Tag Archives: frequent flyer programs

Your Loyalty Is Costing You BIG Money

Below are the screen shots of a flight from Victoria to Edmonton. I picked it because I was booking it – and that’s what got me thinking how much WE have to pay for loyalty…

The Air Canada basic fare is $202. No seat, no checked bag, no frequent flyer miles. Pay $23 more and you get HALF of the frequent flyer miles. Or pay $44 more for 100% of the miles, a seat selection, and a checked bag.

Westjet’s basic fare is $160. So right there it’s $42 cheaper than Air Canada if you were a free agent and just shopped by price and not loyalty. But after that, Westjet is the same as Air Canada: Basic fare is zero reward dollars in their program for tier levels and perks. Pay $23 more and you get only the reward dollars. Pay $90 more for those rewards and a seat selection and checked bag.

One charges you $23 to get your points, the other charges $44. You’ll need $3,000 total (before taxes and fees) to be a somebody in their loyalty programs, and always need to pay way higher than basic fares to earn any! That’s about 12 flights which would cost you almost $300 to $500 in order to BUY your loyalty points. AND you could never fly the other airline.

As a free agent, I took the $42 cheaper flight, skipped the $23 to get my reward dollars, let the computer pick the seat instead of spending $20 or so, and my credit card waved the $30 checked bag fee. That saved me $115. THAT is a lot of money – but not something I would have done last year when I was tied to Air Canada! Even if you make the “silver” Westjet level – have a look what that gets you: 6 free lounge visits, priority boarding (the flight leaves when everyone is on – not just your zone 2, though, and two free checked bag that your Westjet credit card can get you anyway. Yes, you do get to use the reward dollars towards future travel. (Air Canada is pretty much the same rewards but with two lounge visits.) That ain’t much for about $4,500 of spending ($3,000 plus all the taxes and fees for each flight).

For 99% of us, take the cheapest flight at the cheapest price. Pay the rip-off luggage fee if you don’t have their credit card to get a free bag. And for flights under 2 or 3 hours – forget paying for a seat. I’ve done studies that show row 5 arrives at the same time as row 26. The seat pitch is awful and there’s no leg room. Step up to buying a seat only if it’s a long flight.

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!

Loyalty Is Dead

Almost exactly two years ago we talked about Delta Airlines in the U.S. changing their frequent flyer program from miles or flights to how much money you spend with them. In other words, if you’re a price sensitive flyer that wants the cheap-charlie flights, you’re no longer getting any perks. The entire program is focused on how much profit they make from people.

At that time, I shared this would spread over the next few years. That’s now already come to pass: Starbucks has changed their reward program away from how many times you visit them, to how much you buy on each purchase. So no more rewards for the simple coffee a dozen times, but only if you buy the five dollar fancy coffee.

Thrifty Car rental gave me one free day for every 10 I rented from them. That’s gone: Now any free reward only comes when you reach some huge total dollars spent with them levels. I rent based only on price – I’m never going to see another reward from them because I’m not booking last minute expensive vehicles or rates.

But the best (actually worst) has to be Air Canada. I fly over 35 flights a  year and that was the level at which you were a small somebody. A few years ago they changed away from how many miles you flew to how many flights. Then they took a number of perks away if you didn’t fly at least 50 flights. Then they reduced the total miles for each flight and this year, it’s how profitable you are to them.

If you’re not spending $4,000 or more before taxes and all the rip-off fees, you’ll never get a single perk. I purchase the no-refund lowest price tickets versus the so-called flexible tickets at $100 or $200 more for each flight. Business travelers buy those, because they’re not price sensitive. It’s a fair guess that half of all people on their frequent flyer program have now been cut off. Oh, and to get the decent rewards, you need to spend over $10,000 a year. Add the taxes and fees, it’s about $15,000 or more in flights before you’re a somebody.

Yes, loyalty is dead. The average Canadian belongs to eight different ones. Make sure you know what you’re getting if you do stay loyal. Chances are that you’re still loyal while you’re getting shafted. If so, become a free agent and shop around for the best deal, not the companies that promise something you’ll likely never get.