Airline loyalty programs are designed to encourage customers to spend more money with the airline by offering free flights and elite status perks. However, in recent years, these programs have become more complex and less rewarding. The “Big Four” U.S. airlines — American Airlines, Southwest Airlines, Delta Air Lines, and United Airlines — now reward customers based on how much they spend rather than how far or how often they fly.
Ganesh Sitaraman, a law professor at Vanderbilt University and the author of “Why Flying is Miserable,” discussed the evolution of airline loyalty programs on BW’s Smart Travel podcast. He noted that these programs have shifted from frequent flyer programs to “big spender programs.”
Loyalty programs have become a significant source of revenue for airlines. According to IdeaWorksCompany, the total revenue from the top 10 airline loyalty programs was $32.2 billion in 2023, with Delta Air Lines alone earning nearly $2 billion through its partnership with American Express.
While loyalty programs can be lucrative for airlines, strategic flyers can still benefit from these programs if they understand how to navigate them effectively.
Understanding Airline Miles and Points
Airline loyalty program members earn “miles” or “points” that can be redeemed for award flights or other benefits. These miles and points serve as the currency of frequent flyer programs.
Sitaraman explained that airlines create points out of thin air and sell them to banks for real money. This system allows airlines to control the value and redemption options of the points.
One challenge for flyers is determining the value of their points and miles, as it can vary based on the redemption. It’s essential to understand the worth of your miles to maximize their utility.
Tips for Maximizing Rewards
To make the most of your rewards, it’s advisable to use your miles regularly to avoid devaluation. Airlines can adjust the value of points over time, making it crucial to stay informed about the redemption rates.
Additionally, having a travel credit card can enhance your rewards potential. By using a credit card that earns rewards, you can benefit from points on everyday purchases and redeem them for travel or other perks.
Choosing the right travel credit card that aligns with your travel goals is essential. While airline-specific cards offer unique benefits, general travel credit cards with transferable points provide more flexibility in redemption options.
Remember to pay off your credit card balance in full and on time to avoid fees and interest charges that can diminish the value of your rewards. By understanding the intricacies of airline loyalty programs and utilizing travel credit cards effectively, flyers can make the most of their travel experiences.
For more insights on maximizing airline rewards and improving your flying experience, listen to Ganesh Sitaraman’s full interview on the Smart Travel podcast.
How to maximize your rewards
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