Airline Points Programs – Are They Worth It?

Are Airline Points Programs Worth the Bother?

The simple answer is…”maybe.” That clear things up for you?

Like just about everything else in life, you get out what you are willing to put in. In this case it is time and effort to figure out the ins and outs of the airline points programs and how frequent flyers can “game” them to maximize their efforts.

For anyone that boards a plane more than a couple times a year or spends thousands of dollars a month on credit cards, I would say “absolutely yes.”

If not — then hurtling headlong into the airline point loyalty game is probably not worth your time and effort, even though the online signup process is relatively painless.

I have seen wild claims that over 90% of loyal folks never accumulate enough miles/points in their lifetime to ever redeem; my guess is that this is not too far off the mark. Suppliers are now offering many cash plus point redemptions.

Now that we have entered the new airline fee economy and endure ever more intrusive and lengthy security measures, it behooves us to be loyal and achieve elite status simply for the perks of cutting in line, getting a window or aisle at the front of the plane or saving $50 roundtrip in bag fees.

What is a Mile Worth?

I love the spirited debate among hard core loyalty mavens about what a mile is really worth. The debate rages between 1/2 a penny to a dime, basically somewhere between a Zimbabwean Dollar or a troy ounce of Gold.

With literally trillions of miles lying around, there is no doubt loyalty miles are an economy unto their own, the equivalent of the Fed printing more each day. Much like the U.S. there is no ceiling on how much they “mint.”

Today many airlines will sell them to you in bulk for just under $.03, which at least tells us what airlines think they are worth to air travelers.

Depending on the airline I would value them between 1 1/2 and 2 ¢ — which coupled with coach ticket redemptions (starting at 25,000 miles) provide the following rule of thumb:

Consider using your miles if your airline ticket price is over $450 roundtrip

Personally I tend to only use miles for last minute emergencies, business trips, international flights, charities and friends who are in a bind – when ticket prices are typically well over $1,000 roundtrip (even with last minute redemption charges this is a relative bargain).

One word of caution for you loyalty bean counters: be sure to add in the miles you didn’t pad your account with had you paid for your ticket when running feeding your supercomputer with your miles versus dollars calculation.

Airline Loyalty Program Gotchas

One of the biggest problem with frequent flyer or airline points programs is redemption frustration. Trillions of miles chasing and handful of seats to the biggies – Hawaii, Las Vegas, New York, Orlando, London, Paris and Rome.

This problem has been exacerbated in the past few years as airlines have cut back seats in an attempt to fill every empty middle seat to stay aloft of bankruptcy. Less empty seats or rather more revenue seats means “capacity controlled” free seats are…well… more controlled.

Several of the Europeam flag carriers also charge fuel surcharges and redemption fees that can add up into the hundreds of dollars, so buyer beware as you look at alliance programs.

For those looking to upgrade your coach tickets on a long haul flight, you will face the same redemption frustrations.

Airlines in the past decade have added rules to expire miles based on account activity – buyer beware even though Delta recently rolled these rules back to their historical no expiration default.

Airline branded credit cards can carry a hefty yearly fee and eye-popping interest rates, which you should add into your “is it worth it” calculation.

Summing it all Up

I am a member of over six airline award programs with several million miles under my belt and have found delight in the perks and redemptions while separately being frustrated and bewildered on many an occasion.

Just like trying to get that perfect airline ticket price, loyalty programs are a game and you need to spend a bit of time understanding the rules and be prepared to mix it up with millions of your best friends.

Ecstasy and Agony await you…



Published: June 16, 2011