Struggling Airlines Are Making It Harder To Earn Frequent Flier Points and Status. Here’s Why. – The Average Joe
Business Economy Tech Subscribe About Us
×

Become a better investor with our free daily newsletters

Join 250,000+ investors discovering new market trends and ideas.

    Struggling Airlines Are Making It Harder To Earn Frequent Flier Points and Status. Here’s Why.

    victorlei

    December 14, 2023

    If you want to arrive at your destination, take a flight. If you want to get nowhere, invest in an airline ETF. An investment in the US Global Jets ETF (NYSEARCA:JETS) during its inception in 2015 would have cost you 4% of your money through Sept. 30, 2023.

    Despite a record $717B in sales, carriers will net just 2.7% in profit this year, according to research from IATA. To cut costs, airlines are turning to a significant cost-saving avenue — their loyalty programs.

    Air-flation: This year, America’s five largest airlines have announced changes to their frequent flyer programs — making it harder to earn and redeem loyalty points. Some airlines like United (NASDAQ:UAL) have outright devalued their points by over 30%, while others have made changes that have kept travelers guessing.

    • Delta (NYSE:DAL) increased its award fare costs after adding a Basic Economy redemption option that limits seat selection and cancellation refunds.
    • American (NASDAQ:AAL) devalued point redemption by abandoning its fixed cost rewards chart — replacing it with a dynamic one which prices routes based on demand.

    More changes lay ahead, with Southwest (NYSE:LUV) projecting a 4% devaluation of Rapid Rewards points by year-end and Alaska Airlines (NYSE:ALK) altering its award redemption process in Mar. 2024. Meanwhile, airline status could be getting a more prominent revamp.

    When status means nothing

    While some airlines are making loyalty status easier to attain — others are introducing hurdles to limit preboarding, upgrades and lounge access.

    • Delta made controversial changes to its SkyMiles program, nudging flyers towards Delta-branded credit cards for Medallion status and lounge access.
    • In 2024, budget carrier Frontier (NASDAQ:ULCC) will expand benefits for status-holders — but earning them will be more challenging with a switch to a spend-based rewards system.

    Will status still be worth it? The coming program changes will only increase the cost of achieving status, placing greater emphasis on airlines’ credit card programs. That’s why The Points Guy’s Summer Hull recommends sitting out the status sprint and simply “buying what you want when you want it.”

    Trending Posts