Monthly Archives: November 2013 - Page 2

US Airways Takes First Step to Dismantling Its Frequent Flyer Program (Also, The Merger Was Approved)

You’ve read the elsewhere, no doubt, but I would be remiss if I did not mention that that the government approved the US Airways/AA merger. The airlines agreed to:

– Divest 52 pairs of slots at Reagan airport
– Divest 17 pairs of slots at LaGuardia
– Give up slots at Boston, Chicago, Dallas, Los Angeles and Miami.
– Arizona, Florida, Michigan, Pennsylvania, Tennessee and Virginia have a 5-year guarantee that the airlines will keep daily service.

And that’s about it – about 112 flights out of a total of 6,700 were affected. Lots of hubbub over not that much. I would have to assume that when the carriers were discussing the merger they would have been satisfied with this result.

I’ll assume this is the first step toward the beginning of the end of Dividend Miles. Oh, Dividend Miles….sure, hard-core mileage nerds loved your 90k business class award to Asia, but because you didn’t allow one-way redemptions you never got that much respect. We’re going to miss you when we have to pay $625 in fuel surcharges to fly to Paris.

3 Quick Things: Amex, Sheraton and Air Berlin

– Have a lot of business in South Sudan? Enjoy collecting Starwood points? Good news – Sheraton is opening a new hotel in Juba, South Sudan, in 2015. A new property in Guinea also opens in 2015 and in Mauritania in 2017. Looking forward to trip reports.

– I just received an email from Amex offering $5 off $30 worth of gasoline at Exxon/Mobil stations through December 31st (1-time use). Register any of your Amex cards, though I used my Amex Blue Cash Preferred since it earns 3% on gas already.

– Air Berlin is adding service beginning in May: Chicago – Berlin goes to daily from 5x per week. JFK-Berlin and JFK-Dusseldorf go to 10x/week from daily. That’ll give a few more options to go to Europe using Avios points without fuel surcharges.

And the Hyatt Devaluation Suggests We Should Re-Think Our Credit Card Strategy

One Mile at a Time has written more than I will bother to about Hyatt changing their award chart (short version: 6 hotels get moved into a new Tier 7, which costs 30k points/night; suite upgrades are now 6k points per night, not per stay; Tier 5 and 6 hotels cost more points).

There will be many tears shed about this, but I think it just underscores what I’ve been thinking since the United devaluation:

1) Cards that are aligned with multiple programs are now much more valuable;
2) For me that means that Starwood Amex rather than the Ultimate Rewards cards because of the breadth of transfer partners;
3) People who pooh-poohed cash back cards should probably take a second look.

Let’s take a look at those 6 properties that now cost 30,000 points per night – they’re the Park Hyatt hotels in Beaver Creek, Sydney, Tokyo, Milan, Paris and Zurich.

If you put $30k in spend on an Ultimate Rewards card you can get a free night at one of those hotels when you transfer the points to Hyatt.

But – and this is why I like the Barclays Arrival as my cash back card – for 4 of those properties I’m actually better off earning points on the Barclays card and just buying the hotel with those points. The hotels in Beaver Creek, Tokyo, Milan and Zurich are all under $600/night. So that $424 Beaver Creek room will only require $21,200 in spend on the Barclays card (not even including the 10% bonus I’ll get back from Barclays. Plus I’m earning 2,100 Hyatt points per night because I’m buying the room (rather than using their miles). That means I can upgrade to a Club room for only 900 more points per night.

Yes, the math gets more complicated because you’re probably putting some travel/restaurant bonus mile spend on that Sapphire card, but still — the flexibility of that 2.2% cash back you earn on that Barclays Arrival means you’re not subject to the whims of the programs nearly as much as if all your eggs were in one basket (if, God forbid, you were earning points on the Hyatt card, for example).

Personally, I’m torn about how to spread my spend between the Barclay Arrival and the SPG cards. I see value in getting cash back that can be spent on any travel (car rentals, for example), and I see value in airline points that I can generate with the SPG card. For now, I’m just planning on splitting my spend – but I’d be interested to hear if others have a better strategy.

But my larger point was that these devaluations are certainly going to continue and a hedge against them – especially with hotels – is to have some of your spend go onto a cash back card. I was surprised that earning on the cash back card was actually a better deal than just earning points through spend and transferring the points to Hyatt for several of those top hotels.

(Incidentally – I’m talking about everyday spend here….you should certainly feel free to earn points through signups as much as you’re comfortable…)

How to Buy Roundtrip Business Class Domestic Tickets for $730 (Sometimes Less)

Melia Hotels has a loyalty program called Melia Rewards that is useful if you want to buy discounted domestic business class tickets. Here’s how it works:

Melia is partnered with Lufthansa, and they allow you to exchange 2 Melia points for 1 Lufthansa Mile and More mile. So far so good.

Melia also allows you to purchase up to 100,000 of its points per year. 1000 points cost 8 Euro.

Lufthansa offers roundtrip domestic business class tickets (on United or US Airways) for 35,000 miles round trip (they also allow one-way tickets which, because they appear to only allow redemptions in 1,000 mile increments, actually costs 17,000 miles). Domestic includes Alaska but does not include Hawaii.

Melia charges 544 Euro to buy the 68,000 points you’d need (remember, you’re transferring at 2:1) for the ticket. 544 Euro is roughly $730. That’s quite a bargain for domestic business class (especially for transcon flights).

They also offer transfer bonuses from time to time – we just missed a 30% transfer bonus that ended October 31st that would’ve gotten you the ticket for roughly $569.

Sign up for their email newsletter to find out about future bonuses.

Wednesday Roundup: Aeromexico, Qatar Airways and More

– Aeromexico will launch nonstop Saturday-only service from JFK to San Jose Del Cabo beginning January 18th. United also offers Saturday-only nonstop from Newark.

– Qatar Airways is offering up to 13% off its fares when you use coupon USONEWORLD and book before November 30th. Restricted coach fares start at 3% off, while business class fares get 13% off.

– Delta will have flat beds on all its 757s flying JFK-LAX beginning June 2014.

– Beginning November 22nd, TAME Ecuador will offer daily nonstop service between JFK and Guayaquil, Ecuador.

– Aeroflot is combining its two Siberia-based affiliate airlines (SAT Airlines and Vladivostok Avia) into one new airline called Aurora.

Classbuxx Deal: $10 Starbucks Gift Card for $5

From time to time we’ll post great deals we’re featuring on our sister site Classbuxx, the cash back site that helps you earn cash for your child’s school. Today’s featured deal:

Groupon is offering a $10 Starbucks gift card for just $5 today and tomorrow (November 5th and 6th). Who doesn’t want $5 worth of free Starbucks?

Click here to get the deal without cash back.

Click here to get the deal and earn 4% back for your child’s school.

(If any of you want to get your school involved with Classbuxx so you can raise money by when you shop online, shoot me an email at jared (at) classbuxx.com).

My Final Word about United, In Which I Realize Perhaps We’ve All Been Thinking About This Wrong

I promise, this will be my last piece about the United re-valuation, but I’ve had a few days to think about this and chat with people about it, and here’s where I’ve landed:

I think the major US airlines have made 2 serious miscalculations over the past 10 or so years, one of which they’ve made an effort to rectify, and a second they are now dealing with.

First: throughout the 2000s certainly until the economic crisis in 2008, legacy carriers talked about “service” as one of their key tenets separating themselves from low cost airlines. Low cost airlines were supposedly no-frills operations, while legacy carriers were chock-a-block with frills and service. Until suddenly, they weren’t. JetBlue was able to succeed so quickly because they offered a notably different experience, plus legroom and televisions. A few years after they launched when legacy carriers started cutting back on in-flight food and before they had started investing in in-flight entertainment, the world was suddenly turned upside down: JetBlue and Southwest were viewed as service leaders (because “service” no longer meant chateaubriand – it meant a smile when you got on board), and legacy airlines had a terrible product (especially domestically).

The legacy airlines were either kidding themselves, or somehow thought people were too stupid to notice that their product was horrible, and a much better product was just a click away. Southwest realized this because they can now often charge MORE than legacy airlines. JetBlue was able to expand all over the place. Virgin America, though not profitable, was able to command share on Transcon routes. Oops. And so a couple of years ago the majors decided to re-look at their more important domestic routes and are now investing heavily in the Transcon market, while offering amenities like wi-fi on shorter flights. This will benefit travelers, who actually will have great service options, and it will benefit the airlines, because it appears that people will pay for better service (they won’t pay crazy amounts, but JetBlue is betting that you’ll gladly pay $1200 round trip for one of their new suites).

Second: Airlines sold frequent flyer miles to banks like they were going out of style. They printed those points like they were Zimbabwe’s Finance Minister. And this was amazing for those airlines, because during the bad times their frequent flyer programs were profitable, bringing in cash from the sale of points to banks. At the same time, between Flyertalk and the blogs there was plenty of information out there about how to optimize the whole system. And many of us woke up realizing that it’s so much easier to earn miles through credit card signups than by actually flying. And we were redeeming those miles that we got from doing nothing on nutty around-the-world first class Star Alliance-partner riddled award tickets that were – GASP! – actually COSTING United money.

(We can no longer pretend the blogs have absolutely no impact on the airlines. Let’s just do a back-of-the-envelope calculation: I consider there to be 5 major frequent flyer blogs (View from the Wing, One Mile at a Time, Million Mile Secrets, Points Guy, and Frugal Travel Guy). 3 of them are full-time endeavors, and 2 are part-time though significant activities. We’ll have to assume that those blogs are bringing in north of $150k, a number I’m only guessing because 2 (and soon 3) of them employ staff to help write them. I’m sure the number is higher. Figure the average app pays $150 (some higher, some lower), each of those blogs is generating 1,000 approved credit cards per year. I’m sure it’s more than that, based on my own numbers. I know it varies, but for the sake of argument let’s say that the average card bonus is 40,000 miles. Each blog is generating 40 million miles for its readers per year. Times 5. So each year the 5 major blogs are, conservatively, generating 200 million miles for their readers. Add in Vanilla and 5X Office Depot, etc. Likely 300 million miles each year generated by those 5 sites alone. And that has no impact on the airlines?)

Frequent flyer program rules and award charts were created well before the massive printing of the frequent flyer currency. Premium cabin awards were meant to incentivize business travelers to fly the airline more and more so they could – one day! – maybe! – earn enough miles to take their family to Hawaii in business class. It was not set up to allow some schmuck like me to open a handful of credit cards and get the same award, especially if that award involved paying Austrian Airlines to allow me to fly their airline in business class for free because I signed up for a credit card.

So of course United (and the others) woke up over the past couple of years and realized that this whole thing needs to change. Delta decided to change it by creating 3 tiers of awards, severely restricting availability for the lowest tier, and essentially repricing awards by 1.5 – 2x because, sure, awards were always available, but they were going to cost you. American Airlines frequent flyers were screwed because of the fuel surcharges levied by British Airways, their primary option for flights to Europe; though AA also made awards widely available on their own metal at double the base price. And this week United decided enough was enough, and decided to roll it on back: if they’re going to print miles they can now primarily be used for coach tickets on United. And if United has to pay a partner for a premium class ticket, you, the passenger, are also going to pay by increasing the mileage required.

But what if you were someone (like one of my readers who wrote me today) who flies frequently and primarily redeems for international coach tickets (if you read the blogs enough you start to believe that nobody redeems points for international coach tickets)? He describes himself as a “traveler” — he actually wants to go visit as many places as possible, which he does by flying coach instead of burning miles on business class. For him, almost nothing has changed.

And that’s where I am now: we were living in a crazy arbitrage age. Airlines printed miles but they didn’t bother to change the value of the currency. That can’t go on forever. And it didn’t.

For people who love to travel and can survive without business class, nothing has happened. The airlines will continue to print points – churn away! And before you go burning those points over the next 3 months as some blogs are suggesting, take a deep breath and think about whether you’d prefer to fly more frequently in coach in the coming years. That, sure, business class is better – but isn’t it still great to be able to travel at all? Why burn off those miles when you can take a few trips in coach.

That’s not for everyone, I understand. But if you’re a “traveler” and not just someone who likes to fly up front, you’re probably sitting and laughing at all of us who have been freaking out.

And if you are someone who likes the good life, there are plenty of redemption options available — go get yourself the Amex SPG card and have a field day.

US Airways 100% Mileage Purchase Bonus Is Back (Again)

I just received an email that US Airways is (once again) offering a 100% bonus on mileage purchase. It looks like this is targeted, because the text of the email (below) reads: “As a first-time buyer, you can get a 100% bonus when you buy miles – up to 50,000 miles.” 100,000 miles will run you $1881.25, and the offer expires November 30th. Here’s the link to see if you’re eligible.

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So Here’s Which Miles You Should Use for Trips to Different Regions

In general my mantra about the whole frequent flyer thing is to try and look on the bright side – that for all of the complaining that this community tends to engage in, there’s been so much good….for years many of us have gotten to travel all over the place, in comfort, for a pretty reasonable number of miles, most of which we had accumulated by doing things other than traveling. As I’ve written here a whole bunch of times, it’s been a golden age.

Until today…and even I can’t see a single shimmer of light in United’s announcement today. For those of us who use miles to travel internationally in business class, the game is, while not exactly over, considerably more over than it was.

One thing I’ve found interesting: People love JetBlue and Virgin America. Love them. People speak far more highly of those two airlines than they do of any other, in my experience. And neither has anything resembling a real frequent flyer program. They’ve chosen to compete through service and experience, and (largely) they’ve succeeded. The big carriers have (in large part) decided to compete using frequent flyer miles (and relied on the banks to keep these programs profitable). And travelers have become addicted to these programs (and to the loopholes, games, and general fun of trying to accumulate as many points as possible) to the point where making any change to the program leads to a tremendous amount of blowback.

Now, blowback and loss of business are two different things. Delta has an embarassment of a program, but it’s grown into a profitable behemoth of an airline. The lesson? The ability to redeem those frequent flyer miles at a reasonable rate does not a profitable airline, make. Sorry, but it’s true. And United woke up to that and, unfortunately, we’re feeling that pain today.

But enough with the whining (for now)…I thought I’d share the best frequent flyer programs to redeem for business class trips to different regions, now that United’s chart has gone off the rails for partner travel. I’m assuming departures from the US, and I’m also assuming that US Airways will be disappearing soon enough, so I’ve left them out. I’ve also skipped North America and South America since those didn’t change much with the devaluation today.

TO EUROPE
If you’re going to Dublin from Boston, Avios is 50,000 points round trip on Aer Lingus with no fuel surcharges. If you’re flying to Dusseldorf or Berlin, Avios charges 80,000 points round trip on Air Berlin, with no fuel surcharges.

If United actually has award availability you are generally better off using ANA’s points – their distance-based award chart starts at 63,000 miles in business class roundtrip from New York to Dublin or London. Most of Europe from most of the US will max out at 90,000 miles roundtrip in business class. They do not impose fuel surcharges on United or Air Canada metal (but they do on just about all other airlines to Europe). Membership Rewards and Starwood both transfer to ANA.

TO AFRICA
If you’re going to Accra or Lagos, you should use those ANA points – it’s just 90,000 miles with no fuel surcharges when you fly on United metal. If you’re willing to fly via Dubai, you could use about 100,000 JAL miles (from Starwood) on Emirates. Unfortunately if you’re going anywhere in Africa via a more direct route you’re either going to need United’s now-miserable award chart, or you’re going to pay fuel surcharges. You may decide that 90,000 miles + $500 or so in surcharges is better than 160,000 miles (ie, are 70,000 miles worth more than $500? Probably).

TO MIDDLE EAST
Using JAL points (transferred from Starwood) to use on Emirates generally makes the most sense. They have a distance-based award chart where you’ll pay about 85k-100k miles roundtrip with no fuel surcharges for most Middle East itineraries.

TO ASIA
American Airlines is 100-110k for business class to Asia, which is fantastic if you can ever find availability. Korean (via Ultimate Rewards) charges 125,000 miles round trip (150,000 to Southeast Asia). If you can get on United metal, the 140,000 miles they charge don’t seem so crazy anymore for business class. You can also use Avios points on Cathay, which will also run you 140,000 miles with no fuel surcharges (assuming you’re flying nonstop to Hong Kong – it’ll be additional mileage if you need to connect). Unfortunately you’ll find surcharges when you use ANA points (even on United metal) when you fly to Asia.

TO AUSTRALIA/NZ
ANA allows you to fly on Air New Zealand with no fuel surcharges. Round trip flights in business cost just 90,000 miles for flights from LA (good luck finding availability on that, btw). If you can actually find availability Alaska Airlines charges 105,000 miles round trip on Delta or 110,000 on Qantas.

Any that I missed?

My Fears Realized: United Guts Their Award Chart

3 weeks ago I wrote this post saying that I was fearing we were reaching the end of the frequent flyer game because of a combination of devaluations and lack of availability. I noted that we were basically just left with United for reasonably priced international premium award availability.

That’s all over.

United is making very significant (and very terrible) changes to their award chart for reservations made after February 1st. The highlights (is highlight the right word here)?

– The only changes in North and South America are that coach awards to Hawaii now cost 5,000 miles more roundtrip and business class awards to South America increase by 10,000 miles roundtrip. Not a huge deal.Alaska flights increase 10k in coach and business class. That’s annoying.

– They now have different redemption rates for partner awards and, as you would guess, those rates are much, much higher. Biz awards to Europe increase 40k roundtrip. Yes, that “free” business class flight Germany on Lufthansa now costs 140,000 miles in business class. First class awards to Europe are an insane 220k roundtrip. On United metal biz goes up to 115k r/t. United metal business class to the middle east increases to 140k, and on partners to 160k. Africa goes to 160k in biz on partner airlines. Business class to Japan increases 10k on United and 30k on partners. Rest of Asia goes up 20k for everyone in business class. First class is insane, with tickets increasing from 160k to Australia to 260k on partners. Oh here’s the worst part: if ANY leg of your trip includes a partner (even if other legs are on United), you’ll be charged the higher partner rate. Awesome.

– Flights within Asia and to Northern South America are no longer eligible for free elite upgrades (what they call CPUs).

The full chart can be seen here.

Remember all those times I’ve (and others have) said not to hoard miles because they’ll be worth less in the future. This is why.

So what does this mean? It means that business class international travel is going to cost considerably more, and first class award travel is just ridiculous. We’re now beholden to United’s own availability, because we’re paying a significant premium to fly with partners.

But really – are you going to switch to Delta? It’s worse over there. American? Enjoy those surcharges on BA. I still think we’re stuck with United as the best (“best”) option.

Here’s one thing I’m doing, though: I’m moving my everyday spending to either the Barclays Arrival card (for the 2.2% cash back on travel purchases) or to the Starwood Amex, where I can transfer those points to a bunch of partners. I’m now much more interested in accruing miles that can be used across a number of programs (which is why if you fly Delta most of the time – unless you’re a high level Elite – I would put those miles toward Alaska Airlines, where you have some flexibility in where they’re redeemed). Membership Rewards, while not great, still offers some transfer options between Aeroplan, ANA and Singapore so you can redeem on some partners without additional miles required (though there will be fuel surcharges on some redemptions). Ultimate Rewards becomes a bit less valuable because I primarily use it for United transfers, though it’s still useful for Hyatt and British Airways (for short-haul flights).

It’s going to take a day or two to digest all of this – if you mostly use miles domestically there’s not much change for you. But if you use miles for international premium class travel, it may be time to focus day-to-day accrual on that Starwood card. More to come…