Frequent flyers, including long-time loyal customers, are increasingly frustrated with airlines due to changes in loyalty programs that are undermining the value of accumulated points.
For years, travelers have remained loyal to specific airlines to accumulate points, hoping to exchange them for perks such as seat upgrades, lounge access, and flights. However, the recent adoption of dynamic pricing and devaluation practices has shifted the landscape, leaving many customers feeling disillusioned. Frequent flyer Sean Brown, who has clocked nearly 2 million miles with Delta, expressed disappointment at the industry’s direction, indicating a seismic shift that doesn’t sit well with loyal customers like him.
The Department of Transportation is scrutinizing major airlines over these practices to understand their impact on competition and consumer satisfaction. Secretary of Transportation Pete Buttigieg voiced concerns about point devaluation and unpredictable pricing, which could deter customers from finding the best deals. Buttigieg, who also navigates these programs personally, emphasized the need for transparency and fairness in how these programs operate.
The evolving nature of rewards programs has reached Capitol Hill, with officials like Consumer Financial Protection Bureau Director Rohit Chopra highlighting potential ‘bait-and-switch’ tactics by credit card companies and airlines. They found that companies could quickly devalue points, complicating redemption for consumers. The push for transparency continues, with Buttigieg asserting it’s crucial for programs to be consistent and fair.
Economist Brett House from Columbia Business School notes that airlines have raised the bar for accessing perks, including clubs and amenities, through their frequent flyer programs. This is a result of various factors, including attempts by credit card companies to attract customers post-2020 with better sign-up bonuses and more ways to earn points. In 2022, the average value of these bonuses increased by nearly 20% since 2019, according to the CFPB.
As a consequence of these strategies, consumers began using points as savings for future travel. However, the post-pandemic surge in flight demand overwhelmed airlines, leading to a ‘logjam’ as they struggled to accommodate the new level of interest in points seats. Gilbert Ott, travel platform point.me’s director, pointed out that airlines are now selective in offering point-based seats unless it significantly benefits them.
Dynamic pricing, long a staple in pricing strategies, now influences the realm of points and rewards. Some airlines claim this allows them to offer cheaper flights at times, yet this introduces unpredictability, with huge variations in point costs based on demand and timing. While some airlines, like Delta and Southwest, highlight benefits such as no blackout dates and points that don’t expire, consumers face a complex system that demands careful navigation.
United Airlines, which abolished its fixed award chart in 2019, claims dynamic pricing offered customers more flexibility in securing flights for fewer points than before. However, the absence of predictable guides complicates the process for many travelers, leading to an uncertain marketplace where flight prices can fluctuate dramatically within short time frames.
The frustration has driven some travelers to move away from mileage-based rewards entirely in favor of cashback options. Finance professor Meir Statman, previously a proponent of miles, now endorses cashback cards, finding them simpler and more rewarding. Statman believes consumers are recognizing the diminishing value of miles and opting for straightforward cashback as a more consistent benefit.
The landscape of airline loyalty programs is undergoing significant change, with many frequent flyers reassessing the value of accumulating points as dynamic pricing and devaluation practices challenge traditional benefits. While airlines and regulatory bodies discuss transparency and fairness, travelers continue to navigate this evolving environment, often choosing alternative rewards solutions. The future of airline loyalty rests on whether these programs can adapt to maintain customer loyalty without sacrificing the perceived value of their rewards.
Source: Businessinsider
