Reader John Delta left the following comment on the “Ask Lucky” page of the blog last week:
Well, you probably have guessed that I am bailing on Delta after more than 4 decades with them. Like you (were), I am Washington resident and am asking you where should I begin to place my loyalties and get a sizeable jumpstart on my new loyalty program? I have not signed up with DELTA’s Washington resident bonus program, but might consider that for 2014…and sure am interested in the possible benefits of the “Battle in Seattle.”
Should I go with Alaska, United, American (US Airways), or simply go with a credit card loyalty program (SPG, HHonors, Ink, or?) With all the rapid changes, I need to find a new, stable place to put my loyalties and efforts to maximize our rewards. American Express is our current card…but I am open to any suggestions for a new home for us as well (referring to your newly upcoming nomadic lifestyle.
There’s no doubt that the airlines have made it really, really hard to be loyal the past few years. And the challenge isn’t specific to one airline, but rather the industry as a whole.
When the airline industry is losing billions of dollars they’ll do anything to keep customers. When they’re making billions of dollars, loyalty is about as important to them as to someone that spends hours a day trolling the personal ads section on Craigslist (“but I was just looking…!”).
If an airline makes changes you don’t like, the good news is that in most cases another airline will match your status. The issue in this case is that we’re kind of out of good options. And there’s a huge switching cost to changing airline loyalty.
Delta SkyMiles actually is really lucrative in this case
Looking at John’s situation specifically, he’s presently loyal to Delta, and living in Washington there has never been a better time to be loyal to Delta. Delta is offering residents of Washington state double redeemable and elite qualifying miles through the end of the year on all routes to/from Seattle.
That’s ridiculously lucrative, and means that as a Diamond member you’re earning 325% redeemable miles and 200% elite qualifying miles for all your flying. 62,500 flown miles gets you qualified for Diamond. The big “catch” here is that you’ll be requalifying for status in a program which will be revenue based next year.
On one hand Diamond status is valuable — this year for the first time Delta added actually useful international upgrades. And Delta status has always been valuable for someone that primarily flies domestically. But you’re earning Diamond status in a program that will be substantially less rewarding next year if you fit the profile of the “average” traveler.
There are no “safe” options to switch to
When Delta and Northwest first merged, it was easy to switch to American and United since their programs seemed pretty “stable” at the time. Then United and Continental merged, and it seemed pretty “stable” to switch to American at that point. Now American and US Airways are merging, and all bets on stability seem off.
So living in Washington state, you know exactly what you’re getting into with Delta this year. You get lots of rewards this year in a program that won’t be nearly as rewarding next year. But the alternative is a program like American, which, all things considered is still very rewarding, though likely won’t be as rewarding next year.
A bird in the hand is worth two in the bush, right?
There’s a cost to switching loyalty
While I’d like to think status matching is seamless, it’s not. There’s ultimately a huge cost to switching loyalty. You often have to complete a challenge, you have to learn a new system, you’ll get less value out of your existing miles with the other airline eventually (since you won’t have fee changes when redeeming those miles), and ultimately it’s often “once in a lifetime” (whatever that means nowadays given the rate at which the industry is changing).
Avoid being loyal if you can
Nowadays the question shouldn’t be which airline you should be loyal to, but rather whether you should be loyal to an airline. As I wrote about last week, loyalty might be overrated but miles most definitely aren’t. It’s easier than ever before to earn miles, just not through actually flying.
At the end of the day you can get entry level elite benefits with most airlines just for having their co-branded credit card. If you fly mostly internationally you should be able to come out ahead by strategically buying miles when there are sales, and in turn redeem those miles for international travel.
Being loyal has never been less rewarding. And not only are there fewer rewards for being loyal than ever before, but there’s also more uncertainty. So I tend to think more than in the past it’s either worth being loyal on a “year to year” basis since there’s no long term certainty, or doing what you can to be a “free agent” and simply accrue miles through other means.
At the end of the day the most stability you’ll get with miles or points is “investing” in currencies like Chase Ultimate Rewards, American Express Membership Rewards, or Starwood Preferred Guest. They’re far from devaluation-proof, but given that they all have many transfer partners, you’re at least hedging your bets somewhat.