10 Dirty Little Secrets of Frequent Flier Programs: How Many of Them Do You NOT Already Know?

“O ccasional and somewhat-frequent leisure travelers may get hit the worst, but a word of warning to all you road warriors: Don’t be too smug about your insider tricks and tips for gaming the system. They airlines have stacked the deck against you, too—and the house always wins.”

That is part of what Ed Perkins — who has been writing about frequent flier loyalty programs and travel for many years — had stated in this article posted at Smarter Travel; but how many of the following 10 dirty little secrets of frequent flier programs do you already know?

My guess is that you probably know most — if not all — of them; and that you would argue with at least one of them. Here they are — along with my comments.

1. It’s the Most One-Sided Contract You’ll Ever Make

Christopher Elliot could have written the headline for this first “dirty little secret.”

“Yes, those frequent flyer contracts are even worse than wireless phone or cable TV contracts”, claims Perkins. “You agree that the airline can change the rules any time it wants without any input from you. One-sided contracts are called contracts of adhesion, and frequent flyer contracts are the super glue of adhesion contracts.”

The last time I checked, you can become a member of most frequent flier loyalty programs free of charge. The basic travel experience is that you pay for an airline ticket to travel from Point A to Point B — meaning that if you did join as a member of a frequent flier loyalty program, whatever miles you earn are basically a bonus on top of what you paid for your travel.

Randy Petersen — the founder of BoardingArea — himself has said that frequent fliers are merely a small fraction of people who travel. How do I know this? I heard him say it personally. There are still many people who are not members of frequent flier loyalty programs, believe it or not. I do not have the exact numbers to support that statement; but I do know that it numbers in the millions…

…which means that millions of people purchase airline tickets to travel without the benefit of earning miles or points.

As long as being a member of a frequent flier loyalty program is free of charge and I can earn miles simply by doing something I would already do anyway, I can live with the “one-sidedness” of this contract.

Now, as for “wireless phone and cable TV” contracts — well — that is a whole other story…

2. The Airline Actually Owns ‘Your’ Miles

I knew that the airline owned “my” miles the very first time I joined a frequent flier loyalty program years ago — didn’t you?!?

“The worst of the one-sided provisions is that you don’t even own ‘your’ miles—the airline owns them”, stated Perkins. “That’s true even though it regularly offers incentives for you to ‘buy’ miles it ‘sells’ you.” That is the one aspect about which I disagree — not with Perkins, as he is correct — but that you purchase something which is not even yours to call your own; which is why I rarely purchase miles or points.

“In most real-life situations, ‘buy’ and ‘sell’ strongly imply change of ownership, but not with frequent flyer miles. That means you can’t transfer them to anyone else (without paying a fee of more than the miles are worth). On some airlines, you can’t even bequeath them to a surviving spouse.” Here is my take on this…

…I have a quirk in my personality that I do not like to finalize a tape or a disc after recording onto it and have empty space left over to be wasted forever. Ridiculous, I know. Similarly, I have always secretly wished that there was a way to take “orphan” miles and points and be able to combine them to create a useful opportunity — such as an award ticket. If five people each have 5,000 miles and agree — somehow amicably, by some miracle — to allow one person to combine them and use them for an award which costs 25,000 miles, why charge a fee for that?

Why? For the sole purpose for the airline to profit; and — other than clerical costs — it is almost a pure profit at that. It is irritating to look at “orphan” miles and not be able to do anything with them — especially when the amount is significant enough to not want to waste them.

The frequent flier loyalty programs of some airlines — such as Etihad Guest, for example — permit you to have family accounts where you can pool all of the miles of the accounts of each member of your family to use on an award ticket.

“And if you do something the airline doesn’t like—repeated use of hidden city or throw-away ticketing, for example—it can nuke your miles and kick you out of the program.” I have to say that there are unfortunately members of frequent flier loyalty programs who abuse the system and then claim that their are simply “playing by the rules” of the airline; so airlines must write whatever they can into their rules to mitigate or prevent such abuse.

In other words, there are some people who ruin good things for everyone else. Such is life.

3. Most Big Airline Programs Favor Business Travelers

Yes — and…?!?

4. ‘Free’ Trips Are Hard to Score

Ed Perkins wrote that “A study by IdeaWorks found that reward seat availability for major North American airlines ranged from highs of 100 percent for Southwest, 91 percent on Air Canada, 87 percent on JetBlue, and 80 percent on Alaska; to 75 percent on United, 67 percent on American, and a dismal 58 percent on perennially low-scoring Delta.”

Gary Leff of View From The Wing calls that study “fatally flawed” in this article, stating that “The results are dead wrong, because the methodology is dead wrong. In fact, consumers will be worse off if they pay any attention to it.”

So who is correct? Does it really matter? You can go to any airline forum on FlyerTalk and find experience after experience related by FlyerTalk members on how difficult it is to redeem frequent flier loyalty program miles…

…but in the end, what matters to you is if you have a difficult time redeeming frequent flier loyalty program miles for an award trip — and despite having some reasonable restrictions, they simply should not be that difficult to redeem, as it defeats the whole purpose of a frequent flier loyalty program in the first place. End of story.

5. Awards Are Often Hidden

In extreme cases — such as with the SkyMiles frequent flier loyalty program of Delta Air Lines — dynamic pricing of award tickets has become the norm where you will have no idea how much a ticket will cost in miles unless you start to go through the process of actually booking the ticket.

Some people are vehemently against this policy; while others defend it, citing that the circumstances are similar with revenue tickets — except you are using money instead of miles to pay for your ticket.

That may be true; but unlike money — which can be used virtually anywhere — miles are a currency which is limited in use and dictated by the policies set forth in the rules, terms and conditions of the frequent flier loyalty program. That is one reason why I eschew using a credit card to earn miles and points — even if the benefits are greater than earning a cash rebate — although the cash rebate credit cards are currently not as rewarding in general as they were years ago.

Perhaps it is engrained in me from years of being a member of multiple frequent flier loyalty programs; but I prefer to know what my options are in redeeming miles for awards — and how many are needed for the itinerary of which I am planning at the time. Having them hidden just seems to open the customer to mistrust, in my opinion.

6. The Fees Are Outrageous

The fees have been outrageous for several years. Do you know why? Because people are paying them.

For airlines to backtrack on charging outrageous ancillary fees, people have to stop paying them; or airlines have to lose money as a consequence of them. Unfortunately, the opposite is true: ancillary fees are a significant reason why airlines are experiencing record profits quarter after quarter lately; so do not expect them to reduce or eliminate ancillary fees anytime soon. As long as the economy does not falter, people will keep paying those outrageous fees — and airlines will keep profiting for as long as they can get away with it.

Better milk it while you can, airlines…

7. The Fuel Surcharges Are Crazy, Too

Fuel surcharges to airlines are like resort fees to lodging companies. They are a form of deception, in my opinion. Offer an airfare as low as one dollar; but charge $600.00 in fuel surcharges — and this is still happening despite the recent decrease in the price of oil which has contributed towards lower fuel prices.

In fact, Charles Schumer — a member of the Senate of the United States representing New York who has been frequently critical of airline fees — in December of 2014 called for a federal investigation by the Department of Justice and the Department of Transportation pertaining to airlines enjoying record profits amidst dramatically declining prices for fuel, as he believes that those profits should be passed on to consumers through lower airfares in the United States, according to this article posted at his official Internet web site.

I interviewed Charles Leocha — who is the chairman and founder of Travelers United, the only non-profit, membership organization which represents all travelers — via telephone months ago to get his thoughts on fuel surcharges for a future article. I intend to follow up with him so that the information which I plan on posting in that article is as accurate as possible. Watch for that article in the future.

8. Miles Aren’t Worth Their Asking Price

“Most independent observers place the value of airline frequent flyer mile at somewhere around a penny or a penny-and-a-half per mile”, wrote Perkins. “Presumably that’s close to the price airlines get when they sell miles to banks for inclusion in credit card programs. But when they try to sell miles to you, the big airlines charge more than three cents—about two to three times what the miles are worth. They even charge up to one-and-a-half cents per mile to transfer miles you’ve already earned or bought.”

Let us not forget about the taxes — typically at 7.5 percent — and charges which are usually associated with purchasing miles or points, inflating the price of those miles and points even further…

…and they are certainly of little worth when you cannot use them, combine them, sell them or otherwise do anything with them, as already stated earlier in this article — again, which is why I rarely purchase miles or points.

9. You’re Better Off Buying a Coach Seat Than Using Miles

Even without generating most of my miles through a credit card, I find that I am often better off purchasing an airline ticket than redeeming miles or points — especially with the lower airfares which have appeared in recent weeks.

I agree with Ed Perkins that “the ‘highest and best’ use of miles is for premium cabin travel. The cash prices for those tickets are out of sight, so, for many, frequent flyer miles are the only escape from the cattle car into a comfortable flight. But if you’re a more typical coach/economy flyer, you are often better off buying a ticket and conserving miles for occasions when they’re the best option.” However, it is important to keep in mind that this is not an absolute “dirty little secret”; and there are exceptions.

10. Elite Status Isn’t What It Used to Be

I know you already know this one as a reader of The Gate. Unless you happen to have earned the top tier of elite status — and even then, that is no guarantee — you are most likely finding free upgrades more difficult to procure; special lanes to check in crowded with lines of people; increasing fees or the appearance of fees which you once did not have to pay; or other benefits slowly but consistently eroding.

Ed Perkins claims that “Airlines are handing out elite status to more and more travelers, while they cut back on the number of first-class seats on typical domestic flights.” It may depend on the airline; but with United Airlines and Delta Air Lines as two examples, earning elite level status has become more difficult for many people — so as for the claim that “airlines are handing out elite status to more and more travelers,” I disagree.

There have also been reports of airlines either discontinuing elite level status matches — as well as increasing the difficulty of challenges of short-cuts to elite level status — which tend to make me believe that the numbers of frequent flier loyalty program members with elite level status would be decreasing, not increasing.

Summary

I would find it difficult to believe that there is information in this article which you did not already know; so as far as the 10 “dirty little secrets” — well…perhaps it is because I tend to keep myself informed of developments with frequent flier loyalty programs in general — none of them have been “secrets” to me for years.

In fact, I have no doubts that you have some insights of your own; and — as usual — I look forward to reading them and interacting with you in the Comments section below.

Photograph ©2015 by Brian Cohen.

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