As travellers return to the skies, many, like Meredith, have amassed larger than usual totals in airline and credit card rewards programmes. And they are starting to spend them. United Airlines’ Mileage Plus programme has had multiple record-breaking days over the past few weeks as customers have flocked to redeem miles, said Michael Covey, the managing director of the United programme. “The demand is hitting the books in ways we’ve never seen before,” he said.
Several factors make now the time to cash in points.
Flights booked with points on the major US carriers are fully refundable. That means if you need to cancel the trip, all your points and any associated fees will be returned without any penalties. Tickets bought for cash, in contrast, typically offer a credit for a future flight rather than a refund and may charge fees, so your money is tied up with the airline. Refundable tickets can be purchased, but they are more expensive.
This difference, between ending up with a credit or a refund, can loom large for expensive trips like a family vacation overseas. Some travelers are “still uncomfortable with international travel,” while conditions remain in flux because of the pandemic, so using points to book a flight to a foreign country can offer more peace of mind, said Jamie Larounis, who writes about loyalty programmes on his travel website, the Forward Cabin. He is now also seeing some worry about flights near Eastern Europe because of the Russian invasion of Ukraine.
BETTER NOW THAN LATER
Many travellers are sitting on larger than ever point balances, both because they haven’t been redeeming their points and because they’ve been adding to the pile over the last two years with credit card purchases tied to airline loyalty accounts. According to a study by ValuePenguin and OnPoint Loyalty, the five largest airline loyalty programmes — Delta Air Lines’ SkyMiles, American Airlines’ AAdvantage, United Airlines’ MileagePlus, Southwest Airlines’ Rapid Rewards and JetBlue’s TrueBlue — ended 2020 with $27.5 billion in liabilities, up $2.9 billion from 2019. Customers earned about half as many points in 2020 as they did the previous year, and redeemed just 10% of their available points compared to 30% the previous year.
The most important reason to use points now is that they may have less buying power over the coming years, Larounis said. Airline and hotel points are like currencies owned by companies, and those companies can value their currencies however they like by changing the cost of redemption. Helane Becker, an airline analyst at the investment bank, Cowen, said airlines have devalued points multiple times over the past few years and she expects that practice to continue.
This is already evident in both the airline and hotel sectors. Alaska Airlines recently upped the cost to book some of its first class tickets. Hyatt Hotels recently increased the points necessary for some hotel stays when it implemented a new peak and off-peak pricing programme.
Companies know that “people are sitting on big piles of miles and have a lot of pent-up demand for travel,” said Larounis of the Forward Cabin website. “There is no downside to them raising the cost of award travel.” That is especially true of airplane seats in the premiere cabin, he said. Some leisure travelers, who may have been content in economy class seats, are now purchasing seats in the front of the plane where passengers are a little more spread out. “They see it as safer in regards to COVID,” Larounis said.
Still, the airlines are mindful of those with fewer miles. “We have more seats available for less than 10,000 miles than ever,” said United’s Covey.
NUDGES FROM THE AIRLINES
Airlines are encouraging customers to use their points. Rewards tickets booked on Delta airlines through the end of this year will count toward elevating the customer’s loyalty program status. Previously, only flights paid with cash counted toward program status. United Airlines recently joined the list of airlines that allow customers to combine “money plus miles” to buy tickets, so “members can redeem miles sooner and not wait until they have a large total,” Covey said. United also had flash sales in February for tickets to London and Australia purchased with points, and now allows members to use points to buy food and beverages on flights.
MORE PLACES TO GO
Travel itself is less daunting now with more countries eliminating COVID testing for vaccinated passengers. London, one of the most popular destinations for US travelers, dropped its testing requirement on Feb 11. Thailand, Vietnam, Australia, and other countries are opening up to tourists.
Alison Carpentier, the director of guest loyalty at Alaska Airlines, which is part of the Oneworld alliance of 14 global airlines including Cathay Pacific and Qantas, said the availability of tickets purchased with points “has been good as international travel starts to open back up.”
MORE SEATS AVAILABLE
Airlines want to fill as many seats as possible so many now make almost all of their seats available for purchase with points, instead of just a subset. The prices set by most airlines fluctuate, so it pays to check back periodically before the flight to see if the number of points needed has come down.
Business class seats on international routes are more plentiful than usual now because demand has been low during the pandemic. Corporate travel is still down and companies that allow employees traveling overseas to purchase business class seats so they can arrive (somewhat) refreshed for their meetings are not buying as many tickets.
TAKE TIME TO SEARCH FOR THE BEST DEAL
Redeeming points to capture the most value can take some sleuthing. For example, at the time of this writing, a business class flight on Delta from New York to Paris costs 320,000 SkyMiles points on a randomly selected day in March, but a similar flight on Air France costs only 75,000 miles plus $213 with Air France’s Flying Blue loyalty program. American Express, Citi, Chase and Capital One have partnerships with Air France, so their customers with membership rewards points could transfer them to Air France, making the cost just a fraction of the Delta ticket.
A new website Point. Me, which made its debut in February, aims to help travellers see all of their redemption choices, according to the company founder, Adam Morvitz. Travellers can enter the dates and cities for their potential trip and the site will compare how many points they need from various airline and credit card programs, factoring in partnerships that allow points from one program to be transferred to another, like the New York to Paris scenario above. The site also offers concierge service for those needing some hand-holding through the points maze.
Airlines are still adding back routes and flights, so it may not be easy to find exactly what you want, said Tiffany Layne, a travel consultant and owner of LaVon Travel and Lifestyle in New York City, but she said booking as far in advance as possible will give you the most choice.
Larounis agreed: “There’s rarely a downside to booking with points, even very far out. If your plans change you have full control.”
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