Posted by Seth Miller on May 22, 2013 under frequent flyer, points | 
Want to save hundreds of dollars in fuel surcharges on Qantas award flights between Australia and Europe? Turns out it is a trivial task.
Photo from the Qantas/Emirates flyover of Sydney Harbour courtesy of Qantas
Thanks to the recent partnership between Qantas and Emirates has created a number of interesting arbitrage opportunities for members of the Qantas Frequent Flyer program. Included in that is a sizable gap in the fuel surcharge the two carriers levy for similar trips:
Travellers wanting to fly economy from Australia to London return have been able to escape paying $610 in fuel surcharges by redeeming their frequent-flyer points on an Emirates flight rather than Qantas.
…
A passenger flying one-way in economy or business on Qantas from Australia to Europe has to pay $380 in fuel surcharges, while on a flight to the US it is $340 and to Asia $175.
In contrast, Emirates charges $75 in fuel surcharges for a one-way economy ticket to Europe, and $30 to Asia. For business class, the surcharge for Europe is $230 and for Asia $165.
And the part where Qantas made searching for Emirates award seats incredibly easy by integrating such into their online award booking engine isn’t hurting the situation either.
The bad news for customers is that the two carriers are set to meet in the coming weeks to discuss this issue, among other things. Apparently they recognize the issues they’ve created for themselves.
Of course, this is not the only place where similar routes can attract widely varying fuel surcharges depending on the operating carrier of the routes. American Airlines will pass on the YQ from British Airways when redeeming AAdvantage points on BA metal while a similar flight on AA metal has no surcharge. ANA’s Mileage Club or Aeroplan have similar variations for partner flights. Certainly not a fuel dump in the traditional sense of the term, but the net savings apply in roughly the same manner.
If anything is unique about the Qantas/Emirates situation it is that they are apparently trying to address it rather than just hoping for the best.
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Posted by Seth Miller on May 20, 2013 under frequent flyer, Hotel, points |
When hotel booking engine PointsHound started up late last year there were some notable limitations to the service. Most significantly, like other OTAs, bookings made through the site would not earn points or stays in the hotel loyalty programs. While that’s no problem for some customers (like me) it is a deal-breaker for others. Earlier this year the company quietly introduced a limited collection of hotels where they are now able to offer elite benefits and points earning for stays, in addition to the airline miles for bookings. It turns out Hilton HHonors is no longer the only way to “double dip.”
That initial work was more a proof of concept than a final product. This past weekend the PointsHound team finished a major update to their site and one of the big changes was that they now have more than 3,200 hotels across 115 US markets where their customers can “Double Up” on bookings.
Searching their list of hotels you may come across an orange icon at the bottom of the entry which looks like this:
Book that hotel and you’ll earn both the airline points from PointsHound for the booking and also all the traditional benefits which come from direct booking through the hotel’s website.
Here are the rates for a PointsHound-only room and a double earning rate (and, just for fun, the direct booking rate) at a couple hotels on the same night for the same room:
A Westin:
For the same per-day rate you can walk away with 2600 free United Points (based on being a Level 2 PointsHound user). Or take slightly fewer points and a non-refundable rate and save some cash on the nightly price.
A Hyatt Place:
A Marriott:
In the case of the Hyatt Place stay you are potentially giving up 100 airline points in favor of earning your Hyatt Gold Passport points. In the case of the Marriott you actually get MORE points by booking it as a stay which also earns Marriot Rewards points. And in each case you’re getting more benefits than just booking directly through the hotel’s site directly.
Of course, there is the rather notable catch that the option doesn’t exist in all cities, much less all hotels in any given city. Still, if the option works for the location you’re in and the property you’re interested in that’s a nice win. In cases where the price and earnings are otherwise the same this might even be enough to sway someone like me – a skeptic on the value of hotel points – to go for a booking engine which allows lots of earning options.
Also worth noting is that PointsHound has a promo out for some bloggers now whereby you can get a 60-day trial of Level 2 status (more points earned per night) and 250 bonus points for signing up completing your first stay and the blogger gets 250 points. I’m pretty sure Gary even negotiated that the user can get all 500 if you want to sign up there. If you want the bonus points and Level 2 status you can use my referral link here. The main link atop the post is a generic one.
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Posted by Seth Miller on May 16, 2013 under frequent flyer, News, points |
For nearly the past decade earning points for flights within Norway was not possible thanks to laws designed to encourage competition and prevent one airline from using their loyalty program to unduly attract or retain customers. Apparently (at least according to them) the rule worked and there is now sufficient competition in the market such that the rule has outlived its usefulness. It is not clear when the airlines will start to permit accrual on these flights (or, in the case of SAS, when their Star Alliance partners will update the rules). From the Google translate version of the announcement:
Government shares the concern expressed Competition for competition in the aviation industry, particularly in rural areas, when bonus ban repealed. But today there are two major players in the Norwegian market, and competition is more robust than when regulation was introduced in 2007.
Norwegian Air is the second carrier and they have grown significantly in both the domestic and regional markets. They’re introducing long-haul service this summer to Bangkok and New York City, too.
Also in the same announcement is this bit:
The Government will also examine the possibility of laws on the bonus points earned in employment attributable to the person paying for, normally the employer. The purpose of this study will be to examine whether it can reduce the administrative burden of enforcing taxation of the private use of bonus points earned on business travel as well as any negative competitive effects of repeal regulations.
Apparently letting the traveler keep the points rather than crediting them to the company buying the ticket raises tax issues. Hopefully the IRS doesn’t get any similar ideas.
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Posted by Seth Miller on May 9, 2013 under points |
If you believe the bloggers, the latest sign-up promo might have been the most significant news this year. It certainly gathered the most posts in a 24 hour period of any story I have tracked this year (and I’ve been tracking a lot of them, thanks to the hack.travel site). In the past 24 hours no fewer than 21 posts were published about the deal, often using terms like "amazing" or "incredible." And, to be fair, it is a good sign-up bonus, though the $5000 spend threshold is also on the higher side. And I don’t really fault the bloggers who are making money from the signups for sharing the information; it is actually news.
But how many times does it need to be shared?
Four different bloggers felt it was so incredible that it deserved to be talked about more than once in the same 24 hour period. One felt it deserved three separate posts. At that level I start to wonder just how much of it is trying to help readers versus themselves.
Here’s the full list I have of headlines (in alphabetical order by the blog) and who wrote them. Did I miss any? And which is your favorite headline??
- Limited Time Offer: 75,000 Points for The Business Gold Rewards Card® from American Express OPEN — Deals We Like
- 75,000 point AMEX Business GOLD card up from 50,000 after $5000 spend! — Delta Points
- 75,000 Bonus Membership Reward Points With the Business Gold Rewards Card from American Express OPEN — Doublewides Fly
- CREDITCARDS: That amazing 75k sign up offer for AMEX Business Gold Card is still active — Frugal Asian Man
- American Express Gold Business Offering 75,000 Points — FrugalTravel Guy (Ariana)
- 75,000 Point American Express Business Gold Rewards Sign-Up Offer — Live and Let’s Fly
- 75000 Membership Rewards Points for Business Gold Rewards Card from American Express OPEN — lovetofly
- Top 5 Questions on the 75,000 Points American Express Business Gold Rewards — Million Mile Secrets
- Won’t Last! 75,000 Points (~$750+ in Travel) With The American Express Business Gold Rewards Card — Million Mile Secrets
- Big Points – 75,000 Points From The Business Gold Rewards Card from American Express OPEN — MJ on Travel
- Amex 75,000 Points ($750+) Offer Still Alive and Kicking! (Now Expired) — Mommy Points
- Great Deal: 75K Membership Rewards for Amex Business Gold Rewards Card w/5K Spend! — Mommy Points
- Answers to a few common questions about the American Express Business Gold Rewards Card 75,000 point sign-up bonus — One Mile at a Time
- Amazing 75,000 Membership Rewards point sign-up bonus on American Express Business Gold Rewards Card! — One Mile at a Time
- How I Got the Incredible 75K AMEX Business Gold Offer to Work & Why You Should Take Advantage — Point me to the Plane
- Amazing Deal Alert: 75K Bonus For the Amex Business Gold Rewards Card — The Points Guy
- Business Gold Rewards Offer: What Do 75K Amex Points Get You? — The Points Guy
- Amex 75,000 Point Business Gold FAQ and My Top 10 List of Other Credit Cards for the Last Minute App-o-ramas — The Points Guy
- Limited Time 75,000 American Express Offer With The Business Gold Rewards Card® from American Express OPEN — The Weekly Flyer
- 75,000 Membership Rewards Points with the Business Gold Rewards AMEX Card after $5,000 spend — Torsten Jacobi
- Big Deal: Limited-time 75,000 Membership Rewards for American Express Business Gold Rewards — View from the Wing
Posted by Seth Miller on May 2, 2013 under frequent flyer, News, PaxEx, points |
Airlines are looking to cut costs in just about every way imaginable. For Frontier airlines a major focus on that front has been encouraging customers to book on their website rather than through 3rd party sites (OTAs). The OTA bookings cost the airlines a lot of money and saving those margins can be significant, particularly for a smaller airline which is struggling as it is.
Last September Frontier cut mileage earning on OTA tickets to 50%. At that time they also increased most fees by $50 for fares not booked directly. It was hoped that would help increase direct bookings. In March of this year Frontier pulled their inventory from Expedia, cutting distribution costs but also reducing the potential bookings. And, this week, they’ve taken this a step further, announcing that they have "Enhance[d] Services for Customers Using FlyFrontier.com." Yes, they used the word "enhance" in the ironic form.
The latest changes see more cuts for customers booking OTA-issued tickets. Carry-on bags will now come with a fee – up to $100 at the gate – for the cheapest fares booked through 3rd party sites. "With this change, we are ensuring that our most loyal customers – Ascent and Summit level members of EarlyReturns®, those who book Economy, Classic and Classic Plus tickets, including all customers who book through FlyFrontier.com, will have more space onboard the aircraft for their carry-on bags,” said David Siegel, Frontier’s chief executive officer. The effective date for the carry-on charges has not yet been set.
Charges are also coming for in-flight beverages. Effective July 1, 2013, customers who purchase Economy or Basic fares will be charged $1.99 for coffee, tea, soda and juice. On the plus side, that $2 will entitle customers to the whole can of soda or to unlimited refills on coffee. No word on if they’ll charge again if you want more hot water for your tea. Customers who purchase a higher fare or who have elite status will need to show their boarding pass or elite card to have the beverage fees waived.
And, on the mileage front, the fares which were earning only 50% when purchased through an OTA will see that number further reduced, down to 25%.
There’s a whole lot of hurt in this latest round of changes. It is hard to believe that things will end well for Frontier out of these moves. Maybe it will shift the consumer behavior but I get the feeling more customers are going to buy their tickets through an OTA, get annoyed at the lower service levels and then choose a different carrier on the OTA rather than change their buying habits. I suppose we’ll see soon enough.
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Posted by Seth Miller on May 2, 2013 under frequent flyer, points |
As part of the FTU event last weekend I presented a session on maximizing United’s MileagePlus program. I don’t think that there is anything particularly groundbreaking in the content, but I do think that it is a good reminder of how their award chart works (or doesn’t in some cases) and how a bit of thought can help you book some pretty incredible awards for the same price (or less!) as a more traditional award.
At the beginning of the session I asked the crowd what they were in the program for. I was quite surprised – and pleased – that domestic upgrades were at the bottom of the list. That’s a good thing in the United program as those upgrades are less forthcoming than with other airlines. Most people were interested in the awards and routing rules and I think that is still an area where United shines. Maybe too much, and I don’t expect it to last forever, but for now the opportunities truly are grand.
I’ve posted the slides online here. I’m not entirely sure that they’re actually going to be completely useful without the conversation as they’re more of an outline than a detailed analysis of what to do and how to book the awards. But I do think they can get you started on where some of the sweet spots are in the awards and how to think about the travel options so that you can get more from the trips you’re taking. If nothing else, they’re a good way to start a conversation on just what can be done.
Give them a look if you’re interested and let’s have that conversation, either in the comments here, on FlyerTalk, on MilePoint, via email or however else works for you.
Posted by Seth Miller on May 1, 2013 under frequent flyer, points |
How do you react when the head of a major airline loyalty program so bluntly states their case? More to the point, what do you say to the person wondering why they don’t get retention bonuses comparable to sign-up bonuses on an annual basis. Do you believe the programs when they say something like, "Every time we tweak [the benefits] we try to take off something that not many people are using and add something that we think more people will use."
Both the headline of this post and the above quote were offered up by Jeff Robertson, VP SkyMiles, during a session last week at the Executive Travel Summit outside DC. Robertson also offered insight as to why a less valued customer – one who doesn’t hit the spend requirements for Medallion status, for example – can suddenly become valuable enough to rate the status with $25,000 spend on a credit card. Unsurprisingly, it is because Delta will have made a lot of money based on that spend, pushing the customer past the value tipping point into being considered worth rewarding.
Throughout the five days I was at the sessions it was interesting to hear the different views of the parties involved. Sure, consumers want more and airlines want to give less. Airlines say the costs to provide the benefits are going up (as are airfares and load factors, so not too hard to believe). Customers say they want long-term loyalty to be rewarded, among other things. What was particularly interesting to me was hearing the view the credit card companies have on the topic.
Sure, the CC folks are incredibly biased. But that doesn’t mean the ideas they have cannot be solid. David Rabkin, SVP Consumer co-brands for American Express offered up a few views which seem pretty similar to the two-way street discussion, but which also have me wondering about which types of loyalty are the ones really worth rewarding. Using two different examples Rabkin quite clearly indicated that share of wallet is more valuable from a loyalty perspective than total revenue. In one instance it was a simple comment about credit card spending, "Someone who gives a high percentage of spend is loyal, even if it isn’t as much money as someone who spends a lot of money but across different cards…. The guy who only has a small wallet and gives you all of it is golden; give him all the rewards you can."
The second example offered up three hypothetical customers:
- Very frequent domestic lowest-fare customer
- Multiple long-haul F customer, but who also flies on competitors
- Credit card user who pulls your co-branded card out thrice daily
Of these, Rabkin made the argument that #3 was the best customer for the airline in terms of loyalty. Or, as he stated in the session (slightly paraphrased):
We love that guy who is flying in the back of the plane but he’s not making us any money. We love the $10k fare but he’s not loyal. We have to focus on the guy who is bringing us the best revenue.
I certainly agree with rewarding the best revenue more than the other options, but I’m not nearly as convinced that share of spend matters so much as total volume. That’s not to say either is 100% important or not, but earning the majority of revenue from a customer based on 3rd-party transactions is a strange way to believe they’re loyal to me. At another session over the weekend there was some discussion of lesser-known loyalty programs and how some of them (BMI was the big name in this space previously) were shells which seemed to be associated with an airline but where the bulk of the points activity seemed to be wholly third party. There are a couple still out there today. What happens when the operations of the loyalty program become so completely disconnected from the operations of the airline? Is that a sustainable way to run the business? Sure, the airlines get to manufacture the award inventory on their own planes, but when partners get involved there are a lot of variables they don’t control, and that can be a challenge.
Ultimately, considering that 60% of points earning these days happens outside of flying (I thought the number would be higher) it isn’t all that hard to believe that Rabkin is correct in who the most valuable customer is. But does that make them the most loyal? And is that the loyalty to be rewarded?
And then there is the final theme which was pervasive throughout the sessions, "Miles are a relic of history. In the next 5 years, maybe 3, programs will be revenue based." That’s a direct quote from an industry insider and I think that the timeline is probably about right.
The industry is entering into a period of significant change in the coming years. There is significant pressure to reward the right types of loyalty, not just time on a plane and not just absolute spend. There will be moves to shore up programs, ensuring that they remain revenue positive for the airlines while also not losing too much in the competitive landscape. Then again, with less competition, that is much easier to do. It isn’t like there are any programs out there which are ridiculously generous across the board.
Posted by Seth Miller on April 30, 2013 under frequent flyer, points |
I had the opportunity last week to sit in on an industry conference focused on loyalty programs, points and consumer behavior. Not surprisingly, a decent amount of the conversations were around credit cards and how they are shifting (or have already shifted) the market. One of the sessions offered a comparison of airline versus bank rewards cards and the results were, to some extent, surprising to me. Here are a couple of the results they showed:
Of course, the numbers are based on certain assumptions, and those assumptions are based on averages, not the extremes. And even the average numbers they’re using are flawed, I believe (assumes $18K annual CC activity). But the overall concept is still interesting. The general conclusion reached is that the cash-back cards are more valuable than points-based cards when the end goal is domestic leisure travel. And, quite frankly, I cannot argue that conclusion.
The real differentiation point, in my view, is what the customer is actually looking to get out of their travel rewards spending. That aspect of the equation is often overlooked in these sorts of reports. Analysis which starts given a certain set of assumptions will invariably reach those conclusions. This report starts with the assumption that only domestic seats bookable online are desired by customers and, unsurprisingly, gets to the result that the co-branded cards from airlines are pretty bad at providing that benefit. Ironically, the airlines can (at least in theory) provide the benefits at a lower cost given their control of inventory and the ability to offer only distressed inventory towards award redemption.
On the plus side, the analysis is pretty good at showing the disparity between year one and subsequent years. That’s as good a way as any to remind consumers that their loyalty is being bought, and that they should consider being sold on a regular basis. Somewhat ironic that they are so up-front about this when at the same time the airline folks at the event were saying things like, “Loyalty has to be a two way street; otherwise it is just bribery and that’s not sustainable.”
If you want to read the full report it can be found here.
Posted by Seth Miller on April 24, 2013 under frequent flyer, points |
Looking for some useful perks in an airline loyalty program above and beyond the normal elite tiers? American Airlines has a rather compelling offer out this year in the form of their 2013 Elite Rewards program (registration required!). The concept – extra perks earned at various milestones – is not a new one but the AA implementation this year is one of the more generous versions in quite some time.
There are two main factors which make the promotion so useful this year, mostly by making it accessible to so many customers.
1) The qualifications this year can be made by EQS, EQM or EQPs. In prior iterations the thresholds were defied by EQPs. That meant only high spending customers were likely to earn the benefits. This time around EQMs or EQPs count at the same rate so even the budget/mileage running passenger can earn the awards.
2) The milestones at which the earnings trigger are pretty smart numbers. Even lower frequency travelers can benefit from the 40,000 point threshold and the 125K and 150K levels do a pretty good job of keeping passengers around even after they’ve hit EXP qualification for the year.
2a) They have an awesome infographic. Seriously, it is pretty solid:
Some of the choices at the various threshold levels are not particularly great values. Like why would you choose a $100 Global Entry credit over 4 EVIPs or 40,000 RDMs?!? And it is worth noting that some of these benefits are not unique to American. The Global Entry reimbursement benefit is provided by United to everyone at the 75K level, for example. And additional upgrade instruments are given to UA elites as they pass the higher thresholds, too. Oh, and for UA elites there is no extra effort required for the additional upgrades; they just happen. Delta also has similar awards available where Platinum Medallions choose one and Diamonds choose two from the pool. Gifting status, bonus miles, upgrades and lounge passes are among the options.
Because of the choices involved it is hard to make an apples-to-apples comparison of the programs. Didn’t stop me from trying to, however. If you’re in to award miles (and that’s what you choose as your bonus) here’s what the earnings look like assuming you start from scratch:
If you are a 100K passenger already it looks like this:
If upgrades are your thing and you choose those instead of miles here’s what the earning looks like (and keep in mind that the relative utility of UA, AA and DL SWUs varies wildly by travel patterns, fares paid and destinations and that the regional upgrades are also quite different; also, if you are an EXP to start the year you actually don’t earn any e500s):
Things like the Global Entry option, lounge membership or wifi passes are probably lower value so harder to compare, but if you don’t want miles or upgrades AA is going to be better in this regard, followed by Delta and then United based on my quick review. Similarly, the opportunity to gift status is one which I know is appreciated by many Delta elites in lieu of upgrades in the SkyMiles program.
That’s not to say that the AA program isn’t very good; I think it is quite compelling for many AAdvantage members. It offers the best benefits at the lower tiers and the choices are broader than what Delta or United offer. But it is most definitely not the only game in town.
Posted by Seth Miller on April 13, 2013 under Flying, frequent flyer, News, points |
I’m often intrigued by the information I can glean from Twitter chats. I tend to avoid them more than participate in them but a chat this past Friday hosted by @JohnnyJet and @CJMcGinnis piqued my curiosity so I tuned in. The chat was about summer travel and used the #TravelSkills tag for tracking the conversation. The two hosts didn’t waste any time getting in to what is often a touchy subject: How much is a reasonable price for airfare?
My answer was actually easy to come up with. For summer travel I’ll spend up to 100,000 points for a business class trip to Europe. And I’ve been quite successful in finding those when and where I want them over the years. But that’s just me. What was interesting to me were some of the other responses I saw to the inquiry. Seems that a lot of people think that $1000 is an reasonable upper limit, with many believing that even lower fares are "fair" for such a trip.
Some responses based the price on where they’d end up:
And some considered where in the USA they were starting as part of the thought process:
Every single one of the numbers tossed out as being "fair" was actually below the average cost to operate the flight which would carry the passenger on the trip (based on published average cost data from the airlines). So, with the exception of some bargain fares on oneworld carriers to Dusseldorf (and even those are ~$900 from the east coast), it seems that many of the chat participants are going to be disappointed. Chris points out that average fares are in the $1200-1500 range already and there are no signs of those dropping much anytime soon.
Fares are higher on average than they have been the past few years; there is no doubt about that. Even off-season fares are higher. That mostly comes from less competition, less capacity and a desire by the airlines to actually make some money. Absolute fares are at or near all-time highs, while inflation-adjusted fares are still quite reasonable according to DoT analysis (note that the DoT data is for domestic, not international, but the trends are similar):
Not adjusted for inflation, the $367 third-quarter 2012 average fare is the fifth-highest average fare for any quarter since BTS began collecting air fare records in 1995. The highest was $385 in the second quarter of 2012. The previous third-quarter high was $361 in 2011. Third-quarter 2012 fares were $243 in 1995 dollars, down 18.1 percent from the average fare of $297 in 2000, the inflation-adjusted high for any third quarter (Tables 1 and 2).
Here’s another bit of analysis from Airlines for America, the industry trade group in the USA. It uses DoT data to track overall international fares since 1990 (a subset shown here).
These are overall averages for all international travel, not just peak season transatlantic. Still, the numbers make it hard to believe that getting peak season airfares at below average rates is going to work out well very often.
There was one slightly off-topic aside in the conversation which was also rather entertaining:
Apparently relatively normal airfares are, in some cases, shocking.
Don’t get me wrong – I don’t like paying very much for airfare and when the fare is too high I either don’t travel or I go somewhere else. But I also go in to the transaction knowing what to expect and being able to tell if I got a good deal or not rather than just expecting that fares are always so low. At the end of the day I guess I’m just surprised how low some people think airfare should be to be considered reasonable.
No wonder the airlines are struggling to eke out profits. For too long passengers have become used to the cheap fares offered as a result of excess capacity and increased competition. Mergers and ATI deals have cut almost all of that out of the system. And with the impending US Airways/American Airlines merger and Delta/Virgin Atlantic ATI request working their way through the regulators the competition is going to decrease. It is good for consumers that the airlines are able to remain in business. But that will mean higher fares, more crowded planes and fewer choices, all of which make for not-so-happy passengers.
Tags: American Airlines, bankruptcy, Delta, DoT, Flying, frequent flier, frequent flyer, merger, points, US Air, Virgin Atlantic
