What the Latest Frequent Flyer Devaluation Means for You

airline priorities

As you may have heard, American Airlines is joining United and Delta in giving you frequent flyer “miles” based on revenue rather than distance flown starting mid-2016. So for most of us stuck in the back of the plane, that means we’ll be earning fewer loyalty points for each plane ticket on the three largest domestic airlines. In American’s case this will be only 5X the price of a ticket. So if you fly far away but only spend $400, you’ll get just 2,000 AAdvantage “miles” for it. That’s the same as lousy Delta but less than the 7x factor for United, so you’d get 2,800 miles for the same flight on United that would earn you 2,000 on American or Delta.

The picture gets much better if you’ve made elite status and the more you fly the better it gets, as you can see on the chart below. There’s just one problem with that: with rare exceptions, the only people who ever reach elite status are people who travel often for their job. And those people usually don’t pay for their own tickets. But on American you have to get to Premier Silver just to get the same earnings as Joe Schmo flying twice a year on United.

travel hacking American

Southwest is either in the middle or better depending on your fare. At their lowest “Wanna get away?” economy level you earn 6 Rapid Rewards points per dollar, but at the higher “Anytime” fare level you get 10 per dollar, vaulting past the Gold level of elite status at its legacy airline competitors. Combine that with two free checked bags, the ability for families to easily sit together, drinks, and a snack and Southwest is a slam dunk choice in most cases. You can even fly them to Mexico, so always check their site when you’re pricing out flights—they don’t show up on the likes of Expedia.

Rapid Rewards earning

On top of changing how loyalty points are calculated, American also devalued their awards chart for upcoming trip. In nearly every category, more miles will be required to cash in for a ticket than is required now. Fewer points earned on flights, more required to travel. That’s a nasty combination. It certainly begs the question, “Why be loyal to any of these airlines?”

Here’s my opinionated strategy to follow if you’re flying out of or within the United States:

  1. Try to fly on a foreign airline instead of being loyal to any legacy U.S. one. Most will still earn you mileage on one the the three main alliances and you’ll get more for that fare, like meals, drinks, and baggage.
  2. If flying within the USA, go with an airline that gives you more like Southwest, JetBlue, or Virgin. You can earn free flights faster and won’t get dinged for as many gotcha charges.
  3. Don’t hoard your miles unless you’re trying to reach a specific goal. If we’ve learned anything the past few years, it’s that airline loyalty points are likely to keep becoming less valuable for leisure travelers over time, not more valuable. Use them before the award chart gets worse.
  4. Assume your best path to a free flight is not flying, but spending. What the airlines want you to do is spend more on your flights. What you want to do is game the system by focusing on the right credit cards instead. Assume loyalty flying only helps if you’re trying to reach elite status.

The Plastic Travel Hacking Solution

Don’t give up on these programs: they’re still a great way to get a $2,000 ticket for just the price of taxes and fees, as I did recently for a trip to the South Pacific I’m taking next year. To really win at this game now though, you clearly need to either be a frequent business traveler or you need to make the most of credit card offers. Probably only 20% of those miles I cashed in were from flying on American and its partners. The rest were from two AA credit cards.

If you’re based in the U.S. – or at least have an address and bank there – you can routinely get enough miles for one free ticket just from the initial sign-up bonuses. Often one sign-up will give you enough miles to get to Central America or Colombia, sometimes enough to get to Europe. Then use the card for all your bills and purchases and you can rack up points much more quickly than by flying.(Obviously you have to have decent credit and you need to be able to pay your bills. If neither of those are the case, keep working on your finances to get there.)

Use the dining programs and online shopping malls and build the points up faster still. Last time I bought something through one of those online malls I got 7 points for each dollar. It’s not uncommon to get 3 from Walmart.com or Apple.com, much more from florists or clothing vendors.When I dine or drink at certain local places I can bike to from my house, I earn 5 airline miles for every dollar. Pints for points!

earn free flights

The best airline cards even give you many of the perks of elite status, like priority boarding and a free checked bag on domestic flights. Watch for good sign-up bonuses and get the one for the airline you fly the most. Then get another like Chase Sapphire Preferred or the Amex Starwood one that allows 1-to-1 points transfers to top off your balance on various airlines.Most of them now come with a chip and no foreign transaction fees.

There are no affiliate links in this article, so I have no stake in which cards you use. I will say that lately I’m focusing more on the hotel ones because they’re not so restrictive. I’ve got a buttload of points banked with Hilton and Intercontinental that will keep me from paying for family hotel rooms for quite a while. They’re easy to cash in and the points to dollar ratios are good.

If you’re willing to pay some money to have the best point-building strategies delivered to you on a silver platter, sign up for Chris Guillebeau’s Travel Hacking Cartel. I get lots of great tips from there every month without having to go look for them. Otherwise follow the bloggers who talk about this stuff every week, starting with The Points Guy or the multiple blogs at The Boarding Area.

Getting mad about program changes won’t make you feel any better. Beating them at their own game will.

Comments
  1. Thomas E Mayer Jr

    I wish you would from time-to-time, you would put your articles like about “getting free things” when traveling for example, into a simple eBook on Amazon for about say $3.99. Then this single senior traveler could actually afford to have your your important insights at my finger tip even on my SSA payout.

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