
Are Frequent-Flier Miles About to Lose Value? - prostoalex
https://www.wsj.com/articles/are-your-frequent-flier-miles-about-to-lose-value-11545228909
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whitepoplar
To anyone who wishes to simply not have to deal with airline miles earned on
credit cards ever again, here's a great option I found: if you have $100k+
across checking + investment accounts at Bank of America + Merrill Edge (their
low-cost brokerage arm) you get...

1) 2.625% cash back on BofA's Premium Rewards/Travel Rewards credit card. No
messing around with airline miles. Just buy whatever ticket you want. Or, you
know, pocket the cash.

2) 5.25% cash back on BofA's Cash Rewards card for "online purchases," up to
$2500 per quarter.

3) 100 free trades per month at Merrill Edge. You're not locked into any fund
companies and can buy whatever you want. I buy-and-hold Vanguard ETFs.

4) Free BofA checking account, with unlimited ATM rebates + a free safe
deposit box. It pays negligible interest, so you may want to use another
checking option if you hold larger cash balances, but it's helpful to have
around just in case you need a physical branch for anything.

It's really a great deal, and it's wonderful to never have to think about the
"gotchas" of redeeming airline miles.

~~~
sys_64738
But this requires dealing with BoA who are a terrible company. No thanks.

~~~
cobookman
BoA service is proprotional to how much money you have with them. If you've
got one of their status tiers you'll get significantly better service.

~~~
Scoundreller
Sounds just like dealing with an airline.

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jpatokal
> Are Your Frequent-Flier Miles About to Lose Value?

The answer to this question is always "yes". Quite some time ago, the
Economist estimated that the "money supply" of miles expands by 20% every
year, which means that existing miles get devalued at roughly the same rate.

[https://www.economist.com/leaders/2002/05/02/frequent-
flyer-...](https://www.economist.com/leaders/2002/05/02/frequent-flyer-
economics)

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40acres
I think rewards and upgrades should actually cost less if airlines want to
increase brand loyalty.

I signed up for Delta's frequent flyer program because i frequently took cross
country trips and decided I needed to take full advantage of the fact that
only one airline provided a non-stop route from my location to this
destination. Being apart of this program led me to choose international
flights with this carrier over others because I would earn miles.

Once another airline with cheaper fares took on this route I completely
abandoned optimizing for miles and simply started optimizing for cost like
many travelers do.

Miles take too long to earn for travelers who fly less than 5 times a year,
especially if these flights are domestic. If I were guaranteed to earn at
least enough points for pay for a round trip around 500-750 miles from my
nearest airport in exchange for flying with one airline consistently I would
definitely consider it.

~~~
Waterluvian
I think they're relying on the theory that a lot of people will drastically
over value miles in their mind when calculating which ticket to purchase.

~~~
40acres
You're probably right, also, since most travelers optimize for cost it will
take longer to earn enough points for substantial rewards.

It took me at least a half dozen cross country flights and at least two
international flights to earn enough miles for a free one way cross country
flight, the benefit just isn't there for normal travelers but I guess this is
why it's called a "frequent flyer" program.

~~~
sethhochberg
I honestly wouldn't bother committing to any single airline until you were
traveling enough to qualify for some kind of reward tier somewhere - I go all-
in on Delta/Skyteam when I can because the miles I earn get reward status that
includes free checked bags and seat upgrades and other perks like that, being
able to eventually redeem some miles for flights is an almost inconsequential
perk for me.

I get waaaaay more value out of buying regular economy tickets and flying
(most of the time) in at least economy plus, if not first class on small
regional routes on the free upgrades than I could out of tickets purchased on
miles.

(I'm typically around a couple dozen flights a year, so frequent enough to
have basic status, but nowhere near frequent enough to get top-tier business
traveler level status...)

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syedkarim
The primary reason I spend more on United (from O'Hare), which is consistently
more expensive is the 24-hour change policy. After 50,000 butts-in-seats miles
customers are able to change to another flight within 24-hours of the
original, free of charge. This has been invaluable over the years, since I can
easily add a meeting or buy the cheapest, most inconvenient flight and know
(has only failed me once) I can change the ticket later.

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drinkzima
[I believe] the 24 hour change is legally mandated for all the airlines.

[https://www.consumerreports.org/consumerist/all-major-u-s-
ai...](https://www.consumerreports.org/consumerist/all-major-u-s-airlines-
offer-free-cancellations-within-24-hours-except-one/)

~~~
hueving
Changing your flight within 24 hours of purchasing it is different than
changing to a flight within 24 hours of the original.

The latter doesn't need to happen within 24 hours of purchase.

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tedunangst
Why did I have to read through several paragraphs of speculation and hand
wringing to learn that a basic economy award ticket costs fewer miles than
regular?

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technofiend
Yeah good question considering they offer less benefit so they should
naturally cost less. Seems like something the author could lead with.

I subscribed to Scott's Cheap Flights to see some new (to me) parts of the
world on the cheap. I'd say 80% of the flight deals are basic-economy-class
seats and it's exceedingly rare to see a similar deal for the next fare class
up. In other words if the normal difference between basic economy (can't pick
your seat, luggage is extra) is $200, the difference between basic and regular
is now far more. In fact it's so much more the flyer may as well pay the
upcharge to take a bag.

I'm not sure if this is airlines dumping basic economy seats because they
simply don't sell, or if they're trying to make flyers used to paying for
upgrades since it's still all in cheaper than the next fare class.

Regardless it makes sense for airlines to price basic economy for the least
amount of air miles as the seats again offer the least benefit and the airline
will make their money up billing cash rather than miles for the extras.

~~~
monksy
I wish they wouldn't advertise basic economy tickets. They're a terrible
value.

~~~
sokoloff
As long as customers are shopping on basic price, [un]bundles like Basic
Economy tickets will be a thing.

For some people, they're exactly what is needed.

~~~
hakfoo
The one thing I find baffling is the luggage angle.

"We're going to charge you $25 for a checked bag" triggered everyone to stuff
everything in the universe into a carry-on.

Now you end up with half the flight being told "the carry-on space is full,
but we'll check the bag for free" at that point. So they're checking bags
anyway.

I wish they'd let travelers choose either a checked or carry-on bag for free.
I honestly don't need my carry-on during the flight, so long as I can stuff a
snack and book into an under-the-seat laptop bag, and if I can check the bag
instead for free, then I don't have to schlep it across the airport.

~~~
sokoloff
Random trivia: airlines don’t have to weigh your carryon nor count it against
performance criteria. Bags that go underneath are weighed and “count” for
performance calcs.

Obviously, it affects the airplane either way and there are some safety
margins built-in, but the airlines have some reason to push people to maximize
use of carry-ons.

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tinktank
It works both ways. If there is less incentive for me to stick with a single
carrier, I'll always go for the one offering me the best price, regardless of
my status on any given carrier.

~~~
sokoloff
If you fly only a handful of times per year, optimizing for current cost is
probably the best plan anyway.

If you fly a lot for work, the company may have a preferred carrier (ours is
Delta), and the status you accrue from work travel may allow you to book
domestic economy and almost always get upgraded to First class. (Basically,
unless I’m flying out of Atlanta on Friday eve or into on Sunday PM/Monday AM,
I’m >75% for an upgrade.)

This makes me fairly likely to choose Delta for personal domestic travel, as
long it’s within a couple hundred bucks of another carrier (or unless that
other carrier is Spirit and the price difference is less than $500,000...)

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neonate
[https://outline.com/SM59JB](https://outline.com/SM59JB)

~~~
swang720
Thanks much for this!

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ubernostrum
The value of loyalty programs, for the customer, tends to inversely correlate
to the state of the economy.

In very broad terms: tourism is a larger part of the travel market than
business travel. When the economy is bad, fewer people travel for pleasure,
and those who do don't fly as much. So loyalty programs ramp up the rewards
for the people who are still flying, in order to hang onto them. Then when the
economy recovers and tourism picks up again, there's less need to desperately
keep customers by any means available, so loyalty programs start getting
slashed.

On top of that, at all times the big US airlines tend to hand out redeemable-
only miles like candy (elite-qualifying miles are the ones that are hard to
accumulate¹), which makes them a heavily inflationary currency and requires
jacking up the redemption rates every so often to soften the blow of all those
outstanding miles.

\--

¹ Airlines in the US issue two types of miles. Redeemable miles, usually
abbreviated "RDM" in the frequent-flyer forums, do what the name implies: you
can redeem them instead of using cash to purchase a ticket. They offer no
other perks. The other type is the "elite-qualifying mile" ("EQM"), which can
be redeemed for a ticket but also contributes toward qualifying for some level
of "elite" frequent-flyer status with the airline. Elite status is what gets
you free upgrades and free checked bags and all the other perks.

Elite-qualifying miles, with very few exceptions, can only be earned by
actually purchasing a ticket, getting on the plane and flying (sometimes this
process is also referred to as "BIS" \-- "Butt-In-Seat" \-- miles). All the
"50,000 miles for signing up!" type offers you see with credit cards are
denominated in redeemable miles, for example. If you know your way around the
loyalty programs, you can generate hundreds of thousands of redeemable miles
per year without too much effort. Achieving 100k elite-qualifying miles in a
year, however, is a significant feat and typically qualifies you to the
highest public status tier (the big three US airlines each have at least one
unpublished tier above that, offered by invitation only to customers perceived
as extremely high-value).

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ilamont
United's Mileage Plus program is pretty iffy for getting tickets for domestic
or international, but one great thing about it is the ability to use miles for
goods, gift cards, etc. I've cashed in expiring or insufficient miles more
times than I can count for all kinds of useful kitchen items, power tools, and
once a pretty nice watch (Citizen Eco-drive). I've found other U.S. airlines
are better on reward travel but not as good on other uses ... unless you
really like magazine subscriptions.

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randomacct3847
I’m currently on a two week vacation through Tokyo, Kyoto, Bangkok, and Krabi
entirely funded by credit card points, frequent flier miles, and hotel points.
I flew Japan Airlines first class to Tokyo, flying their business class back
from Bangkok, and staying in some of the best hotels all for almost free
(small amount of award tax out of pocket). The points and miles game is still
very much alive.

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sys_64738
I used to have a lot of air miles with United but they always found a way to
increase the threshold just as I was about to get there. It felt like I was
constantly swiping at air (no pun). Eventually I used to use my skymiles to
buy The Economist but then they stopped letting me buy mag subs and expired
all my miles. I don't miss them.

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chaosbutters314
I got for american now. They overbook so much i set my business trips in the
morning and happily take a bump for the voucher

~~~
hueving
Delta cut wayyy back on doing it because United pissed in the pool and idiotic
casuals took to the streets and blindly blasted the practice of overbooking.

Is AA still overbooking with regularity?

~~~
Brockenstein
All airlines do, because they have decades of passenger data to work with and
can estimate how many people won't show up, how many people will take
compensation, etc. They have policies in place for every contingency.

Passengers don't like the idea of overbooking. But most passengers don't
really understand how the sausage is made. And they don't care when the system
works for them most of the time, just that it's not perfect, so booooo.

~~~
viraptor
> the system works for them most of the time

That's assuming people prefer having a chance of getting bumped off a flight
they booked to paying a few bucks extra and having the same chance of just not
getting that ticket in the first place. For me that system never "works for
me". Maybe it works for some people, but for others, there's a good reason to
hate it.

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monksy
Basic economy is a sign that end airlines are raising process in a drastic
way, and not increasing the value with it.

