2019 has been an interesting year for award travel. The amount of devaluations this year alone trumps the last two years combined. As for the banks, they are becoming expert at restricting the flow of credit cards to anyone with open accounts in the double digits. Truthfully, the banks have never been as dialed in as they are today.
But, I don’t care. The game will continue to work in the future, even for people who want to fly business class around the world.
As the saying goes, nothing is as good as people say it is, and nothing is as bad as people say it is. Award travel is another example. At the turn of negative news, critics, and the internet blow up and proclaim that award travel is dead, points are dead, and everyone should head over to your local credit union to find a nice 2-2.5% cash back card to pay for travel purchases, while avoiding points and miles from the banks. Ha!
It’s a classic example of fear mongering used in media today. Don’t buy into it.
Here are the five key trends I see in this space, and the actions you will need to take to beat the bank and airline industries:
1. US Airlines Move to Dynamic Pricing
This is inevitably going to happen across the board, so accept it. This means cheap economy flight will decrease in pricing, and expensive premium cabin awards will be expensive. This likely means more off-peak travel dates will have awards at lower prices, and perhaps using cash + points for upgrades will become more popular.
Advice: Do not spend on co-branded airline credit cards, and consider forgoing elite status with a domestic airline in favor of an international carrier in the same alliance with an award chart that suits your travel.
2. Domestic Hotel & Airline Awards Increasing in Price
The trend is devaluation after devaluation, from the likes of Hilton all the way to United. The good news is Chase Ultimate Rewards and Citi Thank You programs offer direct bookings with points, which will save the headache and frustration of finding low level awards if traveling to hotspots or at peak times.
Advice: Accrue Chase or Citi points and book directly through a travel portal when you can’t find low point costs availability.
3. International Carriers Still Persist With Great Business Class Award Charts
There are still many international carriers that actively use lucrative award charts for international business class travel. The de-emphasis of US airline programs leads to the emphasis of using international programs more thoroughly. Specific examples of great airlines with great programs include: Air Canada Aeroplan, Avianca Lifemiles, Iberia Avios, Singapore Krisflyer, and Virgin Atlantic Flying Club.
Advice: Accrue Amex, Chase or Citi bank points to transfer to international programs, and complement this activity by picking up international airline credit cards of programs you plan to use.
4. Points and Miles Still Offer Outsized Value Compared to Cash Back
Cash back cards of 2-2.5% look good on paper, but rarely offer any lucrative sign up bonus. I don’t care if I get 1-1.5 cents per mile if I can squeeze out a 60 or 75K point bonus offer with an airline for a couple flights.
Advice: Continue to acquire airline credit cards as ‘burners’, and ensure you are building up a point balance with an airline where you have existing points. If looking for business class flights, acquire cards that complement programs served by your transferable currencies to top off if you see an award that works for you.
5. Strategy Matters More Than Tactics
If the banks make application rules tighter, and airlines are limiting the amount of award space and low level awards, then it’s time to get ever smarter. Rather than applying for cards rather casually, it will be more important to quantify how each card will stack up for specific travel needs. Focusing on long term rewards and value will be more important than signing up for a card with a 50K point sign up offer that you have no idea how you will use.
Advice: Quantify and justify every card you acquire, and ensure it fits into the ‘earner’ model I have alluded to before. I.e. earns points quickly on your general spend, pays for the annual fee itself through normal spend (if applicable) and offers some ancillary perks/benefits.
Don’t let the internet tell you award travel is over, because it simply isn’t. If you look beyond the small world of the US-based programs, you’ll find a lot of value bundled into international programs if you look in the right places. If you focus on accruing bank points/transferable currencies, you are already ahead of the game.