Value of frequent flyer miles called into question

Several journalists and other critics are questioning the true value of frequent flyer miles and loyalty reward points, offered by most major airlines, as well as by a range of credit card companies and affiliated banks. Some suggest that collecting these points is actually more costly to the consumer than what they are ultimately worth and that they are meant to generate extra revenue and profits for the company, rather than actually provide the flyer with reward points that they can realistically accumulate and redeem for a free flight. The problem is that far more people are collecting points, than there are available seats on most flights. With most frequent flyer, reward point and loyalty programs, only a small minority of seats on each flight are flagged or reserved for those who wish to redeem their accumulated miles for a free trip. This means that many passengers are simply unable to redeem their points for their preferred trip and for a convenient date, unless they book far in advance. As such, it is believed that nearly 20% of all reward points collected are never actually cashed in and this situation greatly benefits those firms that award these miles. According to some travel specialists, the airline industry banks on the prospect that about one fifth of all miles will never be redeemed.

Some carriers, such as Australia’s Qantas, are trying to address this issue, but the way in which they are going about it has also sparked criticism. For example, Qantas will now offer frequent flyers the opportunity to cash in their points for any seat, on any flight. Although this is likely to make redemptions much more convenient as clients will no longer have to book up to a year in advance, the number of points required to obtain a free ticket is also being augmented, which in turn decreases the value of points already collected by cardholders.

www.qantas.com.au