New Rules for Mastering Airline Loyalty Programs

The complimentary flights and benefits for elite members provided by airline loyalty schemes are essentially aimed at encouraging you to increase your spending with the same carrier.

However, over the last several years, these loyalty programs have become significantly more complex and offer fewer rewards. The era when one could easily earn miles or achieve elite status just by flying long distances or frequently has vanished. Nowadays, the “Big Four” U.S. carriers—American Airlines, Southwest Airlines, Delta Air Lines, and United Airlines—all grant customer benefits according to spending levels instead.

Ganesh Sitaraman, a law professor from Vanderbilt University and the writer of “Why Flying is Unpleasant,” participated.
’s Smart Travel podcast
To explore the evolution of airline loyalty programs.

“In certain aspects, they aren’t truly frequent flyer programs; rather, they are big spender programs,” Sitaraman stated.

This is due to the fact that loyalty programs have emerged as a significant income stream for airlines. The IdeaWorksCompany, an aviation consultancy, reports that the aggregate earnings from the leading ten airline loyalty schemes amounted to $32.2 billion in 2023, marking a rise of roughly 19% compared to the previous year. Notably, Delta Air Lines disclosed generating close to $2 billion in revenue during the past year via its collaboration with American Express.

But strategic flyers can still enjoy the best parts of these loyalty programs while avoiding their pitfalls. Here’s what you need to know.

Airlines miles and points function as a form of currency.

Participants in airline loyalty schemes accumulate “miles” or “points,” which they can later exchange for complimentary trips or additional perks. These miles and points serve as the fundamental medium of exchange within frequent flyer initiatives.

“As airlines generate points essentially from thin air, these points are subsequently sold for actual money to banks associated with co-branded credit cards,” explained Sitaraman. “In this manner, airlines resemble banks or semi-banks to an extent… They introduce their own form of currency through points, dictating both the value of these points and the items available for redemption.”

Sitaraman states that one of the major issues for travelers is their lack of knowledge about the true value of their points and miles. Airlines do not provide this data, and the worth often varies depending on different redemption scenarios. As an illustration, a $100 ticket could require 10,000 miles (implying each mile has a value of 1 cent), whereas a more expensive $400 fare may necessitate only twice as many miles at 20,000 (thus making each mile equivalent to 2 cents).

examines the cost per point for over a hundred award flight options to determine
What is the value of points and miles?
These kinds of estimations can assist travelers in determining whether they should redeem their miles or opt to pay with cash instead.
whether to buy points
.

It’s wise to use your miles frequently.

Given that the value of airline miles can vary, it becomes simple for airlines to subtly increase flight prices in terms of points, resulting in your rewards being worth less.

[Airlines] have the ability to decrease the worth of what you can obtain with the points,” Sitaraman stated. “As a result, we’ve observed fluctuations in the value of these point systems over time.

This is why travelers ought to utilize their miles frequently rather than accumulating them. Miles often lose value over time, so a desired journey to Europe could require more miles in three years compared to what it costs today. Additionally, certain loyalty programs may vary.
miles expire
following a specific duration of non-use.

You miss out on rewards if you don’t have a travel credit card.

Sitaraman suggests that individuals with strong credit scores who manage to clear their credit card balances entirely every month could be overlooking an opportunity if they do not utilize a credit card program designed for earning rewards.

The credit card company receives a share from each transaction,” Sitaraman explained. “So, the reward points system functions somewhat like receiving a small rebate.

Usually, travel credit cards allow you to accumulate one or two points for each dollar spent, with additional points awarded in specific bonus categories. Cardmembers can later exchange these points for trips or various other perks.

Selecting a travel credit card that suits your financial situation and objectives is essential. While airline cards can provide perks such as complimentary baggage checks and preferential boarding, they confine cardmembers to accumulating rewards within a single airline loyalty scheme.

A more adaptable approach would be to obtain a versatile travel rewards credit card that offers earnings.
transferable points
These points can be moved to various airlines or hotel reward systems typically with a 1-to-1 conversion rate. This means that as one airline’s loyalty scheme eventually increases the mileage needed for free trips, you’ll still possess these benefits which you can shift over to alternative schemes offering more favorable exchange ratios.

Just make sure to pay off your credit card bill in full and on time. Late fees and high interest rates on rewards cards can eat into — and often fully negate — the value of any rewards earned. If you’re planning to carry a balance, focus on paying off your debt with a card offering a
0% introductory APR offer or a lower interest rate
rather than accruing benefits through airline programs.

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