Tag Archives: airline loyalty

Hurray! I’m Now A Free Agent! (Saving $1,500)

On average, we’re in eight different loyalty programs and some of them are costing us way more than the tiny benefits we (may) get.

For years, I’ve been a medium sized somebody with Air Canada (50K Elite) where I had lounge access, two free checked bags, priority boarding and no lineups at check in. This year I’m a small somebody and lost priority boarding and lounge access. Yet, somehow I adjusted. Sure I miss the lounge, but most connections are less than two hours, and I’m just fine.

In the next month I have about 10 flights to book. I wrote down roughly what that would add up to: Around $2,200. But I can’t stay a “somebody” unless I reach $3,000 (with Air Canada and Westjet – they’re both the same) and that’s on base fares excluding all the fees and taxes. So I’d have to book more expensive tickets by over $1,500 just to stay a somebody AND would HAVE to fly only Air Canada or Westjet, or I’d dilute my earnings and not make it in either one. That applies to most loyalty programs: To get the bigger rewards you can’t be a free agent and shop elsewhere.

That seems and is stupid. (That’s why vast numbers of business travels purposely wait until the last minute to book when prices have gone way up. It maximizes their bonus levels and it’s their company that pays the ticket and the price for that.) But when we try to do that, we don’t shop around, we stay blindly loyal because we want that reward level!

Instead, I checked Westjet on a flight to Victoria this month. Their flight gets in at 9pm vs. the Air Canada at 11:30pm. That’s almost three hours of extra sleep. I also checked the last Victoria to Edmonton flight the next day: Same price on both airlines, but Westjet can get me home at 10 pm vs. 1 am for Air Canada. On the other hand, the only lunchtime flight to Grande Prairie in two weeks (August 29th) is $140 on Air Canada vs. $284 on Westjet. So of course, I booked Air Canada for that one. Ahhhh….the joy of being a free agent and looking out for my wallet instead of others!

The same applies when we see the “bonus Airmiles” offers. We’re chasing the points, but in my experience, for the 10 most common things I buy (heads up that I’m a bachelor, so it includes cookies, Bolthouse juice, Tasters Choice, etc.) Safeway/Sobey is at least 30% more expensive than Presidents Choice or Walmart. So we get three or four bucks in Airmiles while possibly spending $20 more on what we’re buying!

We, and that includes me, can be so brainwashed or blindly loyal we’re constantly tripping over a loonie to pick up a dime! Your point earnings with every program are between one and 1.5 percent. That’s it! So make sure you don’t overspend by more than 1.5% at the register or you’re losing money!

Stay loyal to friends and family – just don’t extend that same loyalty to companies who brainwash you, and aren’t ever going to be loyal back to you!

Reward & Frequent Flyer Points: Think of Them as Bananas

The deal with any reward program was always that you spend literally tens of thousands of dollars on airline tickets, or charges on your credit card. In return, you would get some free flights, or other kind of rewards, way down the road when you finally accumulated enough points.

You kept your part of the deal. You charged away, and kept flying and staying loyal to a specific airline. But right now, you’re being played, as the airlines and many other reward programs are not keeping their part of the bargain. According to the Wall Street Journal, overall reward perks dropped by 29% last year and an IBM Global survey reports that less than 48% of us are satisfied with our airline reward program.

Should you go in arrears on your credit card, cancel it or the company goes under, your reward points will be gone. To assure you receive at least some of the benefits of what you signed up for, forget collecting points for the super expensive and cool reward. Take your points and redeem them. At least you will get something, which is a whole lot more than nothing. Read the fine print for changes, redemption fees, and watch for increased points thresholds with fewer rewards.

In the airline industry, the shrinkage of points and the growth of restrictions are even more noticeable. Start to take the convenient schedule, the direct flight and cheapest ticket. Never mind any loyalty to a particular airline that will most assuredly change the goalposts on you, way before you ever get close to a free flight.

The sharp drop in frequent flyer point values has also started to erode loyalty from customers – and rightly so. The percentage of people who are loyal to an airline is down to 25%, according to Forrester Research. And airlines have done it to themselves. The programs used to be about 2 cents per mile in these programs. Now it’s down to barely 1 cent, that’s a 50% drop in what you’re getting, and in what you’re holding in points values!

At the same time, there can now be fees to redeem, to call them, to book a flight, to check a suitcase, massive last minute surcharges in points, and the likes, which drastically erode the value of these so-called “free” points even more.

The other big killer is that airlines make a pile of money selling their points to car rental companies, flower and hardware stores and, well – anyone that wants to pay cash up front. Last year, United Airlines made over $800 million just by selling points. At American Airlines, it was more than a billion dollars! Those are cash for an airline but it’s a staggering amounts of points dumped into the world, and now there are literally billions of points chasing the same few seats. It’s supply and demand.

Right now, it’s heads they win, tails you lose. Do not let your points get eaten up, wiped out, or shrink away. Make it a point to redeem what you can and think of them more like bananas instead of an asset! Something sort of free today is better than nothing down the road.