Collecting Miles & Points is very fun – and even more fun is redeeming them for aspirational awards which can potentially cost thousands – like travel in First and Business Class all around the world. Miles & Points are an incredible currency that allow us to see the world in ways normally we would only dream about – however, the airline and hotel industry changes rapidly and it seems like almost every day there is yet another airline or hotel changing their loyalty program and sparking miles & points devaluations.
most negative miles & points devaluations across airlines are triggered by Delta
What are Miles & Points Devaluations?
A devaluation of a mile or point happens by the airline or hotel loyalty program – essentially they raise the cost of either flight or hotel awards while keeping their miles and points earning rates the same. In other words, today and tomorrow you will continue to earn the same amount of miles for a flight but tomorrow a flight in miles might cost twice as much as it does today. Airlines and Hotel Loyalty Programs love to make negative changes and then spin it as a positive: “we are releasing more seats for awards than ever before… and we have adjusted how many points those seats cost”.
Loyalty Programs Make Changes Without Notice
In the past, airlines and hotels announced major negative changes to their loyalty programs months in advance so that loyal customers could lock in awards prior to devaluations at old rates. Nowadays, airlines and hotels rarely care about their customers and seem to be making changes almost every day to their loyalty programs, and most of these changes are negative. The cost of a flight in miles keeps going up and up – with revenue-based programs, the cost of a ticket in miles is tied closely to the cost of a ticket in cash, but with traditional airline programs there is a fixed cost and a seat is either available (at that cost) or isn’t.
These days loyalty doesn’t mean much and airlines and hotels only seem to care about those spending massive amounts of money instead of loyal flyers/guests that may be spending less money on a particular flight or stay, but more in the long term (since they are loyal to that airline or hotel chain).
Loyalty programs making negative changes without notice only hurts them in the long term (for example, loyal flyers will switch to another airline or someone might not apply for that airline credit card anymore).
Elite Status Benefits are Decreasing
A devaluation of a loyalty program has many parts – either the cost of the award can go up in miles/points, you many no longer receive as many miles for a flight, or perhaps your elite status benefits are decreasing and being removed. Airlines, specifically, love to make changes without notice – for example, with the ever-changing frequent flyer program your benefits might only be worth half tomorrow of what they are worth today. Increasing the cost of an award flight overnight is one thing, but changing an earned elite status benefit like lounge access or complimentary upgrades without notice is brutal and truly shows you the face of the airline.
There have been times where airlines have adjusted elite status benefits overnight and suddenly flyers woke up the next day to find themselves no longer a priority of the airline. Perhaps complimentary upgrades were modified or lounge access was removed on some itineraries, whatever the case may be, you always need to protect yourself against devaluations.
Miles & Points Devaluations: How to Protect Yourself
There are ways by which you can protect yourself from loyalty program devaluations – for example, don’t use an airline credit card and instead use a credit card of a major transferable bank points program (since then you have flexibility of transferring points to several airlines and all of your miles aren’t stuck in one airline). Another important tip is to diversify your miles and points portfolio – don’t just have airline miles and hotel points in one airline/chain, but rather spread it out so if one airline devalues, you can have a back-up plan. Be sure to spread out your points over multiple transferable bank programs – that way if one of those programs devalue (or gets rid of an airline/hotel partner), you still have another decent program to use.
Lock in award flights and hotel awards – some airlines let you cancel award tickets free of charge and therefore if you’re thinking about taking a trip, book something now to avoid disappointment later. The same is true for hotel stays – you can generally refund an award night a few days prior to arrival and therefore it makes sense to speculatively book – even if you don’t know the trip might happen.
Spread out your loyalty – if you’re someone who has top-tier status with an airline or hotel, consider spreading out your flights across multiple airlines/programs and maybe consider if all of your top-tier benefits are worth it – perhaps mid-tier could also work for you? If so, you could consider going for mid-tier elite status at multiple airlines so you’re protected if one of them makes drastic changes to their elite frequent flyer benefits. The same is true for hotel stays – if you have already reached a target with a hotel frequent guest program, maybe try out another program instead of over-crediting to a single program.
hotel chains don’t make changes as often as airlines do
All in All
Changes happen and they particularly happen with the airline and hotel industry – they love making negative changes and promoting them as positives. We always need to be a step ahead of these loyalty programs and have a back-up plan in case one program that we use frequently devalues. If your frequent flyer program hasn’t made changes in a long time, chances are that those changes are coming sooner rather than later. Generally speaking, non-U.S. airline programs are much better at making changes – they announce them in advance and they don’t do them as often as U.S. programs.
Remember to earn miles/points with a flexible bank points program so you can transfer them wherever and whenever you feel like it. If you’re over-flying or over-staying with a specific airline or hotel, consider breaking up your loyalty and being loyal to multiple programs – don’t be afraid to experiment and keep doing so until you find the strategy that’s right for you and your family.