Recent news about airlines changing their frequent flyer programs has left some passengers wondering if their bank of miles still has the value it once had. The answer is probably not, and now may be the time to start thinking about getting the most out of them before the rules change again.
We've written before about the proclivity of airlines to change the terms of their frequent flyer programs, usually favoring one class of passengers or another. Airlines can pretty much do as they wish with their programs. The fine print in the terms and conditions tells us so. Airlines can even end their programs with little or no notice. That would probably be a bad public relations move, but it doesn't change the fact that the language is there for passengers to read and ponder. Is it time to cash in your miles and rethink the whole loyalty thing? It depends.
It's no secret that the airlines are reaping in higher revenues from add-on fees for every convenience imaginable like checked baggage, priority boarding, choice seating, packaged food and more. The other big money maker for the airlines is the business traveler who, as an elite frequent flyer and one who usually travels in a premium cabin, often gets these services for free. The added perks are often part of the cost of the higher-priced ticket she or he usually buys and the airlines are doing more to lure this type of flyer, including skewing the frequent flyer program rules to favor them. This isn't necessarily a bad thing if you hold status with an airline but for others who earn miles intending to cash them in for flights and not much more, the changes could be unsettling.
Several U.S. carriers have adjusted their programs this year to give more credit (miles or points) to those who pay for more expensive tickets. Miles earned for miles flown is no longer the standard among the largest carriers and passengers buying discounted tickets will find that they will earn a far smaller percentage of miles when basing credits on the price of a ticket. For elite members, the ticket price might still dictate the number of miles credited, but they have the added perks of free upgrades, choice seating and boarding and other benefits. Miles flown also still count toward requalifying for elite status. It's those perks, not just the award tickets that appeal to the very frequent flyer. So, what about those so-called free tickets?
When it comes to cashing in the miles for flights, there have been a few program tweaks among airlines but the results are slightly more balanced. Many airlines now allow a one-way award ticket for half the required number of miles and some have even lowered the mileage threshold for their most basic award levels which you might know best as the ones with the most restrictive dates and seats. Where this is all headed is anyone's guess but the prudent thing for passengers to do is to reassess the value of their mileage banks and consider taking action sooner than later.
Airlines have already attached fees to their award tickets. They have also included fuel surcharges on some routes, rendering many free tickets anything but free. Yet, with alliances, there are many more airlines to use your miles on. Just don't expect the limited number of available seats to make things any easier. Aside from making sure your miles don't expire by engaging in some mileage earning or burning every now and then, you should also consider ways to make the most of the miles you still have.
As a good rule of thumb, consider most airline miles to be worth about a U.S. cent and a half each. You would be wise to do some math of your own. A free hotel night could set you back 35,000 miles but if you value them at the average rate of 1.5 cents each, that night is costing US$525. The same goes for a domestic airline ticket. There are times you might be better off just buying the discounted ticket and using the miles for something bigger like first class international travel. The same holds true for other mileage redemption options like airline lounge memberships, magazine and merchandise purchases and transferring miles to other accounts which airlines will typically charge you about 1 cent per mile to do in addition to any fees. In that last case, you might be better off just putting your award ticket in the recipient's name rather than transfer the miles to that individual's account.
Airlines are the first to remind you that miles have no cash value. It's true. They don't. But given the numerous ways to earn and redeem awards, airlines are making it easier for you to empty your mileage bank. Despite their lack of cash value, frequent flyer miles are still a financial liability for the airlines. That's why you should have at least some idea of what those miles might be worth, especially since the rules could change yet again.