“Frequent flyer programs were the best marketing scheme of the ’80s,” says Peter Greenberg, The Travel Detective. He also adds, “We’re a nation of addicted frequent flyers who will do anything for those miles.”
American Airlines launched AAdvantage, the first loyalty program, in 1981. It was a copycat of the incentive programs that banks were using to attract and keep customers by giving away toasters and blankets. It was also a riff on the small Travel Pass program at Western Airlines, where passengers could get $50 in travel vouchers after five flights.
AAdvantage took off like wildfire. By the end of 1981, United and TWA had their own frequent flyer programs. And the competition began. Free trips, first class upgrades, bonus miles, even a “happy hour” that awarded flyers a free second drink when they showed their membership cards. It was a Golden Age.
Fast forward to 2017. The situation is not as rosy.
Airlines are now suffering from the overabundance of the accumulation of air miles. Why? Because 54% of miles are now earned on the ground. Many of us have credit cards that gather miles as we shop, eat, or even pay our mortgage.
What an airlines do? Create increasingly difficult hurdles!
- Keep raising the mileage requirements.
- Tie elite status to actual miles flown.
- Toss in the amount paid for the ticket.
And if you’re American Airlines, you add a fourth hurdle: Go back and review how much you spent to achieve your status. And readjust status levels. Because there is no legal oversight, airlines can pretty much do what they want.
If all of this seems concerning, it should be. All those miles you’ve worked so hard to earn? (Even the word “earn” makes you think you’ve done something important, besides sit in a narrow seat and fight for overhead space.) Their value is tanking, fast.
In order to accumulate 25,000 miles–enough for a round-trip coach seat–you will spend $14,000, says Greenberg. If you don’t have enough for a flight, say only 10,000 miles, you may be tempted to trade them for a “free” gift, such as a box of Godiva chocolates. Sounds good, right? After all, you don’t travel much or can’t reach the mileage requirement.
The Godiva Signature Chocolate box costs $32. It has 12 truffles. So you trade in your 10,000 miles…the equivalent of $5600. See what I mean?
If you fly for business–meaning you don’t pay for your trips–by all means, continue to grab frequent flyer miles and the chance for a first class upgrade. But here is advice for the rest of us:
- Use your miles! Their value is plummeting. Hoarding is not a good strategy. Johnny Jet suggests using them for upgrades and international travel. Even better, use them on the longest, most expensive flights possible.
- However, use them wisely. Check the cost of a ticket versus using miles. Before you squander miles for a flight from Chicago to Omaha on a regional jet, check prices. Southwest Airlines can probably get you there cheaper, without baggage fees.
- Seats open up 330 days before the departure date. Plan ahead if you’re using miles for a big trip or a popular route. Check online for availability, then call the airlines and seal the deal. Book the one-way outbound flight. Then at the 330 day mark of your return, book the one-way ticket home.
In case you’re wondering, there is little incentive for airlines to help you redeem your miles. Why? Because YOUR miles are pure profit. Airlines sell miles for about 1.5-2 cents each to the airline’s partners: hotels, rental car agencies, credit cards, florists, restaurants. Anybody who awards bonus miles.
With about 10 trillion frequent flyer miles going unused–and airlines making it more difficult to spend them, because they’d rather have a paying passenger onboard–you can begin to understand the situation. For a typical US airline, frequent flyer miles make up to 45% of its revenue!
So, before you sign up for an airline’s credit card, stop to evaluate if it’s in your best interest. The airlines love it, but will you really get what you’re after? Remember, there is no “free flight.”