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
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
Though there are winners and losers in these
scenarios, Karimzad said that on balance, people are likely to accrue fewer
“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
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
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
“There’s no transparency,” he said.