With all of the changes to the mileage programs that have been made in recent years, you may have come across a credit card that offers a great sign-up bonus and then allows you to transfer miles to a frequent flyer or business card to earn even more benefits. However, the benefits of flying for business are drastically different than those of using miles for business travel. While flights for business are often more expensive than those for personal use, miles from credit cards can vary significantly depending on the credit card.

The Millennial generation is the most educated in history. But do they know how to leverage the points they get from credit cards and other rewards points? How to use these points to maximise their travel rewards? What other options are available?

How credit card rewards and business travel affect the value of miles

Gary Leff 23. June 2021

In the Airlines Confidential podcast from the 23rd. In June, Ben Baldanza, former CEO of Spirit Airlines, outlined the conditions under which airline frequent flyer programs are likely to be devalued. He thinks that a high point balance on airline credit cards offsets devaluation, which I don’t think is accurate, and that the future of business travel is largely determined by the value of miles.

Most airlines’ frequent flyer programs are being reevaluated. In other words, the cost of an upgrade in points, miles or free flights depends to some extent on how the miles or points were earned and how the airline leverages the miles issued. Whether they make money by having you buy plane tickets on them, or sell them to the bank, or whatever.

If people earn more miles with a credit card, or earn more miles by not spending them on airlines where all those miles are paid for by the bank, it may become cheaper for the airlines to say: Go ahead and enjoy the giveaway, because I paid a lot for it.

On the other hand, if people fly less and thus are less likely to earn points for business trips, and if business trips don’t come back, which could be a real risk, I could see the price of buying things like free rides and upgrades in these programs going up over time – because if people don’t earn as much as they used to, they probably won’t be able to use the points to the extent they used to.

He expects that when the airlines understand what is happening with business travel, they will tell them what changes they need to make in pricing.

Ben Baldanza is not only the former CEO of Spirit Airlines, but was Vice President of Marketing (with loyalty responsibilities) at US Airways two decades ago. Before becoming the ultra-cheap travel guru, he was the face of US Airways, which announced that only full-fare tickets would count toward elite status (the airline dropped that initiative). He noted that the customers who buy the low fares offered by US Airways are not necessarily the loyal customers he was looking for.

And I think he’s wrong. The future of business travel will have little to do with the level of premium prices, apart from the impact this will have on the airlines’ flight offerings. This will impact how airlines view elite status – both the qualifications and the benefits. However, purchase prices can be affected as follows,

  • Airlines offer flights for business travel. There are often empty seats on these flights, but they are profitable because of the high fares paid by less price-sensitive airlines.
  • The extra free seats are great for savings bonuses if revenue management doesn’t think the same passengers would have paid cash for the same seat.

The number of seats available on the routes on which customers want to redeem their miles has a major impact on award prices. The reduction in business travel could lead to the exhaustion of some of these flights and seats.

Baldanza is correct that selling miles produces a higher margin than buying miles to travel. And the airline can spend more to make sure it continues to attract that high margin business (devaluing credit card miles is a dangerous game that Delta has historically played well and United has not). But prices are essentially determined by the number of miles to get a certain number of seats.

As the number of miles sold to third parties, including ticket issuers, increases, so does the pressure on prices – while the number of available seats remains unchanged.

As airlines grow and planes stop filling up, there are more and more seats that can be redeemed by passengers earning more and more miles. But if airlines downsize or passenger demand for revenue travel drops and airlines don’t expand, it will be difficult for customers to use their miles at a reasonable price.

  • When airlines print a large number of miles, the value of the miles decreases. For example, United Airlines was very generous with miles when it was bankrupt, and a few months after it went bankrupt, a new bonus plan appeared.
  • When airlines fill the majority of their seats with paying passengers, devaluation follows. Customers can’t redeem their miles or don’t redeem them at the prices they expect, so the airlines balance supply and demand by raising overall prices.

Miles are a currency and operate according to the basic principles of monetarism. Of course, there are nuances. Since they are individual currencies without a central bank, there is a temptation to devalue more frequently at the airlines’ discretion. And this is all the more true if the program eliminates bonus tables, i.e., in an opaque manner.

Ultimately, however, it is not the volume of business travel that will directly determine devaluation decisions. In fact, it wasn’t the expectation of an immediate return to business travel that caused United, Delta or Southwest to drop their miles in value during the pandemic.

Lake View from the Wing

Frequently Asked Questions

How do travel miles work on credit cards?

Travel miles are earned on all purchases made with your card. You can redeem them for travel, cash back, or gift cards.

Are credit cards with airline miles worth it?

Some credit cards offer airline miles as a reward. These cards are typically not worth it because the rewards are usually not enough to offset the annual fee.

How do I transfer credit card points to airline miles?

You can transfer your credit card points to airline miles by calling the number on the back of your credit card.

how much is 40,000 miles worthcredit card miles calculatormiles credit cardhow to redeem credit card mileshow many credit card miles to flyhow do credit card miles work,People also search for,Feedback,Privacy settings,How Search works,how much is 40,000 miles worth,credit card miles calculator,miles credit card,how to redeem credit card miles,how many credit card miles to fly,how do credit card miles work,how do credit card miles work reddit,best miles credit card

You May Also Like

Staying in an Accessible Silver Suite on Silversea’s New Silver Moon

Silversea, a luxury travel company that has many ships with specialized layout,…

Second Royal Caribbean Cruise Ship to Homeport in Barbados

Hey there! Before reading the article which is about Second Royal Caribbean…

MSC Cruises Completes Its First Simulated Sailing From the U.S.

If you’ve ever been to an MSC cruise ship, you know that…

Qatar To Open Over 100 New Hotels Ahead of FIFA World Cup 2022

For those who are planning to visit Qatar in December 2017, you…