What All the Recent Changes in Frequent Flier Programs Mean for Travelers

By Nomadic Matt | Published May 8th, 2014

Many of you may have noticed the many changes to frequent flier programs lately. Delta has completely revamped their program to be revenue-based instead of distance based, United has devalued their reward chart and added a revenue requirement, Air Canada devalued their rewards last year (twice), and American Airlines has made a number of unannounced changes to their program, including adding two new reward tiers.

The North American frequent flier market isn’t looking so good. Across the world, frequent flier programs were never that generous to begin with, and though there have not been any major international program changes as of late, I’m sure they will one day follow suit.

But that’s something to worry about in the future. For now, let’s discuss what has changed. For us budget travelers, what do these changes mean? How does this affect travel hacking, loyalty programs, and everything in between?

Here is my take:

Miles are like travel money. The more you have, the better. But just like regular money, miles lose value over time through inflation and overprinting. Essentially, the more miles the airlines “print”, the less valuable they become. A mile today doesn’t take you as far as a mile did yesterday. There are so many miles in circulation right now (there are more miles than there is money in the world) that it’s become too easy to earn and, in some ways, redeem them.

To correct this, airlines devalue their miles by increasing the amount needed for a reward ticket and placing restrictions on when you can use them. This happens every few years, and while it’s never good for the consumer, it’s to be expected. The airlines are constantly changing their award programs. Like others, I’m only really bothered when there isn’t any warning. (Once US Airways and American merge their frequent flier programs, I expect a big devaluation to occur.)

That is why it’s important to spend your miles when you have them. Miles hoarding is never a good idea because they are a depreciating asset. Use them once you have enough for the reward ticket you want because you never know when the programs are going to change. (Disclosure: I’m kind of a hoarder. I have over 250,000 American Airlines miles, though I’ve redeemed over 100,000 this year so far.)

Luckily, recent changes don’t spell the end of travel hacking and your ability to score free trips. Airlines are going to require more miles for travel rewards and there will be less availability of seats. However, while having to use more miles sucks and devaluations will continue, as long as you can still rack up a ton of points through credit card bonuses, online shopping, fake spending, surveys, and more, these frequent flier programs still continue to work in our favor. Miles are still so easy to get that the end is not near.

For now, the game continues. It may not be as good as it once was, but it’s still one worth playing. (Note: You can also use the Chase and American Express programs as they transfer to multiple travel partners – that way your points aren’t tied to one program.)

Moreover, I don’t believe these changes spell the demise of frequent flier programs. The programs have clear perks, including upgrade access, priority boarding, lounge access, and quicker check-in at the gate.

But since you receive a lot of these perks with branded airline credit cards and so many miles are being sold to banks as card sign up bonuses, there is currently a glut of elite status members and miles.

In light of that, many of these changes are meant to reward an airline’s best customer – the travelers who pay full fare. Those are an airline’s bread and butter, not the person who flies the most. Moving to a revenue-based model serves to reward those high-spending travelers.

I’ve gotten a lot of emails from people worried about these changes. Should they stay loyal? Are miles over what does this mean for them? The future doesn’t look bright but now is not the time to completely worry.

In light of these changes, I once again reiterate that unless you are flying enough to earn mid-tier status on an airline, I don’t think you should be loyal to one specific airline. The vast majority of branded airline credit cards offer essentially the same perks as the lowest level status – free checked bags, priority access, priority boarding, and discounts on in-flight food and beverage. Mid-tier status is when you actually start to get the good perks (upgrades and international lounge access) so unless you can reach that level, it’s not worth being loyal when you can get bottom tier benefits so many other ways.

For non-frequent fliers who may only take a handful of flights a year, go with the cheapest flight and/or travel hack to collect points to travel for free. Don’t be loyal to a specific program. It’s not worth it.

The last few months have seen major changes in frequent flier programs and there will be more to come. I think most programs are going to move to reward their high-spending customers and include a revenue component for gaining and maintaining status (though that may be waived if you have the airline’s branded credit cards).

But, while these changes aren’t great for consumers, the end is not nigh. There are still plenty of opportunities and ways to use frequent flier programs to our benefit.

*****

the ultimate guide to travel hackingIf you’re looking to get into travel hacking and want to know how to earn enough miles and hotel points to go anywhere you want… without having to spend extra money or leave your couch, I’ve written a guide to travel hacking that will walk you through all of the basic and some of the advanced techniques that can be used to go anywhere for free. It also features interviews with other prominent travel hackers to give a wider range of tips and strategies you can use! Click here to learn more!

comments 20 Comments

After 4 years of flying around the world I finally signed up for a frequent fliers program- whoops. I hate thinking of all the miles I missed! I really need to pay more attention and start playing into this travel hacking business.

NomadicMatt

I didn’t get into the miles game until two years into my trip. I feel the same way.

You can’t imagine the value of the miles in Russian airlines, like Aeroflot. I’m not a frequent flier, but even after 3 years of flights, haven’t got enough miles to go from one major city to another. Anyway, you’re right about the miles, it’s like dollar – their value will go down with the time.

I’m just getting into the miles & travel hacking game myself. As someone who hates spending $$ that isn’t absolutely necessary (ahem, cheapskate), I’m trying my hand at credit card churning right now. It’s a little scary, but the only way I can make the spending requirements on most cards is to fudge it a little. :)

Alan Eames

Hi Matt

Interesting read. I have had a very good experience with my bank card here in Canada. It is a TD Infinite card. Yes it costs me a bit every year but this is how it works.

It is not an “air-miles” card but a loyalty card. Basically, for every dollar I spend, TD place an amount into an account for me. This can be used for several things. It can be used to purchase ANY airline tickets with ANY airline (no blackouts). If Lufthansa are having a seat sale, I get it. It can used for hotels as well.

Also, TD Bank are in a partnership with Expedia so if I book tickets through the “Expedia for TD” website I get triple the points. I once found a cheaper fare to Ecuador on Kayak, called Expedia and they matched the fare AND they still gave me the triple points.

My wife and I have used this card for several years and have done quite a bit of travelling courtesy of it. With two of us using the card and charging everything over $10 the points add up very fast. The most important thing is not to carry a balance so as to avoid interest charges or it not worth it so going online and paying off the balance every few days is critical.

This is not meant to be a plug for my bank rather to show that there are alternatives out there to airline cards.

Thanks for all your great blogs and tips.

Alan
Montreal

Amy

Thanks for this write up!

I use the Chase Sapphire Preferred card to accumulate points and I’m always looking for different ways of maximizing my points every time I save up for an economy flight (open-jaw tickets, etc).

Thanks for confirming that you shouldn’t be loyal to an airline unless you’re a business traveler that can easily obtain top tier status. I prefer travel hacking & finding cheap airfare while also accumulating points/miles at the same time to get a free flight down the road!

Really interesting, I keep wondering if I fly enough to warrant getting one. Great post.

I agree. I doesn’t make sense to stick to one airline hoping for the free miles which may not happen. Go for the cheapest if you travel frequently.

I just got the Chase Sapphire card and I’m pretty happy. I like how you can use the miles on every airline and that there is no foreign transaction fee (like Capital One)>

Ian

It’s like inflation in currency markets to make an apt analogy, but I just think airlines are waking up to the fact that more people are learning how to game the system, so they are closing the loopholes… :(

Money is juts a theory in practice, just like miles and bitcoins. I am very curious to see how things will turn out with my accounts at American and US Airways since I fly both of them more often than other airlines. It will be interesting. Thanks for updating us, Matt.

Grasshopper

Matt, how much money do you make off this half-ass website of yours? I can find all the “information” you have here with a simple Internet search.

NomadicMatt

You realize this site is on the Internet, right?

Trolls these days just aren’t very smart!

Craig

Matt, I’m buying your book this week. I’m curious to know if there is a minimum credit score you need to get into hacking/churning? Or if your book covers that information?

Beto

This echoes what I’ve heard from some friends who are hardcore business travelers, e.g., who spend 300 days a year in a plane. If even them are having it tough, what hope is left for the rest of us casual travelers? I have had a miles program with a Star Alliance airline for years and at least I’ve been able to redeem about 80% of my historic miles count and even got a free upgrade to business class once, so I may have not fared so bad at all. I still keep using a credit card that puts in miles on that program, but I have to see if the cost-to-benefit ratio still holds.

Gerardo

Thanks Matt, for your advice about the co-branded credit cards. I had been afraid of opening and closing accounts because they would affect my score. I’ve got a great score. The impact will not be that bad. Now I’ve found those extra miles for my upcoming trips.

Agree with your view completely. Still think there a lots of opportunities to use miles and points in spite of the devaluations.
Discovered travel hacking almost 2 years ago and have already taken 2 first class trips to Asia mostly from credit card signup bonuses. I just wish had known about it earlier. Probably missed on thousands of miles using a cashback card. Oh well better late than never!

Thanks for your thoughts on this. I recently have grown concerned about the changes. I currently have all 4 major travel cards (AA, Delta, United) to prevent me from having to be loyal to anyone and redeem those bonuses.

molly

I have used your tips and had a free flight to Europe in March and am almost ready to book a mother/daughter trip with points/miles to an exotic locale. Your book “$50 a day” was a phenomenal resource to pair with your web posts. Thanks for sharing your knowledge….it would have taken me a decade+ to research all of this! Much appreciated.

Your book sounds very interesting. Educating myself in this area is probably the only way I’ll ever get to Europe.

Leave a comment