Aviation Big spenders to benefit more from frequent-flyer changes By Robert Silk / March 27, 2016 Share 1 -- The value of frequent-flyer rewards miles at the Big Three carriers is about to take a hit. The new chart put into effect last week by American Airlines’ AAdvantage program is one of three significant loyalty program changes that the major U.S. airlines plan to implement by the end of June.American is planning further changes, as are Delta and United. Beginning sometime in the second quarter, AAdvantage will follow Delta and United in awarding frequent-flyer miles based on dollars spent rather than on distance flown. On June 1 or soon after, Delta will begin calibrating the price of SkyMiles based on demand for a destination. Overall, said Chris Lopinto, co-founder of the Expert Flyer website, it’s airlines, rather than consumers, that will be the winners.“The value of a mile is never going to go up over the long term,” he said. “My recommendation is if you have miles and you can, spend them. The longer you keep them, the less they are worth in the long run.”The new AAdvantage awards chart, which went into effect March 22, made it cheaper to redeem miles for short domestic flights but more expensive to use them for many international destinations. For example, coach section flyers can now obtain reward tickets on flights of 500 miles or less for as little as 7,500 frequent flyer miles one way. Previously, those flights cost the same minimum, 12,500 miles, that other domestic flights did. Similarly, American has reduced the number of miles it costs to obtain business class reward tickets on short flights. Instead of 25,000 miles one way, those tickets now cost 15,000 miles.It also dropped redemption levels on flights to Mexico, Central America and the Caribbean, though by smaller amounts. The airline offset the reduction in those mileage costs with increases in the redemption levels necessary to obtain free tickets to Hawaii, Canada and Alaska, as well as long-haul international destinations. Coach seats to Europe, for example, now start at 22,500 miles one way instead of 20,000. Business class Europe tickets start at 57,500 miles, up from 50,000, and first class Europe tickets now start at 85,000 miles, up from 62,500.American also increased redemption prices for tickets to portions of Asia and South America. The bigger change for AAdvantage members will come by the end of June, when the program will follow SkyMiles and United’s MileagePlus in awarding loyalty miles based on how much members spend, rather than how far they fly. Under the revised program, standard AAdvantage members will earn 5 miles per dollar that is spent on tickets and airline-imposed fees. The move will benefit business flyers and other frequent high-end travelers while not helping cost-conscious leisure travelers, said Brian Karimzad, director of the website MileCards.com. That’s especially the case because Gold members will earn seven miles per dollar spent, Platinum members will get eight and Executive Platinum members 11.Under the existing mileage-based accrual program, a flyer from New York to London earns approximately 7,000 miles per roundtrip. But under the new program, that same flyer purchasing a fairly typical $1,000 ticket would earn 5,000 miles. A business-class traveler who is an AAdvantage Executive Platinum member would fare far better. Under the current rules, that New York-London ticket would yield 41,260 miles. But a $6,226 business-class ticket, a price found on an AA flight search for April, would yield more than 68,000 miles. Though there are winners and losers in these scenarios, Karimzad said that on balance, people are likely to accrue fewer miles overall. “The reality is this is a cost-saving measure for the airlines,” he said. Still, Karimzad said that filings posted by Delta and United after they switched to a dollars-spent-based mileage accrual early last year don’t show an appreciable difference from earlier years in award tickets used. In 2015, he said, 7.2% of miles traveled on Delta were award travel, compared with 7.3% in 2011. For United, award travel comprised 7.5% of miles traveled in 2015, down from 7.7% in 2013. The change Delta will implement to SkyMiles as early as June 1 could be a sweeping one. The carrier hasn’t provided details on the plan, other than to say that “the number of miles needed will change based on destination, demand and other considerations.” But the move to peg redemption costs to demand the same way nonredemption tickets are sold is groundbreaking among the U.S. legacy carriers. It’s not a novel idea, however. At Southwest and JetBlue, the cost of reward tickets is tied to the retail price of the ticket, with reward point debits increasing or decreasing as the ticket price fluctuates. Delta said that even when it implements the demand-based pricing, most award prices will remain unchanged. The carrier also said it is more than doubling the number of SkyMiles tickets available at the lowest prices compared with last summer. Lopinto, though, noted that the general public never really knows the extent to which Delta is changing its redemption prices, because the carrier removed the redemption charts from its website in February 2015. “There’s no transparency,” he said.