Now may be a good time to bail out of frequent flier programs. Ron Lieber, New York Times
Delta has been crystal clear about its two goals in its communications this week. First, it wants to reward its best customers. And its best customer by far is American Express, which is under contract with the airline to buy $675 million worth of Delta miles each year to give away to its credit card customers.
This dovetails with what I wrote previously on why airlines devalue their miles and what it means for the future of airline travel/status/gaming the system. For many moves like this and, to a lesser extent, the moves by United and American to place spending minimums on their tier statuses mean the end of the end for cheap, so-called aspirational, travel. For others, this means a full-on immersion into the world of credit card churning which carries with it high risk and high reward. It also provides supposedly lucrative incomes for the bloggers who advertise them.
I am not a points and miles blogger so I'll leave it to you whether or not a credit card churn is a smart financial move. My concern is my travel, and using this blog to catalogue my thoughts on it. For my level of financial risk credit card churns are not worth the bother. Neither, at least any longer, is earning status on any one airline plan. My "game" as it's called, is going to be to hammer discount, mistake and other cheap fares to still gain miles, forgo status, and find the best (read: cheapest) ways to pay for the things that matter to me.
In my previous post on the matter I mentioned the "most favored 3" groups of fliers that airlines are now concerned with. I also brushed against the subject of co-branded credit cards but didn't have the space to truly flesh them out. I plan to piggyback on the paragraph above and do that here.
Borrowing an expression from politics: Co-branded credit cards are the new third-rail of travel. They have penetrated the industry to a point where they are almost sacrosanct. Any mention of eliminating them is viewed as travel heresy. I say this not to judge against them but to point out the fact that co-branded cards will be with us for the foreseeable future.
So this gives us the Most Favored 3 AND the Credit-Card Corporation as entities receiving the bulk of the airline's attention. This is why I think that the next logical step is to eliminate the middle-to-lower tiers of elite status and replace them w/ credit card perks. Think about it, fliers purchasing tickets on co-branded credit cards already have preferred boarding status, they already have free bags and they already, in some cases, lounge access for an annual fee. The only thing that they are missing are mileage bonuses (coming) and inclusion into upgrade lists. I think the latter is coming quicker than people think, albeit on a much more limited basis than you see with the lower half of elites.
For this new class of non-elite, elite there will be entirely new choices to make. Do you pay with a co-branded credit card, or is your best deal to pay with one of the many cards that offer transfers to several account options (Something like the Chase Sapphire Preferred Card), a card that has it's own mileage redemption service (Such as Capitol One) or the usual co-branded card*? Furthermore, in an unbundled ticket world which airline will truly offer the best "deal" all things considered?
These questions will be important because the new rules make miles earned per dollar spent the key metric when it comes to playing "the game". Before the focus was on getting as many elite qualifying miles (or whatever your airline of choice calls them) for as little financial outlay as possible. Today's rules focus on receiving the maximum amount of airline miles per dollar spent. That might seem like a fine line, but it's a very important distinction.
Complimentary upgrades, brand loyalty and cost per mile are being removed from the game. Added to the game are price comparisons on many levels. Ticket price, before the determining factor in fare selection for many, is only going to be one aspect of comparison. Added to that will be baggage fees, check-in fees, food and drink fees, carry-on fees as well as carry-on baggage policy. This United move, to crack-down on oversized carry-ons might look like a deal killer but, if you're aware of the size restrictions (and they're consistently enforced), this might mean that you have an easier time finding overhead space. Depending on whether or not you follow the rules to the maximum (for United, one carry-on and one personal item such as a purse, backpack etc. are allowed) then this could mean much more bin space for your items and more leg-room for you. If such things are important then you might find this to be a factor.
In the new game the good news is that there are going to be many more options available to the discount traveler. Already we've seen a rise in business class "sales" as airlines try to improve revenue dollars per passenger mile by selling premier product at rates slightly above economy fares. This has the potential to be very lucrative in terms of accruing bonus miles. There is also the potential to buy up to premium economy for reasonable rates (which counts against spending requirements on most plans) and I expect that we'll start to see many more fare sales as capacity decreases. (Assuming it does decrease)
The one thing that all of these new opportunities mean is that the savvy traveler is going to have to work just a little bit harder and be a lot more budget conscious if they want to maximize their travel dollar. At the risk of sounding like a broken record, whether or not this is a positive I leave up to you.
*Notice: No referral links. I do not receive referral payments from the credit card companies, nor will I ever.
