Predictions for Major Changes to Loyalty Programs in 2014

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2013 was a year of several major devaluation announcements including:

  • United (kicks in February 1, 2014)
  • Southwest (kicks in March 31, 2014)
  • Delta (already kicked in on current award bookings for travel that starts February 1, 2014 or later)
  • Hyatt (kicks in January 7, 2014)
  • Ultimate Rewards (with three major transfer partners devaluing–United, Southwest, and Hyatt–the program took a major hit through no fault of its own)

But the more things change, the more they stay the same. We’re still getting outsized value from our miles and points and traveling the world in style for next to nothing.

What’s my outlook for 2014 and what’s my strategy for earning and burning the major points’ currencies?

United

For the umpteenth time: if you want to book a United award for travel in 2014–especially if you want to fly in a premium cabin and especially if you want that flight operated by a partner airline–book the award by January 31, 2014. Or have my Award Booking Service book the award by January 31, 2014. On February 1, prices go way up for some awards.

But even after February 1, I will be acquiring United miles.

My points strategy is logical, not emotional. Sure, I think United devalued its most aspirational awards way too much, but I’m not going to sanctimoniously boycott a program that still offers great value on some awards.

United miles are still great for economy awards because the Star Alliance is the largest route network with the best award space.

United miles still offer solid value for business class awards on United’s own planes, and United has a solid route network to Europe, South America, Australia, Asia, and Africa. It’s not complete, but it’s good. I also happen to think United BusinessFirst (as its business class is called) is very, very good.

United miles offer a very poor value for international first class awards on partner airlines.

For the award space and the fair prices on economy and business class awards on United metal, I will still be a United collector. If you’re thinking of ditching United miles, ask yourself: What other Star Alliance miles will you collect?

US Airways miles are a great alternative, but only for the next three months, since US Airways joins oneworld in March. TACA miles are great to buy, but hard to earn cheaply otherwise. Lufthansa, Singapore, ANA, and Air Canada miles all impose fuel surcharges too often to be your go-to Star Alliance mile.

I’m certainly not going to miss out on collecting miles with the largest alliance, and United is still the best choice for Star Alliance miles even after its devaluation. Add in the fact that after 2014’s devaluation, we’re probably safe from a new devaluation for several years and the ease of earning United miles through Chase credit cards that earn United miles or Ultimate Rewards, and United will still be one of my major focuses in 2014.

Click this banner for a comparison chart of United and Ultimate Rewards earning cards:

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Delta

For me, the Delta devaluation has already kicked in. Delta increased award prices for travel starting February 1, 2014, no matter when you book it, and I don’t plan to travel before the higher prices kick in.

Delta miles were already the least valuable among the four legacy carriers in the US, and the devaluation made them even less valuable for international business class travel.

The primary value from Delta miles now comes from partner economy awards, since they will price at the Saver level.

Above I said we were probably safe from another United devaluation for several years, but I will not say the same about Delta. This is the airline that just announced two major devaluations in only three months.

I don’t think the chances are large, but I could see farther devaluation of Delta miles in 2014. The worst devaluation possibilities would be more fuel surcharge collection including on Delta metal or a move to a revenue-based award program.

Delta miles should mainly be collected by people who have already gotten the major credit cards of Delta’s competitors or people who want to go where Delta partners have the best availability, like Australia on Virgin Australia.

American Airlines

I am predicting bad news from the AAdvantage program in 2014.

We know that at some point the New American will have to replace the Old American’s and US Airways’ award charts with a single chart. The best case scenario would be adopting the Old American’s chart. But with Delta and United both making business and first class awards much more expensive, I would expect American to do the same to its award chart whenever the New American releases a singled, unified chart.

This is a real shame because I have said that American Airlines miles are the best miles for ultra-luxury redemptions.

We don’t know when that new chart will be announced, we don’t know what it will look like, and we don’t know how much notice we’ll be given to burn miles at the old rate.

Given what we know and what we don’t, I think the best strategy is to focus heavily on earning American Airlines miles in the near term while they are the most valuable mile. For now, you can use those super-valuable American miles at the current rates. If there is a big devaluation, hopefully you’ll get enough notice to burn as many miles as you want at the current rates.

US Airways

Everything I said about American miles goes for US Airways miles since the two airlines have already legally merged. There are two US Airways-specific additions:

  1. US Airways leaves Star Alliance March 30, 2014. If you want to go somewhere in 2014 or early 2015 that is better served by Star Alliance than oneworld, book your US Airways miles before March 30.
  2. The US Airways Premier World MasterCard will disappear in the very near future, and with it, the chance to earn 30k US Airways miles (or 30k American Airlines miles if you hold them until the two types of miles are combinable.) Don’t miss out!

British Airways

My outlook for 2014 for Avios: no changes.

The big devaluations we’ve seen in 2013 were airlines trying to make premium cabin awards much more expensive. But British Airways already charges 3x the economy award price for a first class award, so they don’t need to make changes there.

Most people should maintain their existing British Airways collection and redemption strategy.

The exception is that people who would love to redeem for short, direct US Airways flights with their Avios should start collecting more Avios now in anticipation of US Airways joining oneworld March 31, 2014.

Bank Points

The banks are getting aggressive in promoting their proprietary bank points. Part of the reason must be that advertising “NO BLACKOUT DATES” to consumers who don’t understand miles is resonating. And part of it is that the banks don’t have to pay the airlines or hotels for providing the credit card rewards on bank point cards.

2013 has seen some big sign up bonuses in the bank point area like:

I summarized and compared all the cards and offers in Comparison Table of Fixed-Value Bank Point Cards.

I hope 2014 is another big year for these card offerings. Bank point cards are ideal rewards cards to earn free flights in economy without having to search for award space!

Families, people who can only fly at peak times, or economy lovers should all be heavily involved with bank points. First class connoisseurs should avoid collecting bank points.

Hyatt

We’ve seen the Hyatt devaluation for 2014. I expect that in late 2014, we’ll see an announcement that for 2015 some hotels are moving up a category on the chart, a few are moving down, and that the number of points needed for each category is staying the same.

Starwood Preferred Guest

We saw a devaluation of Cash & Points awards in early 2013. But otherwise, the SPG program maintained almost all of its value and its spot as the clear #1 most valuable point.

The real danger to Starpoints’ value now comes from two fronts. Starwood could increase the points needed for free night awards or Nights & Flight awards, which would hurt the point’s value.

Or American/US Airways/New American could devalue its chart substantially, cutting out the two best airline transfer partners of SPG points.

I’m optimistic that any devaluations either from Starwood or airline partners will be minor and that SPG points will maintain their spot as the most valuable points. Or maybe I’m just hoping that since I just got the Starwood Preferred Guest® Credit Card from American Express and Starwood Preferred Guest® Business Credit Card from American Express and still haven’t spent all my bonus points.

Big spenders and folks looking for a lot of flexibility to use points for hotels or flights should be collecting Starpoints in 2014.

Hilton

The biggest bloodbath, even worse than United’s, was Hilton’s 2013 devaluation. I can’t imagine that Hilton would possibly devalue again next year after nearly doubling the points needed for a top tier hotel this year.

My strategy with Hilton points will remain the same.

  1. Mostly avoid them.
  2. Use the few I do have or accumulate on low category bargains like the DoubleTree in Kuala Lumpur.
  3. Get the Citi® Hilton HHonors™  Reserve Card with two free weekend nights at Hiltons worldwide after spending $2,500 in the first four months if I want to stay at a fancy Hilton property.

Club Carlson

The Club Carlson program has one benefit that is far more generous than any other program. If you have the Club Carlson Visa, you get your last night free on any award of two or more nights. That’s a 50% discount on two-night stays.

The history of loyalty programs is that when they offer a benefit that is far better than their competitors offer, that benefit quickly disappears. I am predicting this benefit disappears at some point, though I hope it lasts through 2014 since I have the card.

Folks who want to hop around Europe from Radisson to Radisson on two-night stays should collect Club Carlson points.

IHG Rewards

For me, IHG Rewards was all about PointBreaks. Then The Big Win came along and I suddenly had a lot of points with IHG Rewards and more reason to follow the program.

I still don’t follow it closely enough to make a confident prediction for 2014. I do think that PointBreaks are for more generous than any other competitors’ promotions, but I think PointBreaks will survive 2014 largely in tact. I think PointBreaks are like Black Friday headline deals–loss leaders that generate a lot of excitement and publicity without costing too much.

Your Predictions

What are your predictions for 2014 for your favorite programs? Where do you disagree with me? Put it the comment section, so we can look back in a year at who had the best crystal ball.


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7 COMMENTS

  1. Scott the greedy masses will all now be competing for those United award flights on United metal. I would argue if that turns out to be true then United miles will be worth something in the area of Skypesos or worse, and consequently, with a few exceptions like transfers to BA, Chase cards will be much less desirable bordering on useless depending in your travel patterns.

  2. Darn…I have to stay in a Hilton for business for the next few months. Wish it could have been starwood or even marriott…

  3. I get annoyed when bloggers predict changes to frequent flyer programs, especially for AAdvantage and Dividend Miles. Do you think that bloggers predicting these adjustments makes it more likely for airlines to modify their award charts? I would think that if the airlines get a sense that people are expecting them to make adjustments to award pricing, then they would be more motivated to do it.

  4. I still feel UA miles are much more valuable than AA miles simply because more award seats are available. (For example, try searching for US to Europe space next summer on UA and AA – you’ll see that there are realistic options for using UA miles at Saver level; many fewer options for using AA miles at PlanAAhead level. I find I can almost always get good value out of my UA miles, but not out of my AA miles.)

    The “sweet spot” for AA is premium cabin AAnytime redemptions at 2x PlanAAhead rates. That is very likely to disappear soon.

    I’m finding that HHonors points are still useful for targeted non-aspirational stays (hotels that charge 20,000 or 30,000 points/night that would cost $200/night or more if paid with cash).

    • Probably early 2015, hopefully more in line with Delta than with United in business and hopefully better than United in First Class (by a lot.)

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