The analogies of points as a currency are not new. There are a few programs out there today that already have "pay with points" types of functionality available, but there are still a number of limits on those systems.In most cases they can be used only for specific purchases, mostly travel related, or via certain merchants. American Express Membership Rewards are one of the most easily spent on non-travel events, though the point valuation of that channel is not very attractive.
Listening to representatives from the loyalty programs and the companies who help them make the programs work at the Randy Petersen Executive Travel Summit a few days ago, however, it seems that the idea of defining a specific cash value to points and allowing full fungability of them is not too far away. Loylogic has partnered with Etihad to put their PointsPay product in the market, allowing points to be easily redeemed for value on a credit card, making points instantly spendable anywhere that credit card is accepted, for example.
Other companies at the event spoke of the shift from points to real currency with different levels of optimism and excitement. Some were lobbying for full transparency on the points, noting that many customers have already figured out what the values are anyways. Others suggested that the opacity of the specific value actually increased the perceived value, making the customers feel that they were getting a better deal and allowing the programs to remove the liabilities more quickly.
Still other companies suggested that the best way to increase the perceived value of the points is to offer up redemptions that are less utilitarian and more creative. Whether it is allowing customers to use points to redeem for space travel, a week on a private island or cashing in 386,000,000 points for a yacht, the options are, at least in theory, endless. That those awards generally are never redeemed makes it easier to offer them and the perceived high valuation since they are still too far out of reach for most to attain.
One concern voiced (by me, among others) regarding this apparent shift is the potential that it will erode or displace the travel award segment of the programs, effectively taking away some of the variable value of the programs and making them truly fixed rebate opportunities. Most present in the room and in the private conversations in the halls seem to think that this point hasn’t arrived. At least not yet. The cynic in me still sees great potential for that time to come, sooner than not. A few carriers are already very close; JetBlue, Southwest and Virgin America come to mind, though they are all still essentially only travel for the redemptions. Switching from that closed redemption network to an open, fixed-rate system actually wouldn’t be too huge a leap, at least on the conceptual side of things. The actual work to make it happen isn’t so trivial.
I’m not throwing in the towel quite yet; there are definitely still opportunities to play the game and come out ahead as a customer. But they are getting harder and harder to find. The market seems to be shifting in that direction, both on the supply and demand side of the programs. This is definitely an area to keep an eye on in the coming months.
It was August 2010 when Virgin America announced their plans to offer reciprocal earning and redemption benefits with the other carriers in the Virgin brand. Alas, the frequent flier market works slowly in some cases and after more than a year there was no real news on the redemption side of the deal. That ends this week, with both Virgin Atlantic, Virgin Australia and Virgin America announcing redemption rates.
I’m focusing on the the rates for Virgin America here, mostly because I find the ranges they cover to be more intriguing than the numbers from the other two. Virgin America has published a calculator that displays the number of points required based on the city pairs that the two partners serve. Even more interesting to me, however, is that the underlying data is contained in a singe easy to download
XML JSON file. Drop that file into Excel and throw some filters on it and the data that comes back is quite interesting indeed.
First up, both one-way and round-trip redemptions will be offered. That’s the good news. Unfortunately, there is a penalty for one-way awards relative to return trips. The penalty is generally 5-10,000 points, based on the samples I saw, though one or two did go higher than that, especially in premium cabins.
As for the actual redemption rates, there are definitely some interesting sweet-spots on the chart. JFK to London return is only 35,000 points in Upper Class, for example, which is pretty nice. The down-side is that it also comes with $1100 in taxes and fees to be paid. Also, it is more than double the price of an economy award on the same route (15,000 points + $650 in fees). The fees do track directly with what Virgin Atlantic charges for a revenue booking (the APD and the YQ are both higher in business class) so that’s not completely ridiculous, but with base fares as low as $120ish round trip in economy dropping 15,000 points seems like a REALLY bad idea.
The real fleecing in the program, however, comes when you try to redeem for Business Class awards on Virgin Australia AND you add a connection in the United States. Los Angeles to Brisbane is a rather reasonable 80,000 points up front. Want to connect onward to Chicago? Tack on another 100,000 points. And if you want to go to JFK rather than Chicago it is an extra 50,000 on top of that. Yeah, it is that ridiculous.
And the taxes aren’t particularly great on those fares either. At least the transcon penalty on Virgin Atlantic is only 15,000 points.
Comparing the rates to the value via American Express Membership Rewards – one of the easier ways to accumulate Elevate Points – shows further examples of the limited value. Getting that JFK-London award is 35K Elevate points, which would mean 70K MR points. Redeeming via ANA would allow the same trip for 63K points and roughly the same fees. JFK-Capetown would be 190K MR points via Elevate or 115K via ANA.
Adding these partners is a great thing, in theory, for members of the Elevate program. With the redemption charts the way they look, however, the numbers are not particularly attractive. I’d stay far, far away.
It would seem that, despite my best efforts, I’ve managed to maintain hotel status through my own actions. I don’t really believe much in the value of hotel status for personally paid stays, mostly because I couldn’t care less about the "free" lounge, the "free" breakfast or the "free" internet service that the status affords. Ditto for suite upgrades. Plus, I like the character and charm of independent hotels in foreign countries way more than the western-branded ones as a general rule. Yes, I have SPG gold via my AmEx Platinum card, but even that barely gets used.
So imagine my surprise when I received an email this week congratulating me on getting status with a hotel program.
FIVESTAR is the program for hotels.com users, and I’ve been a pretty heavy user for a while now. I suppose that if I knew about the program I probably would have been surprised that I hadn’t qualified earlier (it only takes 10 nights annually) but I never knew about it so I never cared. Still, now that I’ve got this status I should figure out what the benefits are, right?
So I click the link lower down in the email and I start reading. There is a PDF file for both the FIVESTAR and FIVESTAR Plus (25+ nights) on their site and I tried to figure out what’s special about the programs. I still haven’t figured it out. There is this one section that purports to be part of the benefits:
Plans change. Now, so can your reservations–with the Hassle-Free Travel Guarantee. If you need to change your reservations for any reason – weather, schedule change, or even personal preference–our FIVESTAR Plus agents will do their best to help you make new travel plans right away, without any Hotels.com change or cancellation fees.
With Hassle-Free Dispute Resolution, we will work to fix any problem that you may have during your hotel stay. Just call your members-only phone number or email us at FIVESTAR@hotels.com.
Here’s the thing about these benefits…they’re not actually unique to the "status" level. Hotels.com has a no-fee cancelation policy for all their reservations. They advertise it really big on their home page:
So that’s nothing special. And their promise to "fix any problem" is also something that seems to be available to all customers. I know that they took care of several successive fiascos with reservations in Kochi, India well before I had the special status.
They also promise a price match guarantee for FIVESTAR members, but that’s also advertised to all customers really big on the homepage. Maybe there is something to be said for the special deals that they supposedly offer for members, but I haven’t seen any of those yet. I’m not holding my breath.
I get that they want to make their most frequent customers feel special by providing them extra value for their loyalty. After all, that’s what these programs are all about. But it doesn’t really work so well when you’re not offering any tangible benefits as part of the program. I’m certainly not going to call up and complain that they gave me a worthless "status" but it is also not going to change my booking patterns, which is what these sorts of programs are supposed to do.
I’m a big fan of their Welcome Rewards program in general (even with the devaluation not too long ago), but this FIVESTAR program is pretty much worthless from what I can see.
Apparently I have a habit of downgrading my travel experience almost as much as I upgrade it. Today’s flight to the Pacific Northwest was another in which the promise of a big, comfy seat on a long-haul flight somehow ended up with me sitting in seat 25E – a middle – in the back of a 737-500. Huh??
It started last night, as I was contemplating the 4am wake-up that would be required for my scheduled 6am flight on United’s p.s. 757-200 from JFK to San Francisco. I had applied an upgrade certificate and booked seat 9D, arguably one of the best in the domestic United fleet. My trip was full of win. Except for that 4am wake-up. It was after 10pm and I was nowhere close to heading to bed. The 6am flight was a bad idea. Fortunately the folks in reservations were able to let me apply the same-day change policy and switch my flight. The only option available was via Houston (more miles!) but also only with a middle seat in coach for the first segment. I decided sleep was more important and confirmed the change.
The new flight was the scheduled 5:25pm departure from Newark to Houston. The aircraft was the 757-200, equipped with AVOD and power. Even stuck in a middle seat, at least the amenities weren’t awful. Besides, it gave me a few hours to hang out at the airport in the afternoon and people-watch. Then I checked the schedule again and realized that if I stuck with the newly booked itinerary I wouldn’t have time for dinner. Not a huge deal and I’m sure I could scrounge something from my bag or the Buy on Board offerings on the flights, but it still wasn’t particularly appealing. Besides, I’d rather spend the time in the Houston airport than Newark; the food options down there are better and the terminal is nicer. Perhaps an earlier flight would be possible.
I listed for the 1:47pm departure as a standby passenger and half-way through the boarding process cleared the waitlist. My seat assignment stayed the same – still 25E – but now I was boarding a 737-500 with no IFE at all. It has certainly been a while since I had a boarding pass print with "Group 7" on it, but they had already called for all passengers so no big deal there.
And so here I sit, somewhere over Virginia if I had to guess by looking out the window, eating and enjoying my Asian Noodle Salad lunch (thanks, AmEx, for the $200 credit!) and generally being happy that I’m getting where I want to be sooner. Sure, the nicer plane is, well, nicer. But being able to have a proper meal on the ground or get where I’m going at a time that is more convenient is even nicer than that.
I’d make this trade just about every time.
An image like this near your airport is simply not good. Flying out of a tropical cyclone almost guarantees an adventure.
About the best thing that can be said for Cyclone Thane is that it passed over 100 miles to the south of Chennai, meaning that the winds and rains were steady, but not excessively strong. Our flight got out basically on time and that was a most welcome relief. Our biggest adventure was actually getting to the airport, with some areas of road having standing water and other issues. On the plus side, it seems that most folks decided to stay home in the rain so there wasn’t too much traffic.
The flight itself was on one of the relatively new Airbus A320s in the SriLankan fleet and it was pretty much an uneventful 65 minute trip from Chennai to Colombo. Cloud cover was heavy for nearly the entire flight so there were plenty of bumps along the way, but nothing too strong.
The seats were comfortable enough. I scored a bulkhead in advance through their online booking system with no issues, though it is a solid bulkhead with no foot cutout.
They even managed to serve a meal to a relatively full aircraft in that short flight time. The vegetable Biryani was not half bad, though it also wasn’t particularly wonderful. (I also think now, 72 hours later, that it was this meal that got me ill, necessitating dipping in to the emergency cipro supply, so maybe the "not half bad" comment above was a bit off.)
The family of four sitting adjacent to us (we both wanted window seats and they took the middle/aisle adjacent) was pretty entertaining, including the decision to change the lap child’s diaper at the seat. Ick. At least the kid was cute and didn’t scream. And his brother fell asleep shortly after takeoff, ending that shouting as well.
The flight attendant uniforms were pretty awesome, with the women wearing a sari-esque outfit. Didn’t manage to snag a photo, sadly, but I’m a big fan.
I was also impressed with the amenities offered up to passengers in the forward cabin on the short flight. Never seen anything close on a short-haul flight.
Oh, and coloring books (colored pencils, not crayons!) or hats for the kids on the plane was a nice touch, too.
And then, as we started our approach into Colombo, the skies cleared and we were treated to a beautiful view of the Sri Lankan countryside as we came in to land on runway 22 at CMB.
I’ve also heard reasonably good things about the long-haul product that SriLankan offers and was actually planning on trying it out, albeit on a somewhat shorter CMB-BKK flight. I booked those tickets online also with no issues. Trying to get them refunded, however, has been nothing short of a nightmare. The refunds for online bookings can only be handled online and the webpage has failed three separate times for me. Fortunately I was able to get through to someone in the call center here in Sri Lanka and have them at least cancel out the seats but I foresee much trouble in the future getting my money back; they insist that I now send emails to a refunds group. AmEx might be getting a call on this one.
Following on the heels of this summer’s award chart adjustments that saw many awards increase in cost it appears that Aeroplan, the loyalty program associated with Air Canada, is also adjusting the surcharges they levy on certain award redemptions. Specifically, it appears that the YQ fuel surcharge, to date only levied against redemptions on Air Canada flights, is now applying to flights operated by Lufthansa, Austrian and a few others.
This trend is not a new one. Recently American Airlines began charging the YQ surcharge on flights operated by partner British Airways. Delta charges a similar fee for flights originating outside the USA, even if flown on Delta airplanes, while not charging where the flights originate in the USA. Needless to say, the development is a costly one for customers.
With Aeroplan as one of the last great redemption options for the American Express Membership Rewards program this move also devalues those points a bit. Not great news at any level.
More over at View From the Wing.
I’ve been working lately on cobbling together a rather ridiculous series of flights for our winter vacation this year. The plan is mostly South Asia, focusing on the southern tip of India and Sri Lanka, plus a quick stop in Bangkok on the way home. At least that’s the theory.
Initially I booked the trip using points for award travel round-trip between New York City and India. Since then the itinerary has morphed a bit so I’ll be changing things up (thank goodness for free award changes as an elite!) but I actually need to get a couple of the tickets purchased in order to make those changes, just in case. And it is proving incredibly difficult to buy at least one of the tickets.
If you had asked me a month ago, before I started all of this, I would have bet that the ticket on Sri Lankan would have been the hard one to acquire. I would have lost that bet. The transaction with them was smooth as could be, handled fully online and it was only a couple days later that American Express called to make sure that I really was buying a couple one way flights from Colombo to Bangkok in early January. It wasn’t even a big enough risk for them to call immediately.
Buying the flight from Bangkok to JFK on EgyptAir, however, is proving to be a ridiculous mess. I started with their website which looks pretty slick, at least for the flight selection search bits. It showed the fare I had seen otherwise online (about $150 less for each ticket than any other channel) and I went through the long process of entering in all our personal data to book the flight. At the final payment screen, however, the transaction was denied. Repeatedly.
My first call was to Visa to make sure my card was OK. It wasn’t, but they cleared that up. Waiting two hours didn’t help; still denied. Another 24 hours later and still denied. Even more strange, however, was that the credit card company didn’t even show the most recent transactions. It is as if EgyptAir never even tried to authorize the card; they just rejected the transaction. It took a couple calls but eventually I got in touch with someone in the EgyptAir ticketing office in New York to try to process the transaction. The first agent saw the reservation and the price I was quoted online. She transferred me to another agent to handle the transaction who promptly informed me that the fare was $300 higher. Ugggh.
So long as I was not going to get the discounted fare I figured I’d try to get some other value for the transaction. American Express offers bonus Membership Rewards points for travel booked through their portal so why not give that a go, right? Apparently their system is not robust enough to handle selling a one-way ticket in business class from Bangkok to New York City:
That’s is simply ludicrous, especially considering that probably a dozen airlines or more offer service on that route with a single connection.
And so I’m essentially left with a bevy of third party online travel agencies through which I can try to book the flight, but now I’m faced with wading through their differing fares and service fees to find the right price. Plus I’m stuck with dealing with one of them for service going forward rather than dealing with the airline directly. What a mess.
It shouldn’t be this complicated to spend money on a plane ticket.
I’ve never been a particularly big fan of using American Express Membership Rewards points for hotel stay transfers. The rates are generally pretty awful and there are better ways to accumulate hotel points out there. Still, the option is there and every now and then it is something that folks use.
It looks like AmEx is trying to make the product a bit better, at least for a few months.
UPDATE: This promo is only for cards in the MR First program, namely US-issued Platinum and Centurion cards. Sorry for getting anyone else excited, though you probably shouldn’t have been anyways.
Through the end of the year they’ve got a sale on for transfers to Hilton HHonors and Starwood Preferred Guest. Both programs are offering 25% off.
There is also a 25% discount on the various free night certificates that are available via the Marriott Rewards program:
None of these are a particularly great deal but it does suck a bit less.
The partnership between American Express Membership Rewards and Virgin America was announced several weeks ago but without many details at the time. Those details were expected to be announced by October 5, 2011, when the partnership was supposed to be fully in effect. Apparently the numbers came out a bit early and The Points Guy noticed the rates. Wow do they suck.
The conversion rate is 200 AmEx MR points -> 100 Virgin America Elevate points. Virgin America’s Elevate program has relatively fixed redemption values for the points, topping out around the 2 cents/point range. With this conversion factor the AmEx points are topping out at 1 cent/point and can actually do rather worse. That’s a pretty bad rate of return on those points.
It is even more crazy when you consider American Express also has a buy with points option that natively values the points at a penny each (1.25 for Platinum/Centurion card holders) and buying via that method actually is seen by the airlines as a revenue ticket so one earns more points (the native program points, not Membership Rewards points) for flying on that flight.
The only slightly reasonable explanation for why one would transfer AmEx points into Elevate at these rates is if you’ve got almost enough for a reasonably high-value award already and you just need to top off the account. Otherwise it is quite a bad deal.
This change, coming on the heels of Continental exiting the program as a redemption partner and the impending doom of devaluation for US-based earners in the British Airways Avios conversion, doesn’t really do much to offset the losses in the Membership Rewards program.
Anyone ever tried to buy a round of drinks for an entire airplane? I did today and the logistics were surprisingly complicated. Maybe that’s because no one ever does this sort of thing. Or because it is ridiculous. But that mostly just describes me so I gave it a go.
American Express offers a $200 credit to platinum charge cardholders to offset the various fees airlines will hit you with these days. The catch is that it can only be used against one airline and once you choose the carrier you’re stuck with that choice for the whole year. Most of my flying is on airlines where I have status and I rarely check a bag, even when I don’t have status. Plus I get upgraded a fair amount so food and booze are often part of the deal. Nearly a year into the program’s existence I haven’t figured out a scenario where I could reasonably spend that $200.
Sitting a lunch with a friend in Anchorage I decided that today would be the day. I was going to commit my $200 in "fees" credit to Alaska Airlines and get my money’s worth. It is my first flight ever on Alaska and probably my last for the year so committing to spending the $200 on my own is too tall a task. But with a little help it shouldn’t be much of an issue. After all, it is a flight to Honolulu and folks should mostly be pretty happy about that, right? A free drink should make it even better.
After stowing my bag in the overhead bin I made my way back to the galley to explain my plan to the flight attendants.
Me: Hi there! I’ve got a strange situation here. I want to buy drinks. A lot of them.
Me: I want to buy the first round for the whole plane. That’s probably 40-50 drinks, right?
OK, so the quotes aren’t entirely verbatim, but the confusion expressed by the FAs was pretty close. We spent the next 10 minutes chatting about my scheme and trying to figure out the best way to handle the logistics. One option was for her to run the card 30+ times and have me hand the receipts to the lucky drinkers. We threw that one out pretty quickly as way too much work. Eventually we agreed that they’d just do a normal beverage service but rather than charge everyone they would just tally the total drinks consumed and I’d pay the bill at the end of the service.
Because the offer was only revealed after the drink was ordered the initial damage was actually rather limited. We didn’t quite get to the $200 threshold on the first pass. This, of course, raised another issue of trying to figure out how to spend the rest of the credit on board. I made a sign, figuring I’d walk through the cabin offering up the drinks that way.
Ultimately, however, that seemed less friendly. So I just started asking folks if they wanted a drink. I’m wearing a Hawaiian shirt that is similar in color to that of the flight attendants so A few people confused me for that; I even had one ask how to fill out the agricultural declaration form. But once I explained that I’m just a guy buying drinks for anyone who wanted one I did manage to get a few takers. Pretty soon my sales efforts were rewarded and the $200 credit (and a few dollars more) was over. I was willing to keep going (a bit) but the third beverage service is about to start and that means free mai tais for everyone!
I had entirely too much fun on this flight. I don’t know why but flights to Hawaii make me want to have more fun than most. Also, a special thanks to the crew from Alaska Airlines who were willing to help me out on this ridiculous bit of entertainment.