Yes, what you figured out from your own experience is verified: New, detailed research proves that frequent flyer programs have, on average, lost value over the last five years. We can thank the good folks at The IdeaWorks Company for those results—published in a press release that is the tip of an iceberg of granular data sold to airlines and other big travel companies.
- Average miles/points “prices” for “free” domestic economy seats are up, but just a little, not a lot.
- Payback on paid fares—how much value you get per dollar spent on airfares—is down a lot.
- The reward value of each mile/point is generally down, but not a lot .
Award Prices. In early 2024, overall reward prices vary from a low of 14,484 points on Southwest to 30,460 miles on United, with Delta also high at 26,700, JetBlue in the middle at 22,388, and Alaska at 18,020. American is an outlier, at 17,820, actually down by a big margin.
Payback on Paid Fares. The report shows a wide variance in payback, from a high of 6.7 percent on Southwest to a low of 0.4 percent on Delta, which awards no miles on basic economy fares. The other four lines are grouped more closely between two and three percent. Although all lines are down, Alaska, Delta, and JetBlue are down a lot; American and United only a little.
Value per Mile/Point. Perhaps the most important results are that American leads the pack in value, at 1.4 cents a mile and double its 2019 value. United generally operates in lockstep with American, but not in value; its miles are worth 0.7 cents each—just half of American’s. The other lines are closely grouped at 1.0-1.3 cents a mile.
Anyone who follows the sprawling blogosphere knows that the self-styled frequent flyer mavens almost always quote the value of a mile at between 1.7 cents and a bit over 2 cents. I’ve been saying the value is closer to one cent—a conclusion validated by the new study.
What’s Not Covered. The study excludes some potentially important evaluations. The exclusion of smaller US lines probably doesn’t affect many travelers, but I’m sure quite a few US travelers pile up their miles on Air Canada, a big European line, or an Asian Line. Still, my guess is that anyone who earns significant miles on a foreign line is probably as aware as anybody of its real value.
The study also excludes folks who use miles for premium cabin long-haul flights, usually to Europe or Asia. I know that’s what I’ve done. And if you aren’t rigorous, you can calculate some really crazy values. I’ve used business class award seats to Europe at around 100,000 miles, and if you compare that with a common list price as high as $5,000, you get a value of 5 cents a mile. But that’s true if—and only if—you‘d be willing to spend $5,000 on a ticket if you couldn’t get an award seat. Not me. I’d maybe spend $2,000 tops, making a mile worth about 2 cents or less.
The report doesn’t touch on credit card earnings, either, but to me the take-away is clear. For most travelers, a credit card that pays 2 cents back for every dollar spent is a much better deal than one giving one mile, worth a bit over 1 cent, per dollar.
The press release summary key findings is must reading for frequent flyers. Download it at Reports | IdeaWorksCompany.
