Will Alaska Mileage Plan Go Revenue Based?

With American AAdvantage announcing they’re shifting to a revenue based program in the second half of 2016, all of the “big three” US carriers now have revenue based programs. They’re actually following the US low cost carriers in that regard, as JetBlue, Southwest, Virgin America, etc., have had revenue based programs for years.

Alaska Mileage Plan has long been been a lucrative program, even for those who don’t fly Alaska frequently. I became intimately familiar with the airline when I lived in Seattle, and really began to love them for the quirky little airline they are.

What makes Alaska Mileage Plan so lucrative

Part of what makes Mileage Plan so awesome is that they have over a dozen airline partners which span the alliances, so you can credit miles to them from airlines like American, Cathay Pacific, Delta, Emirates, etc.

Alaska-Partners

They were a popular program for people who split travel between American and Delta, since they’re the only airline to partner with both of those airlines.

They’re earnings chart on American is still quite attractive, though I expect this to change over time:

Alaska-American

Meanwhile if you credit Delta flights to Alaska Mileage Plan, you’ll only earn a fraction of miles flown for discounted economy tickets:

Alaska-Delta

Oh, and Mileage Plan is also awesome for redeeming miles… it’s one of the best ways to book Emirates first class, which is one of my favorite products in the world.

Is it naive to think Mileage Plan won’t go revenue based?

I’ve been asked several times over the past few days what the odds are of Mileage Plan going revenue based soon.

Let me start by clarifying something regarding the American change. I didn’t expect they wouldn’t go revenue based, but rather I hoped that they would try to differentiate themselves. I had no reason to believe they would, as the world’s largest airline, but I had hoped.

Alaska is a bit different. There’s no denying they’re run differently than other airlines, and a single flight on them will reveal that. But what does that mean for the future of their frequent flyer program? There are a few things which are certain:

  • Earnings rates on partners will be cut over time. At the beginning of the year Alaska cut earnings rates on Delta when their program went revenue based, and I suspect the same will happen on American once the program goes revenue based (American is already cutting mileage earnings rates on Alaska as of early 2016). Simply put, these “arbitrage” opportunities go away over time.
  • Alaska is fighting Delta in Seattle. Let’s keep in mind that Alaska is on the defense in Seattle, as Delta is hugely expanding their presence in Seattle. American, Delta, and United, don’t need to rely on the goodwill of passengers. They’re among the world’s largest airlines. Alaska, on the other hand, does have to rely a bit more on the goodwill of their hometown, and has even based many of their marketing campaigns around how they’re Seattle’s hometown airline.
  • Alaska is run differently. This is the part where you can call me naive, if you’d like, but I do genuinely think Alaska is run differently. It’s almost the equivalent of a ma-and-pa airline in terms of how they operate. Which isn’t to say that they’re not looking out for shareholders, but rather that their way of doing business is going out of their way to be different as a way of generating loyalty and maximizing their bottom line. So it wouldn’t surprise me if they thought they could accomplish that by offering a different type 0f frequent flyer program, especially given the fiercely competitive market in Seattle at the moment.

While I don’t say it with confidence, I do genuinely believe there’s a good chance Alaska will maintain a “traditional” frequent flyer program, making them one of the few US airlines where that’s the case. And I think their situation in Seattle with Delta might be part of the motivation for that.

However, I’d expect Mileage Plan to get less lucrative over time for crediting partner flights, and I also suspect we’ll see an award chart devaluation at some point, though nothing too extreme, unless it’s prompted by the partners (in other words, them not wanting Alaska to have disproportionately low award costs).

Alaska-Seattle

Bottom line

It’s incredible how much the frequent flyer program landscape has changed over the past few years, which I think many of us are finally coming to terms with now that American AAdvantage is devaluing.

I’ll be curious to see what Alaska Mileage Plan does, if anything. I wouldn’t be surprised if they stick to their guns in awarding miles based on distance flown, though I certainly could be wrong. It sort of makes me wish I still lived in Seattle, at least in terms of the domestic flying experience.

Seattle-views

What do you think — will Alaska Mileage Plan go revenue based as well, or be one of the few US carriers to hold out?

Comments

  1. My only issue with Alaska is their status is worthless except for DL/AA…I just cant fly one of their partners and have NO privileges at all, except now Iceland Air.

  2. I fly once or twice a month if that and collect miles mostly through credit card spend and sign up bonuses. From a leisure flyer’s perspective, I’m starting to think revenue based programs may not be too bad.

    I try to fly AA as much as possible these days but after the devaluation and the switch to revenue based earning kicks in, I’d fly based on price or schedule and not because of loyalty.

    Once enough low to mid tier status holders stop being loyal, I’m hoping that would start to drive ticket prices down as airlines compete for those people’s business. I could be wrong but I hope that happens.

  3. Cutting earnings for discounted economy fares is a de facto revenue based earnings system, similar to air Canada.

    Discounted economy Delta flights on Alaska impact eqm as well which I expect to be the case for aa next year as well.

    This would leave Alaska as the only airline that earns full mileage on their own program which is probably exactly what they want to begin with

  4. I live in Portland, therefore fly Alaska a lot. I hate to say it, but I’m confident that they will go revenue-based, like everybody else eventually. About a year ago, they sent out a detailed questionnaire to their elite flyers guaging their acceptance of a revenue-based mileage system. I hope that everyone, as I did, said “Hell No”… But they’ve been obviously looking into it for a while now.
    It’s a great airline, and it will be a shame to not fly them anymore if they change to revenue-based.

  5. As a long time high mileage flyer on AS I would much prefer they go revenue based, 90% of my flying is either ff first or auto upgrade f. But then thats me. And I prefer the old fashion way fly it earn it instead of gimmicks

    thats the way it use to be

    So AS has my vote for revenue based.

  6. I don’t get it. Why do you prefer the old model over the revenue based one? If you have the top status with either United or Delta then you earn 11 miles per dollar!

    Lets say there is a $3,500 business class ticket. It earns you ~ 38,500 miles (bit less because of the taxes). With the old model you certainly couldn’t earn 38k miles especially if the flight distance was just 3,500 miles (JFK-LHR).

  7. I’ve lived in Seattle for over 30 years and find Alaska Air to be one of the best airlines around and have flown frequently on the partner airlines internationally. My concern is the partner mileage exchange and rewards seats available. AK Air is competing with new guy on the block Delta and any message we could send would be to keep the current loyalty of existing customers and promote the excellent service to bring in new and maintain their bottom line investor confidence.

  8. BTW – it’s “Their”, not “They’re” – at the paragraph that begins :

    “They’re earnings chart on American is still quite attractive, …”.

    “They’re” is short for “They are”.

  9. I am a long time Alaska mileage program member, living in Seattle part time and San Diego part time. I fly back between the two cities about ten round trips per year.

    I have done 25 overseas trips since the end of 2007. Between 2011 and 2014, I did nine overseas trips on Delta. I happily flew Delta due to some partner benefits to Alaska Elite fliers. Once the changes in the Delta mileage program were announced in early 2014, I stopped buying tickets on their flights.

    I am trying American next year on trip to Dublin, mostly due to a desire to avoid a transfer at LHR. I also have trips lined up to Asia on Cathay Pacific and to Australia on Qantas. These are routes on which Delta also has a presence. I may fly Hainan Air to China from Seattle and IcelandAir to Scotland from Seattle.

    I am doing this to support Alaska in their efforts to deal with Delta’s attempt to expand their presence in Seattle and set up their own routes to feed flights from Seattle to overseas destinations.

    I enjoy my Alaska flights in the U.S. I tolerated Delta flights when I had to fly to connections at JFK or ATL.

    I do not fly United. I have flown Southwest when Alaska did not fly to my destination.

  10. Yen4Travel: What’s the point? You don’t fly Delta, you don’t fly United rather you fly different airlines so don’t qualify for a decent tier level and you don’t maximize your point earnings. All this just to prevent Delta, one of the largest airline on the globe to get more slots in Seattle. It’s pointless. They have a tons of cash, they could buy the entire Alaska Airline if they can’t get the desired number of slots.

    On the other hand I do understand your motive but Delta will win at the end.
    ps: I don’t fly Delta either 😀

  11. @Aquarel

    Ok let me get this straight. Your example 3,500 mile trip cost $3,500. But I will use American because I do not fly United since they went revenue based. I have never flown the skypeso airline. You are assiming that the person is also Executive Platinum. So Elite Miles on business has a 1.5x accrual. Price per elite mile = $3,500/(3,500 miles x 1.5) = 67 cents per mile. At that rate, to accrue 100,000 elite milles to maintain status, you would have to spend $67,000 annually on tickets. Over a ten year period, that is $670,000. According to a google search, there are 142,000 households that are worth $25MM or more and I am willing to bet even those households are not will to donate that kind of money Delta, United, or American.

    It is easy to understand why most Executive Platinums would not be happy.

  12. Actually, I have MVP Gold status on Alaska, earned in part due to flying Qantas, Cathay Pacific and British Air the past 18 months. I previously was able to get MVP Gold status flying Delta when the mileage credits toward tier status was mile for mile. MVP Gold status on Alaska has good benefits for mileage accrual.

    I also have Chase Visa for British Air which waives foreign currency conversion fees. I decided to credit miles flown on British Air to Alaska beginning earlier this year. Between points from the Chase Visa and Alaska Air, I have had two trans-Pacific and two trans-Atlantic redemptions in the past year, some in premium economy and some in business.

    So I’d say I am doing fine, including upgrades and free luggage etc. when I fly Alaska.

  13. Anyone else watch the video and see the credit card get swiped wrong?? I know it was to show the Alaska card but come on…

    Also, I hope they don’t go revenue. As a butt in seat 75k it wouldn’t be too painful but I like the straightforward approach to earning status and miles on Alaska.

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