Frequent Flyer Points are devaluing fast. When to use them
Frequent flyer points are the crack-cocaine of the travel world; folks do all sorts of peculiar things to maintain status and benefits from their favoured carriers, one friend of mine is flying to Argentina this weekend simply to maintain his top-tier status for next year, but rarely are these devotions reciprocated.
Airlines are getting bigger and bigger, and if one counts Alliances as a carrier itself, they are simply global behemoths, and care little for any individual; as a result, they create targets, measured either in segments flown, or in the actual miles travelled, with attractive benefits for those who reach these levels.
However, their currency, frequent flyer points, are like any other currency; create too many and they will devalue. In the case or airline points, of course, these points, and their concurrent liability to the airline, grow as more people fly, miles are accumulated and not utilised and their “partners”, hotels, credit card companies and the like, issue more and more; more even than the “dollars” issued by the Zimbabwean Central Bank at its zenith.
So there is but one solution for the airlines, and that is their yearly 10 – 15% devaluation; it is true that few of us would actually hold any other investment that shed value so predictably, but we do. In the case of Air Canada, at least some notice is given; others like Delta simply announce that “today” the value of their points has decreased; no chance to book a trip with points accumulated, just back to the airport for a few more flights.
Points too have their blindside; it is rarely worth using Aeroplan points, for example, for a low-season ticket to Europe in economy. A recent look at purchasing a Winnipeg – Dublin / Paris – Winnipeg ticket is a good example. Including taxes, the ticket would cost $1,150; to use Aeroplan points, it would have cost 60,000 points, plus a rather irritating $730 in “taxes and surcharges”; the saving would be a massive $420.
Now putting this into perspective, a ticket from Winnipeg to New York, Los Angeles or New Orleans can often cost upwards of $700 these days, yet one can use 50,000 points and $87 (per person) in fees for a reward ticket; a much better value for utilising accumulated Aeroplan points.
Aspirational travel is, of course, the best value of all; travelling in business and first class is beyond the pockets of many of us, and if one has sufficient points, the value can be spectacular.
A First Class return ticket, complete with large, flat beds, caviar, luxurious ground facilities and all the fun of the fair, can be yours for a mere $13,000 per ticket, or currently 125,000/145,000 points for a ticket to Europe. Space in these classes can be harder to come by, but persistence or the assistance of a suitable compensated travel professional can be invaluable.
It is also worth subscribing to one of the myriad of frequent-flyer blogs; one I particularly like is “One Mile at a Time”. it is a touch US-centric, but nevertheless interesting.
The best advice now, unfortunately for those who were collecting for their dotage, is to “Earn them and burn them”; similarly, it is worth accruing points in a neutral program such as Diners Club or American Express who allow you to hold points, and then turn them into a variety of different programs.
And be careful of exchange rates! As with any other currency exchange, there are huge variations. It costs fare fewer Alaska Airlines or American Airlines points to travel on British Airways that it does BA points themselves, yet they accrue at the same exchange rate via the credit cards. There are many other such opportunities, and a canny traveller will look at three issues: where do I want to go, who travels there and which points can be turned into this journey.
The answers to that question may surprise you; but on the other hand, they may get you to your preferred destination faster and in more comfort!