Rapidly declining Rewards

Remember the good old reward programs days? When airlines at least appeared to value their customers and the 3-12-15-1time they spent with them?

In the last year and a half or so, it seems like it’s been a race to the bottom for airline loyalty programs. First Southwest makes a change to their Rapid Rewards program requiring more points for their ‘Wanna Get Away’ tickets.  Then United changes its frequent-flier award program to require more miles on certain flights followed by Delta who announced the same a week later.  Then Delta ups the ante by changing their SkyMiles program from an award based on miles flown to an award based on ticket price.  Soon after American gets in on the action and increases the number of points necessary for certain award tickets.   Then United changes their MileagePlus program to reflect a revenue-based reward program similar to Delta.  Recently American makes a move closer towards the revenue-based rewards pot by offering bonus miles to customers that purchase eligible First or Business Class tickets based on class and fare type during 2015.  And now Southwest (providing about two months notice) has said that starting on April 17th the number of Rapid Rewards Points needed to redeem for certain flights will vary based on destination, time, day of travel, demand, fare class, and other factors.  It’s hard to keep up!

What does this all mean?  Well, unless airline loyalty programs get regulated (which I’m guessing won’t happen anytime soon) it means you need to have a plan for using your points and stop treating them like they’re in a savings account.  Airline points seem to be depreciating in value faster than a used car, and the longer you wait to figure out how you’re going to redeem them the more you’ll be putting your points at risk due to these program changes.  Here are my tips for redeeming your points.

Don’t redeem points for last minute trips.  Just as when you’re buying last minute airline tickets, last minute reward tickets can quickly eat away your points.  A flight from Dallas to Chicago tomorrow morning would cost you about 10,000 Rapid Rewards points.  That same flight in June is about 5700 points.  So be thinking of where you want to travel as you’re saving your points, and be prepared to book the trip at least a few months out if possible.

Be smart about the days you choose.     Avoid choosing to redeem your points for trips during major holidays if at all possible.  Also research to make sure there are no major events going on during the time you’ll be traveling to and from your destination.  Not only can ticket prices go up during an event or major holiday, but getting through security can be a nightmare if you time it badly enough.

Redeem points for more than just flights.  Many airline loyalty programs allow you to use your points for things like hotel stays, car rentals, gift cards, and much more.  In most cases the value of points redeemed for things other than flights is less, but if you don’t have time to fly in order to redeem all your points this is a good way to spend them before they lose value, or even worse expire!  A year ago I had a little more respect for the points and probably wouldn’t have recommend using points in this way, but as time has gone on I’m more inclined to use points for something like a hotel stay since I’ve lost confidence in points retaining their value.  Plus I’m on the road for work so much I’m having a hard time finding time to take multiple trips a year with our youngster.  With all this being said, be sure your redemption makes sense financially.  For example, with my Rapid Rewards I can buy a $50 National gift card for 4650 points.  That’s just over one cent value per mile redeemed.  However, if you stay at The Venetian for one night next Friday it’s $339 on their website compared to 48,000 Rapid Rewards points.  That’s only about .7 of a penny value per mile redeemed.  If you are looking for the best value the National gift card would be a better value (in this example).  So make sure you are doing the math to see where the best value is.  (Number of pennies divided by the number of miles gives you the figure I used in these examples.)

Buy a ticket for a friend.  Have a friend or family member out of town that you’d like to see?  Buy them a ticket to come and visit you once you’ve nailed down a date.  You can also transfer points to another person but I don’t recommend this because there are usually fees associated.

There are obviously other ways to spend points, but these are my recommendations.  The lasting advice I would give you with points is to try and have fun with them.  They are there to spend.  You earned them, now burn them!

Readers, what other ways do you like to redeem your points, and what are your thoughts on the Southwest announcement? 

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