Seat 2B By Joe Brancatelli
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Guerrilla Guide to the New Frequent-Travel Game
February 19, 2015 --Delta Air Lines stood before the Supreme Court of the United States 15 months ago and demanded the right to play fast and loose with its SkyMiles frequent flier program. The Supremes eventually and unanimously agreed with Delta's contention that no one should " superimpose a duty of good faith and fair dealing" on the airline.

We now know exactly how low an airline unfettered by common decency will stoop in pursuit of profit. Ten days ago, Delta (NYSE: DAL) eliminated SkyMiles' award charts, the published standards that detail how much Delta scrip you must spend to claim a seat on the airline or one of its partners. Now travelers must deal with the carrier's Award Calendar, which by Delta's own admission often spits out random prices far above the no-longer-public charts. The carrier also imposed a de facto 21-day advance reservation restriction on virtually all of its lowest-priced awards.

Welcome to the new world of frequency programs. A world where airlines and hotels create the scrip, manipulate its value, control the inventory and rig the game as they sees fit, when they feel like it, without notice or any discernible sense of shame.

Delta's moves this month are Three Stooges-like pokes in our collective eyes, but they're hardly the first time an airline or hotel has tinkered with the value of our "loyalty" points and made unannounced moves that benefit them and harm us. Just look at Hilton's HHonors program. It is now so opaque that the published award chart allows the hotel giant to double the price of a "free" night at whim. Depending on date, time or who knows what other factors, Hilton tells you a hotel room that costs 30,000 HHonors points one moment might cost as many as 60,000 the next. You never know what it costs and Hilton doesn't want you to know.

These radical changes in the marketplace requires radical rethinking on our part. I've written dozens of times about the "rules" of winning an essentially unregulated lottery played with Zimbabwe dollars. Those basic strategies simply no longer apply because many of the people who run the programs now apparently idolize Vladimir Putin: they don't care about acceptable business behavior and they will obfuscate to get what they want from us.

So here's my guerrilla guide to surviving in a frequency environment controlled by the Putins of the travel world:

Don't give up and get out With the frequent travel arena so nasty, the easiest thing to do is not play. That may make sense for vacationers, but it's a bad idea for us business travelers. Why? The cost of the programs is baked into the price of our airline seats and hotels rooms. Giving up is surrender, not strategy. If you want to get full value for the money you're spending anyway, you need to keep your skin in the game.

Accept the reality of the market The nation's carriers are selling an industry-wide average of 80 percent of the seats they fly, they have no short-term plans to expand and there's little new competition on the horizon. In other words, there's no incentive for them to be more generous. In fact, as we are seeing, they can cut the value of their frequency programs with impunity. The hotel market is less cutthroat because the major players are actively working to expand their footprint around the world. But with nightly rates rising and occupancy growing, they have little need to be more generous, either. Understand and accept that this is the current reality. They have the hammer. Our goal should be not to get hammered.

Loyalty is a one-way street Airlines and hotels still want your loyalty, but that hasn't been the driving factor of the programs for many years. Most carriers and lodging chains no longer run the programs to reward your loyalty. They're about making money, lots and lots of money, and the more you are loyal to them, the more the airlines and hotels will try to squeeze cash from your wallet. Our frenemies at Delta reaffirmed that last year when chief revenue officer Glen Hauenstein explained to security analysts that he hopes to sell half of the airline's first-class seats in 2015, up from just 31 percent in 2011. Selling more first-class seats means fewer free upgrades, a lure that has traditionally bound frequent fliers to a particular airline. But now you must understand that you're not getting for free what an airline thinks it can sell no matter how loyal you are.

Earn 'em and burn 'em There are no tomorrows in the frequency game. Airlines and hotels aren't and have never been banks. They don't give you interest for holding scrip with them. In fact, "banking" miles and points is a fool's game because they'll constantly decrease in value thanks to devaluations and rules changes. The only sane strategy is to burn your miles and points for awards as soon as you can. You want a slush fund to fund your travel when you retire? Fine. Get into some good investments. Airline miles and hotel points are not investments.

Buy your perks Airlines and hotels now work hand-in-glove with banking partners. And unless you're a very frequent flier who can reach the highest levels of the plans, you might be better off buying your perks from the banks via their affinity credit cards. Airline-sponsored credit cards will generally come bundled with perks such as free checked bags, priority boarding and airport lounge access. Hotel-fronted credit cards will get you low- or mid-level elite status, which often translates to free WiFi, complimentary breakfast, room upgrades and other perks.

Limit your exposure Just because you carry travel affinity cards doesn't mean you should use them to charge purchases and accrue even more airline and hotel credits. Instead, move most spending to cards that give you points in Amex Membership Rewards, Chase Ultimate Rewards and Citi ThankYou. Why? Those points have historically devalued more slowly than airline and hotel scrip and all three banks now allow you to shift credits to affiliated carriers and lodging chains when it comes time to claim an award.

Find pockets of value Even in this era of diminished expectations, you can find value in airline and hotel frequency programs. Generally speaking, the Alaska and American airlines plans are more rewarding than the United and Delta programs. Why? The former retain the traditional miles-based earning formula and hope to steal your business from the latter, which switched to revenue-based accrual and wrapped substantial devaluations into the conversion. Meanwhile, Hyatt Hotels (NYSE: H) this month added two new long-term perks to the Diamond level of its Gold Passport program and this week announced a short-term rebate on awards for any member who also carries its affinity credit card.

Don't wag the dog Finally, it's important to restate the basic strategy: frequent travel plans work best when they are played after you choose your preferred airlines and hotels based on price, value, convenience and other hard-value attributes. Fly the airline that makes sense for you. Stay at the hotel chain that works best for you. Then consider the miles and points you earn a bonus, not the object of your affection.


This column is Copyright 2015 American City Business Journals. All rights reserved. Reprinted with permission. JoeSentMe.com is Copyright 2015 by Joe Brancatelli. All rights reserved.