The Future Of Alaska Mileage Plan: Here’s What I’m Most Curious About

Yesterday morning the merger between Alaska and Virgin America was formalized, which is being branded as “creating the premier West Coast Airline.”

Alaska-Virgin-America

I’m very curious to see what the combined airline looks like, given that two airlines have very little in common. Time will tell what happens, though personally what I’m most curious about is what the frequent flyer program of the combined airline will look like. Alaska has indicated that Alaska Mileage Plan will be the combined airline’s program, which isn’t surprising, given that not much of the Virgin America brand will be surviving, it seems.

I figured I’d share the three aspects of the future of the Mileage Plan program which I’m most curious about, personally:

Will Alaska Mileage Plan go revenue based?

Alaska and Virgin America are very different airlines, and that includes their frequent flyer programs. Virgin America Elevate is revenue based, meaning miles are both earned and redeemed based on how much a ticket costs. Meanwhile Alaska Mileage Plan is more of a traditional program, as miles are earned based on the distance flown, and redemption rates are pegged to an award chart.

Earn-Alaska-Miles
Alaska’s mileage earning rates

While many of Alaska’s partners (including American and Delta) are moving to revenue based mileage earning, Alaska has indicated that they’d like to keep their program “traditional.” This was said before the merger between Alaska and Virgin America was announced, so I’m curious to see if this changes things.

Earn-Virgin-Miles
Virgin America’s points earning rates

If I were a betting man, I’d guess that as a “compromise” under the merger, miles will be earned based on revenue, while they’ll maintain a traditional chart for redemptions. I suspect this would only happen a year or more from now, though. Of course I’d prefer to be wrong, but that’s my guess as of now.

At what rate will Elevate points be converted into Mileage Plan miles?

With the merger of American and US Airways as well as Delta and Northwest, this was pretty straightforward, as miles converted at a 1:1 ratio.

However, this is a bit trickier with the Alaska and Virgin America merger:

  • Elevate points can be redeemed for ~2.2 cents each towards the cost of a ticket on Virgin America
  • Alaska miles can be redeemed at varying levels for a ticket on Alaska or their partners

So at what rate will Virgin America points convert to Alaska miles? It’s a similar question to what I have with the merger between Marriott and Starwood.

With Alaska and Virgin America, I don’t think a 1:1 ratio would be fair. Interestingly Elevate is an American Express Membership Rewards and Citi ThankYou transfer partner, and points convert at a 2:1 ratio, while for other mileage currencies it’s a 1:1 ratio.

So that suggests in theory one Elevate point should be worth two Alaska miles. Personally I don’t agree with that valuation since I can get a lot more value out of Alaska miles, though I don’t think that would be an unreasonable transfer rate.

Elevate-Transfer-Partner

Based on my valuation I’d say one Elevate point is worth ~1.2-1.5 Alaska miles, but then again I doubt that represents the average person’s valuation.

This is going to get really interesting, in my opinion, as it’s the first time in a while we’ll see an airline actually have to put a value to their miles in this type of way.

Will Alaska have any transfer partners?

As mentioned above, Virgin America Elevate is transfer partners with American Express Membership Rewards and Citi ThankYou, and points transfer at a 2:1 ratio. Meanwhile Alaska Mileage Plan doesn’t partner with any of the “big three” transferable points currencies (though you can transfer points from Starwood Preferred Guest).

Virgin-America-Elevate

So, will the combined airline remain a transfer partner for these programs, or will they cut ties once Virgin America Elevate ceases to exist?

At this point all we can do is speculate. Given that Virgin America Elevate is being folded into Alaska Mileage Plan, my guess is that ties will be cut, and that Mileage Plan won’t partner with one of these transferable points currencies.

Why? Because presumably if they wanted to, they could have done so already. Since it’s Alaska management at the helm of the new airline, I don’t see much changing in that regard. Historically they’ve done a lot to preserve the value of their miles (aside from the Emirates situation last week), and I’m guessing they don’t want to screw that up by opening the floodgates.

I’d love to be wrong, though.

I suspect Alaska will continue to be aggressive about selling miles, though.

Bottom line

At this point the merger between Alaska and Virgin America is in the very early stages, so we have infinitely more questions than answers. The folding of Virgin America Elevate into Alaska Mileage Plan will be especially interesting, given that this comes at a time where many other airlines are also adjusting their frequent flyer programs.

What are your predictions for post-merger Alaska Mileage Plan?

Comments

  1. Virgin has a more traditional award chart for partner redemptions, which is all I care about. It’s priced by segment, not by region, but it’s still definitely not revenue-based. So I really hope that the post-merger program is basically the same as what Alaska has now on the redemption side.

  2. Once the exchange rate is published, there may be opportunity to transfer to Elevate from the “Big 3” in anticipation of them eventually becoming Alaska miles.

  3. AMEX needs to get back on track and get us some better transfer partners. All they’ve done in the past year is lose Frontier, Best Western, and now probably both Starwood and Virgin America. Do you think that they will continue to lose some more, or replace lost ones with others? I got the Everyday Preferred card because of the breadth of places I could redeem my points at. I know these things change over time, but its been downhill since I got on board :-(. Thanks for your input in advance.

  4. do you recommend getting a Virgin America CC to access the sign up bonus before the cards go away?

  5. @Max – “All they’ve done in the past year is lose Frontier, Best Western, and now probably both Starwood and Virgin America.”

    You can’t really blame AmEx for the fact that Starwood & VX are merging, though. AmEx should respond to these (particularly the possibility of losing the Starwood card), but to say that all AmEx has done is lose transfer partners seems rather more inflammatory than it should be. And transferring MR to SPG is a bad idea in most cases, given the transfer ratio.

  6. So I know this won’t happen but wouldn’t it be crazy if Alaska did a 1:1 ratio and gave 0 advanced notice. Could you imagine the outcry? (I really understand this won’t happen but it would be crazy if it did and they would burn every last ounce of goodwill with the program)

  7. @Brian L: Its just frustrating that the transfer partners list is shrinking, and not growing, or at least replacing the ones that leave. I think they need to get another US airline however, as Delta isn’t a great option for direct flights from my location.

  8. @Max – “Its just frustrating that the transfer partners list is shrinking”

    Except in the case of two of the ones you cited, AmEx probably can’t do very much about.

    “and not growing, or at least replacing the ones that leave.”

    I would suspect that the possibility/likelihood of losing Starwood may make AmEx do something (although I don’t know what).

    “I think they need to get another US airline however, as Delta isn’t a great option for direct flights from my location.”

    How many US airlines are left? WN & UA are with Chase, AA is with Citi, if AS isn’t a transfer partner by now, they’re probably not going to be. And MR has transfer partners in all 3 alliances that you can redeem with for flights on UA/AA/DL.

  9. @Max and Brian L- They may not have the ability to partner with other airlines, but here are some ideas to make any loss sting less. How about making the points worth more for statement credit or airfare? Currently, they are subpar at 0.6c and 1c respectively. Citi and Chase offer a better redemption value in both ways.

  10. Lucky- Do you see a possible arbitrage play here? If you think it is likely that Alaska will fold Elevate points in a ratio greater than 1:1, could it make sense to transfer Thank you points or MR points to Elevate despite the 1:2 transfer ratio? It would be an indirect way to transfer MR and TY to Alaska miles.

  11. I hear nothing about the transfer of Elite status. If you have Elevate Gold status through 2017, will this become MVP Gold through 2017. Any guesses?

  12. I’d like to know what will happen with Virgin America’s partnerships with other airlines- my guess is that they all disappear since almost all of them conflict with Alaska’s partnerships. China Eastern/Southern vs Hainan, Virgin Australia vs Qantas, perhaps even Singapore vs Cathay Pacific. The one they do have in common is Emirates. Maybe Alaska will tie in with Hawaiian too?

  13. It seems to me that the Elevate miles are worth far more. I flew Virgin Atlantic Upper Class from LHR to SFO, paying full price last year. I chose to get Elevate miles as I am not a member of the Virgin Atlantic or Delta FF programs.

    I got about 3,300 miles for the 5,000 mile flight in Upper Class. BA Avios for the same trip would be about 7,500 miles.

    Elevate miles are more valuable than most.

  14. Martin,

    Are you saying because you earned less Virgin points that they’re more valuable ? Not quite how things work lol

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