD-JAX or cents per point redemption on the Oklahoma Airport Hampton Inn worth writing home about?

Needless to say, I've watched as Y earning rates have stagnated or been cut, while J and F remain quite rewarding - even being increased. On top of that, who hasn't devalued their redemption rates in the last couple of years?

Parallel to a shift in the programs I keep an eye on (AA, BA, SQ, DL, Hilton), I noticed a subtle but profound shift in the blog world. Some of the big travel hacker blogs are less of a points "How-to, because isn't this trip super awesome?!" to much more of an aspirational made-for-instagram reality "show."

If you're a J or F flyer, it still seems like quite a good time, relatively speaking. Given redemption rates, you'd have to be a diehard churner or to make that work.

I'll keep this short lest I ramble on, and we're all veterans anyway. Any thoughts?

o

Not dead, nor on life support. Just not as rewarding as it use to be.

You do have a keen eye! ;)

I certainly agree that the blogs have become total crap.

At this point, I just amass points to take an occasional jaunt in the first class cabin on my domestic flights (sadly, I don't do any international travel).

The actionable "how to" content has fallen away in favor of "Look at my latest champagne shot. [BTW, thanks bro for clicking on my credit card affiliate link. Your clicks and data make my adventures financially viable!]"

I feel like Y travel (at least domestically) has never been a good way to redeem points, with a few exceptions.

That said, I think earning points will become harder over time. It's already becoming more difficult to justify the relatively high interchange rates the card networks charge in the US when they've been heavily capped elsewhere (AmEx recently announced they were cutting theirs, for instance). However, I don't think they'll ever be as low as e.g. 0.3% like in Europe--at least not without a dramatic change in government, anyway.

Y redemptions tend to vary in terms of how redeemers feel. Most of Flyertalk (or perhaps the most prominent and vocal segment?) seems to believe that J and F redemptions are "best" - when you consider the notional cash saved. I'd consider myself part of that contingent. In the wilds of meatspace (i.e. the real world), most seem to prefer cheaper/free Y tickets - "I can travel more!"

That's an interesting angle on earning that I've always wondered. In my experiences living in the UK, AU, and NZ, I always wondered why credit card ownership was rarer, less rewarding, and more expensive (annual fees more common, transaction charges). I had assumed that it was due to a moderately less profligate consumer culture than the US as well as a less competitive landscape of card issuers competing for slots in your wallet. Your explanation is the eureka moment for me.

For the average non-FTer, I can see Y redemptions making more sense. Availability is better, so there's a higher chance of getting multiple seats on the same flight if you're traveling with others.

For myself, I'm able to take 6-7 weeks off a year, which is enough for two big international trips a year. I can earn enough points to cover those trips in F/J Savings miles by redeeming for Y wouldn't let me travel more, so why bother?

In any case, the future is bleak for miles and points right now because the economy is strong so flights are full. Come the next recession the industry will get desperate again, the marketing teams will once again come up with silly gameable promos to hit their OKRs and Pudding Guy 2.0 will be born.

The relatively high interchange is also a big reason why merchants in the US seem a lot less happy with accepting cards than elsewhere (the many lawsuits the big retailers have filed over the years, a lot of smaller businesses having minimums and/or charging extra, etc.) I suspect most would still be cash only even today if it weren't for the issuers creating demand by giving us lots of rewards over time.

Hopefully a good balance is reached so that we don't lose out on (too many) benefits while cutting back on merchant animosity.

It may not be the good old days, but it hardly feels bleak to me. The difference to me now is that you have to have a decent amount of organic travel, spend or both to make it work well. Gone are the days of signing up 20 times for the same credit card to get a first class redemption, but I struggle to accept that they ever weee or should have been the norm.

My my wife and I have managed to do almost every long haul trip in J or F over the last 24 months (over ten trips) off the back of award redemptions so I wouldn’t accept bleak.

I have paid for J for the last 4 years now out of my own pocket. Points/status, etc, are literally the last thing I think about anymore.

I reached a stage where I started to realize that none of that really mattered, as the programs have been getting stripped out and watered down for years. Why ? As a direct result of the thousands of people who gamed the system, and didn't earn their points by actually paying the airline, and then flying on it.

It would make me happy if the entire concept went away for good.

The programs didn't dry up because of gamers, churners, mileage runners, etc.; there were never enough of them to matter. They turned to dust because there are only three network carriers left in the US, so less competition, fewer options, less of a role for loyalty. When AA invented the modern FF program in the early '80s it was competing against PA, TW, BN, WA, US, CO, UA, DL, EA, PE, and I don't know who else -- all robust network carriers. Today AA competes with UA, DL, and Southwest. There's no need to reward customers for their business when they have no choice but to keep giving it to you.

Agreed, and much of that competition is notional. E.g: A DFW flyer is pretty much an AA captive barring a long drive to IAH.

For the record, you posted this statement on the world's oldest and largest frequent flyer, points churning, mileage running site in the world, with over 600,000 members. If "we" weren't a problem, airlines wouldn't have moved to revenue based programs and set up FF program compliance/audit departments.

:D

With great respect, FT may have 600k registrants, but many post only once and are never heard from again, and many more -- I'd say most -- show up very rarely. The core community, after 20 years, is really no more than a couple of thousand people. (I have been posting here for nearly 19 years. Seen 'em come, seen 'em go.) And while most FTers are concerned with amassing miles and status, a very low percentage of active posters IME copped to mileage running, even in the heyday. I believe the majority of high-status regular FT posters are OPM flyers.

Mileage running, e.g. assembling very cheap itins to achieve status at low cost, was only ever a niche / eccentric phenomenon indulged in by an extremely tiny percentage of an airline's customers, to say nothing of FTers, and today is irrelevant anyway unless you are flying Alaska.

It is not unusual for "FT myopia" to take hold around here, whose symptoms are the conceit that FTers are the airline's most important / influential customers, that we collectively drive changes in airline policies, etc. But while there were isolated cases of airlines taking an interest in the collective "FT voice" before 2010, they are over now. And the sad fact is that in two decades of increasing membership, FlyerTalk has never established itself as a coherent voice in the public square, speaking on behalf of the aggrieved air passenger. Perhaps that is because, as FF benefits grow scarcer and scrawnier, FT has increasingly disparaged / attacked everyday customers, dismissing them as "kettles," etc. Perhaps it is because some on FT believe things that aren't true, e.g. mileage runners were a big, influential phenomenon.

In any case the US domestic airline industry has now consolidated into an oligarchy practicing cartel / fortress economics, so on most counts it does not need to pay attention to FT any longer, or any other codification of the "voice of the customer." We have observed nearly a decade of FF program dilutions / devaluations, service cutbacks, reductions in choice and options, etc. and cried woe is us at every turn, but the airlines don't have to listen to us -- they are thriving.

I didn't mean to suggest that all FT'ers accounted for all the degredation of programs. Just that 600K website registrations could mean that there is a potential value of 10X (or more or less) other fliers out there doing what we do.

I don't think Flyertalk killed FFPs. But I will pull on that thread just a little bit...

When frequent travel programs were great, it was in part because of information arbitrage. On another thread, I posted about how I used to occasionally hear from a front desk clerk that I was the only Marriott Marquis member in the hotel, so I got an upgrade. I remember trips where I received a comp upgrade as an AA Gold because I was the only one on the plane. The hotel or plane was still relatively full, but people either didn't know or didn't care about the programs. Perhaps they thought you needed to be a super-road-warrior to participate, or perhaps they thought it a silly thing akin to coupon-clipping. Anyway, all of those people effectively paying for miles and points but not receiving them were subsidizing the awards for the people who paid attention.

Now everybody pays attention. The hotel and airplane are full of Diamonds, Platinums, etc. who are receiving and using their points and miles. Even if they don't study Flyertalk and learn where the absolute sweet spot in the program is, the very fact that they pay attention means less of their value subsidizes my awards. :(

So yeah, Internet sites may have played a role in that. Corporate travel department newsletters, the programs' own advertising, pop culture (that movie about AA CK...) and simple word-of-mouth in meatspace played roles as well.

My take is that the future isn't entirely bleak, but the aspirational awards and the advantage gained by paying attention and learning loopholes is diminishing. The programs are becoming purely transactional - spend X, get a rebate of Y later. "Loyalty" is mostly dead. Whomever provides me airline seats or hotel beds the cheapest, within my functional requirements, wins. My functional requirement may be a great product - J/F seat, luxury hotel - or it might be basic Y + Hampton Inn. Either way, the rewards from the programs are becoming easy-to-calculate extrinsic rewards that require no emotion and no consideration of the travel provider as anything more than a commodity.

Flyertalk is a lot less interesting than it was a few years ago. :( Back when frequent, varying promotions were a big thing, there was always something new to learn on your airline board of choice. Partner promos were big - NW, AA, US were three I recall that had frequent BIG partner promos that FTers always kept a running commentary for how to maximize. Now the entire game is credit cards, which is less interesting once you know the max churn rate you can do for a given bank.

Great post and I largely agree with everything you spelled out but I'll state what I think your saying (and what I fully believe) a bit more succinctly, which is that if everyone is "special" nobody is special.

I'm finding this game increasingly less interesting. I was never really driven by churning or miles accumulation, but rather maximizing our experience. For example, I used to love lounges to escape the terminal, they were a refuge. Access to lounges in the US was somewhat controlled by requiring either a membership (which most were unwilling to pay for) or status, which as you mentioned was less common than today. However, we are now in a world of highly, highly subsidized credit cards (via "travel credits") that have a low effective annual fee and provide large masses of people cheap lounge access. Hence we see countless threads on lounge crowding, etc. The experience has been utterly ruined and I've on occasion had to leave a crowed US airport lounge for the "quiet refuge" of the terminal!

One can extrapolate this example across the other vectors of the travel experience (airline status, hotel status, etc.) I don't mean to come off as "elitist" but there is a premium experience I'm willing to pay for, but it's increasingly difficult to even find it available, because to your point information arbitrage has evaporated. Anything remotely valuable is immediately blasted out via Boarding Area blogger and through all their various social media "channels" (FB, Twitter, Instagram, etc.) then the entire herd immediately shifts and devours the carcass within hours.

Wish I could generate a more positive outlook, but right now, not able to do so.

Regards

I am glad that I'm not the only one.

I recently upgraded my Hilton Amex from the silver status no-fee to the gold status $95/annum. Why turn down an upgrade + free breakfast elite status that would otherwise require 20 stays (20 Hamptons is a solid $2000-2300 minimum spend) + 10 free priority pass lounge visits per year all for $95? That's literally the best miles/points/program arbitrage opportunity I have seen in a while now. $95<$2,300.

The down side is the crowding, particularly in North America, of formerly more exclusive elite spaces. Hilton "exec" lounges are a joke - a single room or junior suite converted into the breakfast room for all diamonds (sometimes golds too) + whomever was naive enough to pay an extra $30-50/nt for exec lounge benefits - a croissant, chopped melon, and powder-egg breakfast in the morning and cookies in the evening ($6 for a domestic bottle beer). The relaxing ambiance is on par with the NY Penn Station McDonalds.

I fully concur with XBear about this. Mileage runs were a subsection of a subsection of the community, and have no bearing on anything.

Things have become more difficult/expensive/restrictive/whatever, because;

1) There is little competition left.
2) The amount of mile "currency" created to satisfy the credit card and other premium market.
3) The fact that the airline industry for the most part has now seen an unprecedented decade of straight growth, and with it capacity realignment.


As for blogs posting garbage, so much the better, one frustration that many old timers have had for quite awhile is when things get blown up too quickly and news about certain things gets out too fast.

Airline miles are dying, but Hotel points are alive and well. It comes down to the fact that:
1). a meaningful elite status is much more easily attained & retained with hotel (via credit card, etc) than with airlines
2). it's a lot easier to be loyal to a hotel chain than airlines, since the fares, routes and schedule dictate your choice of airline much of the time

Furthermore, as has been pointed out, airlines have little incentives to keep up the mileage plan benefits when seats are full and there's decreasing competition. With a couple more iterations of devaluation and other rule changes, the concept of airline miles program will truly become meaningless. Except the existence of global alliances is probably tied to necessity of mileage plan... or maybe not.

My main airline program used to be UA, but it's becoming harder to even say that. >85% of my travel is personal, meaning I will fly almost exclusively in Y and choose my flights based on fare and convenience. I fly probably 60-90k most years. My hotel program is Hilton, and I stay at Hilton probably 20-30x a year.

Take UA for example. Back in the pre-merger days, it was easier to get Premier Gold (easier to earn more EQM) and the basic Premier meant a lot more (E+, etc). Now Premier Gold is impossible to attain, and Premier Silver is not a lot whole lot better than an Explorer card holder. Even if I hypothetically had a meaningful elite status with UA, it'd be difficult for me to consistently take advantage of it since I will not fly Star if it's 50% cheaper on Sky Team or Alaska or Jet Blue as it would often happen.

With Hilton on the other hand, while my travel pattern would only entitle me to the useless Hhonors Silver, just paying for the credit card entitles me to the VIP status (ie, Diamond). Diamond is a very rewarding status (EL, breakfast, etc), and its bonus points add up real fast. It's a lot easier to stay loyal to Hilton than to UA for the reasons mentioned above... not to mention Hilton award stays for the right #points is a lot easier to find that UA award seats on the desired flight at the desired #miles .

I estimate that I'll end up flying ~75000 miles this year. Used to be I would've gotten something close to 75k EQM. But now I'll probably only get 30~40k, and that is split up amongst UA, DL, AS. I'm not a heavy flyer, but I'm still a frequent enough flyer and yet I'm just on the borderline of possibly attaining the lowest elite status (which will be pretty meaningless anyways) in any airline for next year. On the other hand, I almost exclusively stay at Hilton (probably ~3/4 of all hotel stays), get all the Diamond benefits, and essentially earn enough for a free night for every ~$1500 that I spend.

I definitely agree with those who point out the consolidation and decreasing competition, and have been beating that drum from even before the time the mergers went through.

I and others also saw it as a Wall Street-driven money grab, i.e. we don't have to try as hard to compete so let's slash the costs, devalue the benefits and give a little more to business travelers on high-fare tickets (especially international J), but keep a lot more in revenue. Those changes were not zero-sum.

It's also notable that they continued minting the credit-card miles, so they're still happy to sell large amounts to chase awards that get ever more expensive.

It's really a shame because the programs are arguably the most successful loyalty marketing concept in modern business history. I've always said the true measure (besides incentivizing MRs and other trips that wouldn't have happened) was getting INfrequent flyers excited enough to at least start and account and build slowly in hopes of getting a Hawaii trip in 10 years or something like that.

As people start to realize the programs aren't what they were, the tie-ins get less appealing and maybe more people choose cash back or some other credit card award.

The other notable trend would have to be the growth of the ULCCs. That model has been so influential that it's causing the legacies to try to imitate. It shows how so many people are price-driven, though you can point out that on a Frontier or Spirit flight you might see: a) downwardly mobile people formerly of the disappearing middle class, b) families that can only afford the ULCC trip to Orlando for a vacation or who would do a car trip instead, and c) people who 30 years ago would have been on Greyhound.

ULCCs generally don't do FFPs very well, IMO, but sometimes they can produce good award deals.

They may be on life-support in a little under 1 hour from the time of this post. :( If Marriott and Starwood get hollowed out, that'll leave Hyatt as the lone remaining "aspirational" hotel program, and it isn't what it used to be.

We shall see...

(I hope I'm wrong.)

EDIT: The Starwood/Marriott announcement was not nearly as bad as I expected. There are winners and losers, but the program did not go 100% dynamic as some earlier rumors were suggesting. Aspirational awards will still exist - although they will probably be a lot pricier in the future.

I don't know much about Marriott/SPG or Hyatt. But I'm quite satisfied with Hhonors. The complaint I hear is that Diamond status is being watered down... more crowded lounges, less upgrades, less late check-out, etc. But I still love it, because you accumulate points fast, you get free breakfast (most of the ones I stay at give full breakfast, not continental), and EL's are typically still way better than your average United Club.

If you have a Hilton AMEx card and Diamond status, you will earn 30,000-40,000 pts (depending on what promotion is going on at the time) for every $1500 you spend. Based on my valuation (~0.55 cents/pt right now, I'd say), that's about $200. So you're earning back ~13 cents on every dollar you spend at Hilton.

If you have Chase United card, you'll earn ~25,000 UA miles for every $3500 you spend. Based on my valuation (~1.5 cents/mile, which may actually be higher than what most others would say), that's $350. So you're earning back only ~10 cents on every dollar you spend on UA.

And a further important consideration is that Hilton pts are far easier to redeem than UA miles at their respective appropriate values, not to mention the greater flexibility (point stays can be cancelled without penalty, etc).

I agree with the OP about how the future of airline miles is bleak, but I do think that there is still value to be gained - just not what it used to be, and in different areas.

When I started in this some ten years ago, elite status was great, but the real reward were lots of miles earned, with the ability to exchange at amazing rates for easily available Business Class longhaul trips. I'd get c21,000 miles for each £300 round trip from London to California. For two trips, I could receive a Business Class single to the Far East or South Africa. Today, I earn perhaps 2,500 miles for the same trip and it costs 100,000 miles for the same ticket to HKG.

I used to deliberately lengthen trips to earn more miles; economy was relatively comfortable and I was looked after well. Today, economy is horrible - even E+ on UA is not nice - and miles are next to worthless.

However, on the plus side, it's usually possible to buy Business Class for much less than it cost several years ago, Business Class itself is much nicer and earns very well. Because economy is so awful, it has become imperative to maintain status, at least on UA, because the benefits are the only thing that make long flights tolerable.

So, my strategy has changed fundamentally. I use my miles purely as a means of buying flexible tickets where I need flexibility - and often replace these at the last moment if prices remain reasonable. In terms of earning, I focus only on elite qualifying. Once I know I'm past my targeted threshold, Norwegian or EasyJet get my business. But, getting to the threshold, I still do my best to game the system.

And here we agree. This is the other side I was hoping would get brought up. As status (particularly in the US) is watered down and flooded with credit card elites, some of the premium cabin fares out there are amazing. On a $662 one-way ticket MIA-ZRH-NRT on LX, I was offered the a J upgrade on ZRH-NRT for $900. While I declined it, that's amazing value to Asia on a great (in J) carrier.

As a California-London flyer, you may remember the deal in J LAX-LHR on Avianca for circa $1,900.

Given that loyalty points/miles seem to devalue like a mismanaged third world currency (which makes accumulating them for premium redemptions frustrating), why be loyal when you can buy premium treatment for very reasonable prices? Lately, I have been gorging on intra-Asian J fares for upcoming travels. I don't give a fig about miles/earning/status if a 7 hour trip (including 2 hr connection) in J costs US$295.

I have abandoned all airline credit cards. They're simply too weak as a general-spend card and they don't convey any benefits that are useful to me. If I suddenly find myself flying an airline enough to want preboarding and a checked bag, I'm probably going to hit at least its low-elite tier anyway. I'll pull the trigger on one every now and then for a sign-up bonus, but that's about it. The Alaska card is the only one out there that seems somewhat tempting.

In the credit card universe, the hotel cards are still pretty solid, although SPG Amex (my favorite) gets nerfed on August 1.

I don't know all the airline cards out there, but Chase UA Club Card serves me well. 1.5miles/$ is really great. If you put $7000/month on your card, you're already getting >$600 per year in extra value over other typical airline cards that earn you 1mile/$. But for us, in particular, the difference between UA Explorer and Club Card is ability to finance 3 free one-way TPAC flights vs only 2 per year. All while enjoying access to not only United Club, but also all the great Star lounges across Asia. But Chase UA Club Card is still not on par with Hilton Aspire card for my purpose.

Alaska Visa is actually the only other card I know. That card is losing value fast for me even though my home airport is SEA, and I'm thinking about canceling it. Alaska fares are getting so expensive that I was actually unable to use the companion pass last year and saw it go to waste. I'm actually flying DL more often now due to price difference. Although Alaska Visa covers bag fees, my Hilton Aspire card will reimburse up to ~$200 of airline fees, which would more than cover the bag fees associated with the few AS flights I take. And despite UA's near non-existence at SEA, I find Mileage Plus to be a more useful MP than AS at this point. But certainly you should go for AS Visa if there's a good sign-up offer.

I know I'm in the minority here in using miles for free tickets rather than upgrades. The best free-ticket experiences used to be in hard-to-get-to places that often were monopoly routes for a particular airline but could sometimes be bought much more reasonably with miles either on that airline or via alliances. There were also some exceedingly good awards like PER-AKL (stopover)-PPT (destination)-AKL-PER at 25K on *A.

Airlines seem to be consciously and deliberately trying to get rid of those lately, so I'm glad I got to go around Micronesia and the south Pacific when I did. Was also nice to redeem 21-year-old SkyPass miles to get to Mongolia, though the ULCCs might invade there before long. I kept trying for the Seychelles but it took the Etihad mistake-fare sale to crack that (and the ME3 invasion in general), and Madagascar is still out there.

AFAIK the biggest missing link I see is the big sale fare on an alliance partner where a good RDM return tips the decision. One of the last hurrahs there for me was a KL sale a few years ago for IAD-CPT-IAD at $650 or so. I was a DL PM at the time and got a good return on RDMs with the bonuses, and on the AMS-CPT even lucked into an operational upgrade. Those days aren't likely to return.

OTOH, I still get to travel and the total spend on airfare is lower (will be going to SLC in a week on a phenomenal $28.30 ATL-SLC-ATL from F9). Less spend, fewer bennies, but the free firewater would have been hazardous to health at this point, anyway.

I strongly strongly disagree that there were ever enough gamers to matter. How many companies out there give away $500-$1500 to customers who have no interest in doing business with them, and it's no big deal? It's also not accurate that this activity is somehow affiliated with FT. Anywhere you see credit card discussion online, it's being discussed. If it wasn't a big deal, why would Chase institute rules such as 5/24, one Sapphire card, etc? American Express gives one bonus per lifetime. To name a few. If I was a betting man, I'd wager we have only scraped the surface on restrictions credit card companies will place to prevent gaming the system.

As far as your other statement, I definitely agree. Too many people feel entitled to loyalty perks. No business is required to give anything away. They do it for marketing. Period. What happens when the business evolves? When your competition stops doing it? When you no longer have competition? When demand is already high? As a smart business owner, you have to look at all of your investments (just like customers taking $1000 sign up bonuses and leaving). Money isn't well-spent just because "that's the way it always was." If an investment isn't giving a return, you start to invest in other areas that will get you a better return, or you bank the money. You wouldn't give away free dessert at your restaurant if you were packed every night.

There is a clear difference between hotel and airline loyalty programs too. I believe the airline business is feeling the hurt around the margin compression way more. The low-cost carriers hurt the business of the big guys more than a new cheap hotel/motel chain would hurt Mariott, Hilton, or IHG. You can say what you want about your favorite airline, but to the average person, there is a far smaller importance in airline choice vs hotel/resort choice.

The only airline CC I still keep is Southwest / Chase. Rapid Rewards is of limited utility but operates transparently. I maintain a modest stash of RR points to send my wife off to see her mom a few times per year. That card / program defends its value. I've given up on the others.

The Amex / Hilton cards are a virtual disloyalty pass. They free you to stay at whatever chain you want, for reasons of economy or location, because you'll always be Gold or DIamond at Hilton. No more need to alter spending behavior to amass 20 or 30 stays -- although altering your behavior is the whole raison d'etre of loyalty programs in the first place. (I had to attend RSA -- cybersecurity conference -- in San Francisco last week. In olden days I would have sought out a Hilton property at whatever cruel cost; this year I stayed at a quaint independent property over in Berkeley, saved $1,000 to $1,500, and risked nothing, Hilton status-wise.) So I am not sure that situation will last forever.