More for your money: Frequent-flier programs
Like the airline industry that spawned them, frequent-flier programs have encountered turbulence and are undergoing major changes. The United-Continental merger means a new mileage program, and the recent marketing agreements among American, British and Iberia and between American and JetBlue also mean adjustments to those programs.
Those changes may mean larger flight networks and thus more options for earning and redeeming miles, but “fewer competitors inevitably mean less pressure to compete and innovate,” says Tim Winship, editor at large at SmarterTravel.com.
When the recession hit two years ago, airlines reduced seat capacity, and now load factors — that is, the fullness of the planes — are setting records. That translates into fewer award-ticket opportunities.
Meanwhile, U.S. carriers keep doling out millions of miles. Some credit cards, for instance, offer a 50,000-mile bonus to open an account. So it’s the same old conundrum: too many miles chasing too few seats.
Here’s what you need to know to get the most for your miles.
• Some frequent-flier programs have morphed into frequent-buyer programs. “Nearly half the newly awarded miles are now earned from credit card companies, followed by flights, then by purchases like hotel stays and car rentals,” Winship says. Maureen Baum of Laurel Canyon and her husband, Isaac Malitz, for instance, accumulate enough miles from nonflight activity for two free business-class tickets to Europe.
• Airlines have taken the “free” out of frequent-flier programs by adding fees to claim an award ticket. Those may include a price to speak with a telephone agent, “expedited service” charges for tickets issued a week or two before a flight and both “co-pays” and miles to upgrade a paid international coach ticket into confirmed business class, usually hundreds of dollars each way.
• Before you redeem your miles, do the math, especially now that programs have introduced different mileage “prices.” Experts say miles are generally worth about 2 cents each. A round-trip coach trip award in the Lower 48 states — a saver-type ticket for which the carrier sets aside only a limited number of seats on each flight — typically costs 25,000 miles, worth $500. An advance-purchase round-trip ticket from LAX to New York can cost as little as $300. If you cash in 25,000 miles for that seat, you lost money by “selling” them for 1.2 cents each. Even worse: An “anytime"-type ticket requires 50,000 miles. At that rate, you receive only 0.6 cents for each mile.
• Plan your trips well in advance, but be flexible too. The airlines are constantly adjusting the number of awards on a given flight, and sometimes they release unsold seats closer to the date of the flight.
• Get a credit card with the 50,000-mile bonus. You must charge a set amount, say $1,000, in the first few months, but you can easily find a card with no fee for the first year.
• If you cannot find an award on your own, book with a telephone agent who knows the program. The fee is worth the expert service, and you pay only if you book your tickets.
• Avoid buying miles directly from the airlines, because they usually cost you 3 cents each, including processing fees and taxes. (One exception: Buy miles if you need to “top off” an account to get an award.)
• Don’t let your miles expire. Programs typically delete your miles if your account shows no activity for a certain time. You don’t have to take a flight to keep your miles. Use a credit card affiliated with that program to make a purchase or trade miles for magazines, often a good deal.
Are the mileage programs still worth increasingly complex rules, add-on fees and hunt for free tickets?
Some frustrated travelers have dropped out, but others are still willing to play the game. “How often does anybody give you something valuable at little or no cost?” says Larry Stevens of Topanga Canyon. “When the time comes to get the tickets, we’re prepared to jump through the hoops. Right now, we’re having fun figuring out where we want to go.”