The skies just got a little less friendly for frequent fliers. Southwest and Qantas are the latest in a long list of airlines to tighten the screws on their loyalty programs. The new restrictions are part of an industrywide effort to eke out more profit without raising base fares.
Frequent flier value: a vanishing act
The same market forces that brought you $25 bag and $8 seat selection fees are threatening the value of your frequent flier miles. Five changes to watch for:
- Mileage inflation. Co-branded airline reward credit cards may yield fewer miles per dollar spent. In May, Qantas downgraded the transfer rate of its American Express airline credit card from .6 to .5 frequent flier points per card point. Southwest has a change scheduled for March that is less transparent, but has the same impact--reduced flight value per credit dollar spent.
- Blackout dates. Airlines may introduce or extend existing blackout dates for frequent flier travel bookings.
- Fewer available seats. A reduction in the number of "award seats" per flight is squeezing more frequent fliers out of the cabin.
- Expiration dates and reactivation fees. Many airlines are moving up the expiration dates for frequent flier points and charging travelers a per-mile fee to reactivate the expired miles. The industry standard has shifted from a 3-year deadline to 12 or 18 months. Qantas is the latest airline to reduce its active period from three years to 18 months.
- Booking and upgrade surcharges. Some airlines are charging booking and upgrade fees ranging from $5 to $150.
Airlines reserve the right to change their loyalty program policies without warning. It's up to you to keep tabs on the changing policies of your frequent flier program and use your miles to best advantage.
Get the Most Mileage from Frequent Flier Miles
Five strategies for maximizing the value of your frequent flier points:
- Time for a vacation? A little air travel at a critical moment could save miles that would otherwise expire. Many airlines reset the clock on your miles if there is any activity on your account. If you use a travel rewards credit card, consider charging a recurring auto-payment in order to validate your miles indefinitely.
- Moving on up. Upgrades may offer a better value for your miles than a flight purchase. Travel consultant Rudy Maxa recommends assessing the value of your miles on a 1-cent to 1-mile basis. If a 25,000-mile flight would 'cost' you $250 in miles and $175 in dollars, you may be better off using those miles on an upgrade and saving the balance for a more costly (per mile) flight.
- Avoid buying miles. Purchasing miles from the airline may seem to work in your favor, but you're usually better off paying for the flight directly.
- Consolidate. Tighter expiration deadlines give you less opportunity to accumulate enough points for a reward. It's more important than ever to consolidate your flight, airline reward credit card, and partner purchases into a single frequent flier program.
- Smart card. Choose the best airline rewards credit card, taking into account the conversion rate to frequent flier points.
Travel rewards credit card offers will continue to deliver value to travelers. After all, airline reward credit cards yield major U.S. airlines an estimated $4 billion, according to industry analyst AirlineInformation.org. Still, airlines are chipping away at their golden egg in an effort to provide less value per mile. With new restrictions and fees on the horizon, it's up to you to stay vigilant and make the most of your frequent flier miles.