Cash or Miles?

Cash or Miles?

With the cost of flights continuing to rise, we’re starting to see stories in the media about how frequent flyers are spending their miles instead of dollars when they deem the cost of a flight to be too much.

We decided to do a little research on the topic and asked a group of frequent flyers three questions. All of those polled are frequent flyers who have volunteered to be part of our advisory board about frequent travel programs. Most are elite members and many are some of the best customers of their chosen airlines and hotels. Most, but not all, are based in North America. This study would definitely not stand up to scientific scrutiny, but we think the findings are still of interest and most likely reflect the feelings of a majority of frequent flyers — and will give you food for thought about where you stand on the issue of cash or miles.

The first question:
In the last three months have you used your miles for an award ticket that you normally would have purchased because the cost of the flight has gone up so much recently?

The responses here were almost equally split between those who said yes and those who said no, with more “yes” answers by a very tiny margin. “Yes, on a trip now, and have an employee on my miles with me. Saved $2,000,” commented one flyer.

While another, answering “no” had this to say: “Prior to this year, nearly half the time I redeemed an award ticket, I ended up paying a fee to redeposit it. Because the fare was so low, it wasn’t worth the miles. This may change, however.” It sounds like the traveler’s “no” is on its way to becoming a “yes” and the statement ends with, “Realize of course that getting an award seat will be much harder, so get used to paying double (50,000 for a domestic award) to redeem an award.” This traveler was not the only person who expressed concern about the mileage cost of an award ticket — more people commented on this fear than any other.

Another “no” was also very close to a “yes”: “No, although I have looked. While prices for tickets have gone up, it is harder to get mileage seats.”

Another frequent flyer saying “yes” commented, “In fact, I ended up using a J class [business class] award. Saved $1,000 on what the economy ticket would have cost (and wasn’t charged the fuel surcharge).”

And the final “no” voter had this to say about miles, “I used them before prices went up.”

The second question:
Do you anticipate using your miles for an award ticket that you normally would have purchased because the cost of the flight has gone up?

Of the three questions, this one had the highest percentage answering yes. In fact, the yes votes were more than double the number of those who said no. And only a very small percentage did not have a yes or no answer to this question.

One traveler was adamant about using miles: “I will use my FF miles more because the fares have become too expensive. If I can’t get a flight with miles, I just won’t go…”

Another was more practical: “It depends on whether I am paying for it or can expense it. It also depends on if it makes a difference on obtaining elite status.”

And yet another sees it merely as a matter of numbers: “My threshold was always $2-300.00. So I am sure I will use miles more often.” And once again, the fear that mileage amounts will increase was expressed, “Hopefully. Not many 25,000-mile awards are available any more. All go to 50,000.”

The third and final question:
Do you see your frequent flyer miles as more valuable now that tickets are becoming more expensive?

The yes answers are the majority here, but by a slim margin and throughout, those who answered yes voiced concerns about increased mileage costs for flights and shrinking seat capacity — it’s safe to say that no one is seeing a rosy picture in this regard.

“Yes, good point — it will be good to have the option to cash in miles for tickets (until the airlines double the miles required),” mentioned one flyer.

“Slightly. But availability is bound to shrink with the capacity reductions,” said another with a similar fear that what might be good now, will surely disappear soon.

“Yes, if we can redeem them and if the airlines don’t increase the miles needed, which they tend to do.” And this from another, “A little, but they are being so devalued (especially Delta) or impossible to redeem that I still can’t burn them fast enough.”

And yet another similar “yes” response: “Slightly. But availability is bound to shrink with the capacity reductions.” And another, “Yes, but I fear that the cost of mileage redemptions will also increase.”

Another flyer had this interesting comment in regards to loyalty: “YES — and I am also more open to various airlines and ticket options (e.g. Spirit last week for $34 RT DTW-LGA) rather than opting for same old airline or frequent flyer ticket.”

Another respondent summed it up thus: “Mark my words. I expect the airlines to soon raise the mileage requirement for awards or eliminate the saver awards. I expect 50,000 miles to be the standard for a domestic coach award, and 100,000 miles required for a coach roundtrip from North America to Europe. End result, frequent flyer miles will be less valuable.”

Of those saying “no,” the comments ran along these lines: “NO — less valuable due to stricter capacity controls and higher mileage amounts needed for flights.”

“No, because the programs have devaluated miles so much.”

“Sadly no, as they are less available. I have noticed that while double miles used to get you a ticket if there was an open seat, it appears they are now limiting the double mile anytime seats. You can buy the seat, but not get it for miles even if you use double. I think it is only going to get harder.”

“No. Quite the contrary — because tickets are more expensive, the airlines are essentially forcing me to use miles for tickets I didn’t want to use them for. I prefer to save them for far more luxurious vacation trips, but am stuck using them for even domestic midcon trips to avoid paying $500+ for a roundtrip ticket. While the cents per mile equation may increase for the miles now, the actual value has decreased.”

“No, because the miles required have increased and with the airlines cutting capacity and mothballing old planes, the chances of actually using the miles for free tickets is about zero.”

And finally, “No. They have very little value. What’s the point of having points if you can’t use the points freely? That’s why I have been focusing my attention to hotel loyalty at Starwood and Hilton chains. I like the fact that if there is a room available, I can have it for points. Southwest used to provide this flexibility but even they have stopped it.”

Some final observations: not surprisingly, those who said “yes” to the first two questions were more likely to also say “yes” to the last question. So those who think their miles are worth more now are acting on their belief and spending their miles.

And for an opposing view, one traveler had this to say, “My answer is ‘No’ to all three questions. I use my miles almost exclusively for overseas business and first class travel, that is, for tickets that have always been very expensive.” For this traveler, life will go on as usual — he just might have to spend more miles.

With the cost of flights continuing to rise, will there be a “sweet spot” for award redemption before the airlines all raise their award mileage redemption amounts? So far, only American has raised the cost of their awards in miles. Most all of the airlines are opting to have frequent flyer members pay out more cash for awards in the form of award fees (such as US Airways’ decision to implement an award “processing fee” between $25-50, depending on where you’re flying and Delta’s new “fuel surcharge” on award tickets). We suspect we will see more frequent flyer members cashing in their miles if fuel costs and airfares continue to rise and their faith in their frequent flyer program continues to decline.

How do you feel about this topic? You can tell us at WebFlyer.com’s “Air Poll.” And you can see the results of the poll thus far in the “Reader Meter” section of this magazine.

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