As the end of the year rolls around and many travelers look to wrap up their year by topping off an account with a quick mileage run to hit a status tier I find myself rather entertained. Part of that is from the frantic posts and inquiries on how to get those last few miles at the best price but a larger part of it is from reading reports from other pundits on whether it is worthwhile or not. This year there are two particular stories which come to mind as I once again review the phenomenon.
First up is Chris Elliott’s latest screed on loyalty programs, explaining why they are a scam. Among the juicy nuggets Chris offers are the idea that the programs are a pyramid scheme and only those at the top benefit from them. So because of that no one should participate. He even takes lower tier elites to task, suggesting that they are causing the problems in some ways:
Some of you will say, "Hang on. I’m just a silver-level flier, but I get plenty of benefits without giving the airline all of my business. You want me to turn my back on that?"
Yes, I do. Because through your participation, you’re propping up a pyramid scheme that’s fundamentally unfair, unsustainable, and yes, fraudulent.
It isn’t particularly often that I agree with the things that Chris has to say, though I did once not so long ago. This time around, however, I think he’s gone too far. I actually think that’s only because he (once again) does a VERY bad job of presenting his position here. Yes, there are opportunity costs to the loyalty schemes. Forcing all our travel to one carrier might actually cost you more in real money than you get back in benefits. That is not so smart. But there are plenty of ways to actually get decent value from the programs at little to no marginal cost. The programs are certainly driven by marketing departments looking to skew spend from their customers. And it isn’t always smart to play along. But it also isn’t always so stupid.
The other story up to close out the year is a piece from Wall Street Journal columnist Scott McCartney, The Short Path to First Class (or get to it via google here). McCartney tells the tales of "a relatively modest investment of $4,000 to $7,000 a year" to reach top-tier status with some programs which can convert to "tens of thousands of dollars worth of business-class upgrades on international trips, plus bonus miles, airport-lounge access, domestic first-class upgrades and even perks like Tiffany & Co. gift cards."
I am not one to ascribe value to perks which I would never consider paying for anyways. Yes, the "free" business class upgrades to Europe or Asia are nice but they aren’t tens of thousands of dollars in my book. And things like lounge access or bonus miles can be realized at lower tiers, depending on the program. I don’t think it is worth $4-7,000 to get to any status level if you’re not actually flying anyways. Based on that I wouldn’t just buy the status outright so the price-point really is a different number. If you’re flying 45,000 miles anyways then the extra few hundred dollars to get to the 50K tier can see a real return on the investment. But just spending $7,000 to have 1K status so you can say you have it is pretty silly.
There is a balance to be found somewhere in the middle. There are plenty of people for whom the programs actually are a foolish investment. And there are plenty for whom the value is very real. A shame, really, that the drive to "call out" the other half leads to such bad advice being given out.
- Are we looking at a shift towards revenue-based loyalty programs?
- Tiers within tiers from the loyalty programs
- The points game doesn’t make sense for most travelers
- Why spend is a good qualifier for airline status