Why Frequent Flyer Miles Aren’t Free
This is a follow-up to last month’s feature on the Price of Loyalty.
Last month we wrote this about factoring in the value of loyalty rewards when booking travel:
“Frequent flyer miles, hotel points, and elite traveler status have traditionally been key considerations for business travelers. However, these perks have to be evaluated in the context of a trip’s cost, convenience, and whether it fits within company policy. The calculus is changing, and there’s evidence that the importance of loyalty programs is diminishing due to a range of factors, from consolidation within the airline industry, to the ease of online comparison shopping.”
Essentially, frequent flyer miles won’t get you as far as they used to. Airlines have been steadily lowering the redemption value of miles, while raising the qualification criteria for elite status. Faced with this new reality, Rocketrip recommended two courses of action:
- Shed a tear for the passing of the Golden Era of loyalty rewards.
- Dry your eyes, forget about loyalty, and start booking trips on the basis of cost and convenience.
The One Mile at a Time blog has recently explored this same topic in a three-part series of articles on why “Miles Aren’t Free.” It’s certainly worth checking out if you’re interested in learning more about the do’s and dont’s of earning and redeeming frequent flyer miles. We wanted to highlight one particularly interesting point made about the cost of acquiring miles. At the end of a long post covering various earning strategies – from credit card spending and mileage runs, to online surveys and purchasing miles with cash – the author finally got around to addressing the traditional way to earn frequent flyer miles – flying. He wrote:
“It’s sort of indicative of the state of the game that I’ve included this at the bottom of the list, almost as an afterthought. The reality is that the majority of miles these days are not earned through flying…It’s true that a few high value flyers are making bank right now under Delta and United’s revenue-based earning scheme, racking up as much as 75,000 miles per ticket for paid premium cabin travel. But those folks are the exception to the rule, the 1%-ers of the flying world. And they are probably doing it with other people’s money.”
Editor’s note: people who spend other people’s money is industry-speak for “business travelers.” That very possibly means you, a person who’s reading the blog of a company that makess business travel software.
The post goes on to say that, “if you travel for business and your employer is paying for the travel, [miles] may be free as well.” That may be true for the majority of business travelers, but very possibly not for you, a person who’s reading the blog of a company that makes business travel software [that lets business travelers keep half of what they save on their trips].
In other words, Rocketrip users aren’t typical business travelers. They’re motivated to spend a company’s money like it’s their own, because in effect, half of it actually is their own. When fifty cents of every dollar not spent on travel goes back in your pocket, there’s an opportunity cost associated with choosing a high-cost ticket just to earn a few extra miles.