Yes, what you have derived from your own experience has been verified. A new in-depth study proves that frequent flyer programs have lost value on average over the past five years. You can thank the good folks at IdeaWorks Company for these results, announced in a press release that is just the tip of the iceberg of detailed data sold to airlines and other major travel companies.
The study updates previously compiled indicators for 2019 and includes three key elements:
The average mile/point “price” for domestic economy “free” seats has increased, but only by a small amount and not by a significant amount.
The return on fares paid, or the value of every dollar spent on airfare, has been significantly reduced.
The reward value of each mile/point has generally gone down, but not by much.
This report focuses on six domestic carriers: Alaska American Airlines, Delta Air Lines, JetBlue Airways, Southwest Airlines, and United Airlines. Value and revenue is based on purchasing tickets on the most popular routes for each route at the lowest available main cabin (coach or economy) fare and the credit required for the lowest award main cabin seat. I am. These ground rules limit the picture, but they track based on data I've found from 30 years ago. That's what most of the US mileage flyers do.
Special price. Overall award prices in early 2024 range from a low of 14,484 points on Southwest Airlines to 30,460 miles on United Airlines, with Delta Air Lines also high at 26,700 miles, JetBlue Airways at 22,388 miles, and Alaska Airlines at 18,020 miles. It becomes. Americans are an outlier at 17,820, which is actually a significant decrease.
Refund of freight paid. The report shows a wide variation in paybacks, from a high of 6.7% for Southwest Airlines to a low of 0.4% for Delta Air Lines, which does not earn miles on basic economy fares. The other four rows are more closely grouped between 2 and 3%. All routes are down, but Alaska Airlines, Delta Air Lines, and JetBlue Airways are down significantly. A little bit of American and United too.
Value per mile/point. Perhaps the most important result is that American Airlines leads the pack in value, at 1.4 cents per mile, double his 2019 value. United Airlines typically operates in tandem with American Airlines, but the values are different. That mile is worth 0.7 cents per mile, exactly half the price of an American mile. Other lines are about the same at 1.0 to 1.3 cents per mile.
Anyone who follows the vast blogosphere knows that self-proclaimed frequent flyer gurus most often estimate the value of a mile at between 1.7 cents and just over 2 cents. I've said the value is close to pennies, and a new study has validated this conclusion.
What is not covered? This study excludes several potentially important assessments. While the exclusion of smaller U.S. routes probably won't affect many travelers, I think a significant number of U.S. travelers collect miles on Air Canada, major European routes, or Asian routes. Still, my guess is that people who earn a lot of miles on international routes are probably realizing their true value on other routes.
The study also excluded people who use their miles for long-haul flights in premium cabins, typically to Europe or Asia. I know that's what I did. If you are not precise, you may end up calculating very strange values. I've flown about 100,000 miles of business class award seats to Europe, and when you compare this to the typical list price of $5,000, it's worth 5 cents per mile. But that's only if he's willing to spend $5,000 on tickets even if he doesn't get the privilege seats. not me. You'll probably spend over $2,000 and each mile will be worth about 2 cents or less.
The report also doesn't mention credit card revenue, but it's clearly important to me. For most travelers, a credit card that gives you 2 cents back on the dollar is a much better deal than a credit card that gives you 1 mile worth just over 1 cent per dollar.
(Email Ed Perkins at eperkins@mind.net. Also, check out Ed's new rail travel website at www.rail-guru.com.)
