Despite the rumors, rewards programs hit all-time record in 2008
By Randy Petersen
Cashing In
Randy Petersen is editor and publisher of Inside Flyer, which is
considered the leading publication in the world about frequent traveler programs. At CreditCards.com, he writes
Cashing In, a weekly feature in which he answers readers' questions about credit cards rewards programs.
Dear Cashing In,
Is my
airline rewards card even worth having anymore? It seems to be harder and
harder to redeem my rewards for free tickets, especially since the airlines
keep reducing their airline schedules. Is there some other way to use my
airline rewards to greater advantage? -- Peter
Dear Peter,
Part
of my answer to your question involves debunking the "urban myth" that frequent flier credit cards' rewards programs are not worth the time
and effort it takes to redeem miles, as well as updating you on some of the
things these rascal frequent flier programs are doing to provide flexibility in
award redemption.
During
the past year, there actually were many pundits and rewards program members who
thought that with reduced airline schedules, there would be far fewer frequent
flier awards available. Frankly, it would seem to make sense, but just as we
have come to expect from these programs, the unexpected happened. As it turned
out, 2008 set an all-time record for award redemption.
Let's
be clear: I don't think it was that the airlines were being more generous, but rather it was a combination of several things. First, members weren't redeeming awards to vacation
hotspots such as Hawaii and Orlando as they might usually do. Frankly, with the
questionable economy, many more members were redeeming miles to more mundane
locations with the belief that it was better to save the money and use the
miles.
So, whether
it was redeeming miles for business travel (many entrepreneurial types use
their miles to save on business travel costs), for that class reunion weekend,
for sending junior out to look at colleges or for typical family emergency air
travel (which is happening more frequently with our aging population), frequent
fliers in the millions used their miles last year. It was one of the most
trouble-free redemption years ever.
Will that last? Probably not. But the
silver lining is that with the economy in the back of most reward program members'
minds, awards are truly a little easier to redeem to some of the more
prime-time destinations now. Does this fully explain the large jump in awards
this past year? No.
Award
redemption was up nearly 13 percent in 2008, and I don't think it was due to the
airlines being more generous. Rather, it was that the industry has gotten
better at displaying the availability of these awards. With newer releases of "award
calendars" in the past year and, more importantly, rewards programs finally
listing most -- if not all -- of their partner redemption awards online, the
number of available award seats increased by nearly 30 percent in 2008.
Additionally,
airlines have slowly (painfully slowly) introduced new ways to cash in your
miles, such as allowing you to shop for rewards just as you would when buying a
ticket. Both United and Delta (soon to include Northwest with their merger)
allow some members to shop online for airline tickets and simply use their
miles (or part cash) valued at a penny a mile to pay for the purchase price of a
ticket. This is a huge advantage because you are controlling the purchase
process as you see the seat availability (again, you are actually buying a
ticket, not redeeming a reward) and, of course, you are seeing the price. Given
that ticket prices are falling these days, these new options are one of the
best things that have happened to these programs in years. They are not meant
to replace your normal reward chart, but they do an excellent job of
supplementing your choices. Plus, they now rival and perhaps surpass many of
the other types of travel reward credit cards such as Capital One, for example.
Finally,
while I truly hate to even mention this, down economies are absolutely the best
time to cash in your miles. Fewer people traveling to even key destinations
means less competition for you and a free seat, additional great travel values
for accommodations, and there are even reward "sales." For example, United
offered economy rewards to Europe, of all places, for a 15,000-mile
discount.
Truly,
while the urban myth is that no one can ever use their miles, the facts really
are that the airlines gave away about 25 million free (OK, not so free with
some of the taxes and fees being added on) tickets last year. Believe it or
not, someone really is flying around out there for free.
Hope
this helps and informs you why it still may be worthy for you to use the
plastic to enjoy the fantastic.
The Wall Street Journal refers to Randy as "... the
most influential frequent flyer in America," while The New York Times tagged him "the world's leading expert on
airline frequent flier programs." Randy is editor and publisher of Inside Flyer magazine -- considered the leading publication in the world about frequent traveler programs. He is a regular speaker at
business travel seminars and conferences around the world; and is often called upon by the industry itself for
his comments and suggestions about the future of frequent traveler programs.
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