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Are We at the Beginning of the End of the Frequent Flyer Game?

I’ve flown Continental (now United) for my entire life, and I think I’ve been lucky to be associated with a frequent flyer program where, for the most part, availability has not been an issue. I wasn’t a United guy, so I didn’t deal with Starnet blocking. Back when Northwest and Continental were tied up there was decent availability for redemptions on Northwest. As I said, I’ve been lucky.

Delta’s lack of availability (at reasonable redemption rates) has been well-documented, and I won’t beat a dead horse here.

Then I’ve seen posts this week about AA having virtually no premium cabin availability to Europe or South America, and Cathay drastically reducing their availability.

Then I started wondering: have we all been fighting the wrong war? Forever we’ve been warning and/or complaining about chart devaluation, and to an extent that has been an issue (though I think it’s been mostly balanced out by the widespread availability of generating miles through credit cards – while the Hilton devaluation is annoying, what’s really annoying is that you can’t buy 70,000 miles for $79 through the Hawaiian Airlines card anymore).

But have I (we?) missed the biggest issue of all: massive reductions in (especially premium class) international award availability – especially for awards without surcharges. Given what’s going on today, I can’t imagine any reason to accrue miles to Delta or American. With US Airways disappearing, that option is gone (people complain about it, but at least there were generous routing rules, 90k business class Asia award, and Star Alliance availability). I’d argue United is the only program left worth anything if you want to redeem for international premium award travel.

How long will that last? If United started Starnet blocking (or whatever equivalent) or decided to go to a 3-tier Delta-like system with virtually no low-level availability, does this whole game collapse? Are we 1 decision away from all of the miles I have built up now being something approaching worthless? Am I overreacting?

(Whew, I’m starting to sweat).

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  1. great post. FWIW – my thoughts… Airlines (or their loyalty behemoths to be exact) are becoming increasingly sensitive to the costs of resumptions. And why not – the profit equation has changed for them. Before they used to monetize “loyalty” through enticing us to use their product more vs competition. Now they are profiting by selling miles to third parties (who want a more effective marketing spend – hence the big boom in credit card bonuses). In the meantime, the cost vs reward is becoming increasingly objective and easier to calculate. So we adapt and continue to profit from the fragmented ecosystem that’s enabling all these freebies… I for one am happy with increasingly available sources of info to take advantage of these freebies from blogs like yours. Net/net I think I’m better off (although i coming from a position of zero benefits 7 years ago). My biggest worry is credit card companies turning the tap off…

  2. mistyped in last post
    “…increasingly sensitive to the costs of resumptions” should read
    “…increasingly sensitive to the costs of redemptions”

  3. Jared,
    I think your conclusion is correct. It is simple economics. Airlines are profitable so they don’t need to incentivize customers with free travel. If the economy tanks again, however, the incentives will return. Once United gets its house completely in order, award space with decline.

  4. We likely anchor a bit too much to the recent past, the Great Recession. Airlines make seats available at the saver level they don’t expect to sell for cash. Premium cabins were flying empty, awards were a gimme for awhile. That’s not really ‘normal’.

    And in many ways using miles is a whole lot easier today than it was 15 years ago prior to the advent of alliances/alliance awards. There were partnerships but you couldn’t combine partners in an award, couldn’t book one-way awards with most programs either.

    • @Gary — I hear you, and I’ve said a zillion times how great we have it today. Except that in terms of award availability we’ve basically written off Delta (save for the handful of specific occasions you’ve pointed out); and it looks like AA may be retrenching (and b/c of the fuel surcharges on BA, a large swatch of Europe is out). We’ve had it great – I’m just wondering if the good old days are done. I sure hope not…

  5. This hobby is about traveling and seeing the world, not seeing the world in a flat bed. Reduced premium seat award availability is not the end of the world. 99% of leisure travelers fly in coach, and so can we. Complaining that airlines had rather sell their premium seat than give them for free is unreasonable.

    Oh, but I’ll finish with this: Delta sucks!

  6. I totally agree Jared and I made the same point in a blog after the proposed merger of USAIR and AA was challenged by the Attorney General.
    All frequent flyer programs are basically unilateral monopolies. If you don’t like their rules, go somewhere else is the way they run the programs. It’s not regulated by the FAA or or any other governmental or state agency.
    No matter if they give you notice before they make changes or not, it doesn’t matter. These programs are not contractual.
    I feel the same way you do. Everyday I wake up wondering if any of my ff programs are going to disappear.

  7. When the average man on the street has 200,000 air miles in his account, it is no wonder why we can not find a free seat in FC,

    Airline need to raise the cost of miles, they are simply worth less, and used more.

    The Ain’t no free lunches.

    We have people on Welfare making $40k in this country and soon McDee’s will be making $15 an hour flipping burgers,

    The game will always be there, the cost will just be higher, to keep inspiration and perspiration in check.

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