Those who are ready to fly again may want to prioritize using airline miles over trying to earn new miles.
ValuePenguin, one of LendingTree’s financial research websites, said airlines could change their frequent flyer programs in a way that would be detrimental to some customers if a large number of unused reward miles were generated. I’m warning you.
According to a review of the annual reports of five US airlines, Delta, American Airlines, United Airlines, Southwest Airlines and JetBlue Airlines, the compensation program debt increased to $ 27.5 billion in total last year, the year before. It increased by 11.6%. Value penguins.
In addition, miles can be redeemed when the heavily exhausted aviation industry needs customers to pay cash at the ticket office.
Miles earned but not redeemed
Airplanes were one of the industries most hit by the coronavirus pandemic, but customers of the five programs analyzed earned about half (46.2%) of the miles earned in 2019 in 2020. I was able to do. Matt Schulze, chief credit analyst at LendingTree, said credit card spending has increased.
Only a small portion of those miles have been redeemed.
“Americans redeemed only about one-tenth of the miles available last year,” Schultz said. “There is no doubt that many people cashed their reward points as statement credits for groceries and other necessities, but many simply held miles and were looking forward to the day when they could travel again.”
According to ValuePenguin, JetBlue customers redeemed the most miles (18.4%) last year. That was about half of the miles customers redeemed in 2019. United members redeemed the least, less than 9%, from nearly 30% in both 2018 and 2019.
Rapid increase in compensation debt
According to ValuePenguin, accumulating reward miles without spending them would increase debt by 11.6%, for a total increase of $ 2.9 billion last year.
Southwest Airlines Rapid Rewards debt has increased by $ 1.1 billion, more than any of the airlines analyzed. The customer redeemed the most miles of all programs, but earned the most miles.
JetBlue’s TrueBlue program (the smallest of the five programs) was the only airline with lower royalty debt growth in 2020 than in 2019.
More points, less value
Delta, United and Southwest Airlines reduced the value of award points during the pandemic, forcing members to pay more points on the same flight, said Sophia, a travel expert at Value Penguins.・ Mr. Mendel said. And more changes may be waiting.
“Southwest Airlines in particular has been quite enthusiastic about changing its loyalty program without prior warning to its members,” she said, with several international airlines such as Qatar Airways doing the same. Added.
CNBC asked the airlines analyzed by ValuePenguin on Wednesday if they plan to change their award program this year. Delta said it has no plans to change its loyalty program. Southwest Airlines has confirmed to CNBC that since April 14th, more Rapid Rewards points have been required to redeem flights for all types of fares.
United and JetBlue did not respond to CNBC’s inquiries.
Mendel said he believes that devaluing miles and capping redemption of awards is for airlines with too many unused miles.
But Spencer Howard, the founder of the loyalty points website Straight to the Points, isn’t very sure. He said the risk of currency devaluation is always present, regardless of economic or global health.
“Airlines devalued before and during the pandemic, but even after getting out of the pandemic,” he said. “Price cuts are inevitable”
Howard agrees that customers now have more miles, but said airlines can control when they redeem.
“If an airline thinks it sells its seats in cash, it won’t free up award space,” he said. “We have already seen airlines reduce the number of award seats available as the pandemic converges.”
But not all airlines work that way, Mendel warned.
“Southwest Airlines and United Airlines do not limit award ticket inventory, so it’s a fair game to book all available seats in points or miles,” she said. “Both airlines Due to the use of dynamic pricing, the cost of award tickets will increase as demand increases. “
Years of “overwhelming trends” are heading for devaluation, but Schultz said not all airlines are on that route, or at least not yet.
In January, Korean Air pushed ahead with the planned devaluation of points from 2021 to 2023, and Mendel said it showed its commitment to its members rather than immediate revenue.
British Airways’ new policy aims to make booking award tickets easier, airlines say.
Steve Parsons-PA Images | PA Images | Getty Images
Last month, British Airways announced that it would double the minimum number of award seats on all flights. For example, the guaranteed number of award seats on Euro Traveler flights (airline short-haul economy flights) will increase from four to at least eight. These flights are currently bookable, but the new policy will begin on July 28th.
American Airlines, one of the airlines surveyed by ValuePenguin, announced last week a change to its AAdvantage program to make it easier for members to earn benefits, said Andrea Koos, a spokeswoman for the company. Members can receive a bonus of 250 to 1,000 “elite qualification miles” on flights up to 10 sectors on flights through August 31, she told CNBC by email.
Advice to protect points
According to Schultz, flyers don’t have to rush to spend points, but they shouldn’t save miles that haven’t been spent for years.
His advice is, “Use your points early.”
Miles and points can be redeemed for a variety of things, but most people can redeem them for flights, but Schultz added, “usually this is the way to maximize the value of reward points.”
Howard agrees that air travelers should not accumulate miles, but prefers another way to protect them from changes in their rewards program.
“We recommend using a credit card that earns points, such as Amex membership rewards.“ This helps prevent loss of value because you have the option to transfer your points to various airline loyalty programs.”
What about airline points?Use them now, the report says
Source link What about airline points?Use them now, the report says