Frequent-Flier Programs Losing Value, Expert Says

Heather Morgan Shott
for National Geographic Traveler

December 22, 2003

Starting in January reward tickets won't be free anymore, if you fly Air
Canada. The Dorval, Québec-based carrier will charge passengers a
U.S. $25 fee to cash in miles, reports Christopher Elliot in
Traveler's January/February 2004 issue. Upgrades and other perks
may also be more difficult to get, says Elliot, because frequent flier
miles will likely depreciate in 2004. Why these unfriendly new policies?
Find out here from Traveler consumer news editor Norie Quintos.

Why will Air Canada charge this $25 fee?

According to a letter Air Canada sent to its Aeroplan members, the fee will enable the network to increase redemption opportunities, make the redemption process more efficient, and make it easier to book reward travel.

Have other airlines or even hotels followed suit?

Not as of the end of December. But industry insiders predict other airlines will follow suit if consumers go along with Air Canada's new policy without much complaint. Since the policy doesn't start until January, it's too early to tell how people will react. Hotels may also follow Air Canada's lead. The frequent flier system is in a state of flux right now, and everyone's watching to see what will happen next.

What other changes in frequent flier programs can we expect in 2004?

The overall value of a frequent flier mile is decreasing. Some redemption levels are rising—which means you have to earn more points for the same ticket or upgrade. Also, airlines like Delta are offering rewards based on how much you spend, not how far you fly.

How many miles does the average traveler currently have?

According to InsideFlyer magazine, there's currently a backlog of about eight trillion unredeemed frequent flyer miles, nearly twice as many as there were three years ago. Our own survey, in conjunction with Yahoo Travel!, found that 61 percent of travelers have more than 25,000 miles in their accounts. In the same survey we learned that 60 percent of the respondents use their miles for award tickets, while the other 40 percent redeem their miles for hotel rooms, rental cards, merchandise, and charity donations.

Would you advise consumer to abandon their flier programs after December 31?

No, but remember that your frequent flier account won't appreciate. So use your miles as soon as possible, because over time, they'll probably lose value.

Any tips to help frequent fliers protect their best interests?

Before you redeem miles, ask if there are any additional costs or surcharges. In some cases, you might get more by using your miles for an upgrade instead of an award ticket. For the latest news on your frequent flier program, log onto www.WebFlyer.com and www.FrequentFlier.com.

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