Recent research conducted by The IdeaWorks Company reveals that frequent flyer programs have lost value over the past five years. The study focuses on the six largest domestic airlines in the United States and analyzes the value and earnings based on popular routes and lowest available fares. This aligns with previous data that suggests a decline in the overall value of these programs.
Ed Perkins, Tribune Content Agency Yes, what you figured out from your own experience is verified: New, detailed research proves that frequent flyer programs have, on average, lost value over the last five years. We can thank the good folks at The IdeaWorks Company for those results – published in a press release that is the tip of an iceberg of granular data sold to airlines and other big travel companies.
Payback on Paid Fares. The report shows a wide variance in payback, from a high of 6.7 percent on Southwest to a low of 0.4 percent on Delta, which awards no miles on basic economy fares. The other four lines are grouped more closely between two and three percent. Although all lines are down, Alaska, Delta, and JetBlue are down a lot; American and United only a little.
Anyone who follows the sprawling blogosphere knows that the self-styled frequent flyer mavens almost always quote the value of a mile at between 1.7 cents and a bit over 2 cents. I've been saying the value is closer to one cent – a conclusion validated by the new study. The study also excludes folks who use miles for premium cabin long-haul flights, usually to Europe or Asia. I know that's what I've done. And if you aren't rigorous, you can calculate some really crazy values. I've used business class award seats to Europe at around 100,000 miles, and if you compare that with a common list price as high as $5,000, you get a value of 5 cents a mile.
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