In general, airline loyalty programs continue to erode in value as time passes. But the past year has brought some happy developments for high-end corporate travelers.
“Luxury credit cards [have] really heated up,” said Brian Karimzad, director of the website MileCards.com.
Leading the way last August was the release of the Chase Sapphire Reserve card, which both Karimzad and Jason Steele, the senior points and miles contributor for the Points Guy, said quickly became the industry standard.
The Sapphire Reserve has a $450 annual fee. But for that, travelers get a robust three points per dollar to spend on travel and dining worldwide, 50,000 bonus points after spending $4,000 in the first three months, a $300 annual travel expenditure reimbursement and access to the more than 1,000 airport lounges worldwide that participate in the Priority Pass program, among other perks.
Those points can be used directly on seven airlines, including United, Southwest and British Airways. But they can also be transferred on a point-for-point basis to partners of participating airlines, including Delta and United.
“It became so popular they couldn’t produce the card fast enough,” Steele said of the Sapphire Reserve.
Its release forced other credit card issuers to respond.
Notably, American Express beefed up the offerings of its longtime industry staple, the Platinum Card, over the fall and spring by offering five points per dollar spent on airfare purchased directly with an airline.
Amex also introduced a $200 annual Uber credit, a $200 credit on the purchase of airline ancillary products and upped its sign-up bonus by 50%, to 60,000 reward points after $5,000 in purchases in the first three months. Plus, the Platinum Card continues to offer the Priority Pass for lounges as well as three other lounge programs and access to Amex’s own highly regarded Centurion Lounges.
The improvements came with an increase in the card cost, from $450 to $550. The Platinum Card partners with 18 airlines, including Delta.
Other companies are working to keep up with the Chase Sapphire, including U.S. Bank, whose $400 annual fee Altitude card, released in May, has generous travel-related perks, including three points per dollar on some travel-related expenses.
The boost in the number of mileage points that holders of high annual-fee credit cards can get for purchases is helping to drive the widening loyalty program gulf between the rich and the not-so-rich.
In recent years, airlines have begun to award mileage points based upon the price of a ticket, rather than the distance flown. Currently, only Alaska among U.S. carriers continues to award miles based upon distance flown.
Overall, these changes are designed to benefit the airlines, with the associated redemption charts leading to an overall reduction in the value of a frequent flyer mile or point. But the biggest losers have been economy flyers. Corporate travelers, who pay more per ticket, have fared better.
“The airlines changed their mileage programs to award people who pay the most,” Steele said.
But not all recent mileage program trends have been good for corporate travelers. In late June, United, following moves in 2016 by Delta and American, announced that it would introduce dynamic pricing for Mileage Plus award travel beginning on Nov. 1.
The system means that travelers will have to use more miles to acquire a ticket on high-demand, more expensive routes — in other words, the type of routes that business travelers fly.
United is calling its dynamic pricing program Everyday Rewards. But the carrier also said that the redemption price for its more restricted Saver Awards tickets would go up on select international routes and for business class seats on premium transcontinental routes.
Corporate travelers are also losing out as airlines increase the percentage of first-class domestic seats they sell and cutting back on upgrades, Karimzad said.
For example, Delta’s publicly stated goal is to increase the percentage of its first-class seats that are purchased at full price, from the 45% that the airline saw in 2013 to 70% by 2018.
Improved capacity discipline among the U.S. carriers as well as a reduction in the price gap between coach and first-class seats have helped carriers sell more first-class seats. And some airlines have also begun to auction off a portion of their unsold premium seats in the days and hours before departure.
Still, despite the mixed bag of developments, Karimzad said that the introduction of better-than-ever luxury travel industry credit cards, combined with the airlines’ shift in mileage accrual models to favor big spenders, has made now a good time for high-status loyalty program members.
“Loyalty programs are a lot better for a smaller group of people than they used to be,” he said. “But for people who are value conscious and stuck in the middle, which is most business travelers, loyalty isn’t as rewarding as it was.”
For corporate travel agents, it is crucial to help clients collect and make the best use of their airline loyalty points.
Maggie Fischer, chief marketing officer of CCRA, said that her company has carriers do webinars directly with agents. But beyond educational programs about how to book certain classes of service or get commission, CCRA educates agents on ways to enhance their relationships with airlines.
“It’s moved much further away from instructional education to almost how to have a proper sales and marketing conversation when you’re booking there,” Fischer said.
CCRA is among the many travel agent-focused companies pressuring the airlines and hotels to make it easier for them to book loyalty points for their clients. The company hears from travel agents “over and over again,” Fischer said, that they don’t want to have to tell their clients they can’t use their loyalty programs or pass on a loyalty program number because it’s not part of their agreement with a particular airline or a hotel.
“A lot of hoteliers and a lot of airlines just traditionally didn’t do that when they were offering negotiated rates,” Fischer said. “Now, I think they’re getting the pressure from us and from other consortia that it’s a must. You have to do it.”
Jamie Biesiada contributed to this report.