Monday, June 28, 2010

Questioning the Value of Articles That Purport to Tell You the Value of Miles & Points

We recently saw a lengthy blog article discussing the “value” of frequent-flyer miles and hotel points. In general, the author postulated that miles/points were mostly worth 1 to 2 cents per mile/point. And that may be realistic for the redemption of points (allow me to just call them all “points” from now on).

Every so often, a travel writer/blogger has to take on the topic of value of miles. Print magazines, credit-card websites, travel blogs – every one needs a point-value article every so often. And all of them miss what we think is a very important consideration – what is the value based on the cost to acquire the point? Two examples:

The writer mentioned above suggests that Delta SkyMiles are worth 1 cent each. But if my cost to acquire 35,000 miles (as I did with a recent credit-card promotion) is, let’s say, an $85 annual fee (my card was actually fee-free the first year), then those points would be worth 2.4 cents each.

In the article, Hilton HHonors points are valued at .7 cents each. But virtually all our Hilton points are acquired through Hilton American Express card spending, and we only use that credit card for the purchase categories (gas, groceries, a few others) where we receive 6 points per dollar spent. Thus, we would value our Hilton points at 4.2 cents each.

Of course, all the equations and comparisons are meaningless. Because each individual situation and every person is so different. Do I want to use my miles for upgrades? Do I want a basic 25,000-mile ticket to see grandma next summer? Are my points acquired through hotel stays or by credit-card spending? What are my travel patterns? (Maybe I take more driving vacations, and thus lodging/hotels are more valuable than air miles.)

Finally, outside of accruing miles by flying or points from hotel stays, the other most-frequent method of accumulating points is via credit-card spending. And if that’s your case, maybe a cash-back credit card makes a whole lot more sense than an airline or hotel card. If you pay your credit-card balances in full every month, there’s no reason you shouldn’t be using some form of reward credit card for all your spending. And there are dozens of cash-back cards – 1% reward is considered the minimum, and by reading some of our older posts you shouldn’t have any problem getting significantly better than that.

We haven’t kept up with all the credit-card news lately, but, for example, we do know that:
1) Capital One offers cards with 1% rewards (and no foreign-transaction fees).
2) We have a Schwab card (which has been apparently discontinued, but could return) that offers 2% cash-back on all purchases.
3) Even the emasculated Chase Freedom card offers up to 5% cash back on certain categories of spending during certain months of the year (as does the Discover card).
4) The Merrill+ visa offers airline tickets (booked through them) for 25,000 points for tickets “up to $500 in value,” which would therefore be as much as 2 points value (and maybe even a bit more, as you can earn actual butt-in-seat frequent-flyer miles on the Merrill reward ticket).

So in general we give our usual thumbs-down to any attempt to calculate the “value” of miles – we wouldn’t want you to follow blindly even our suggestions. What’s important is the intangible value of your points. Do they allow you to travel more often? To see more varied places in the world? To save money for non-travel spending?

Take advantage of every opportunity to earn miles/points/cash-back, but spend less time worrying if the value of your points is less than someone else’s.

Thursday, June 10, 2010

Americans Still Drinking the TSA’s Kool-Aid

Unless you’ve not traveled in the past several years, you’ve probably heard about the Transportation Security Administration’s new Virtual Strip-Search Machines (oops, TSA’s new full-body scanners).

The always-excellent The Middle Seat column in The Wall St. Journal yesterday discussed travelers’ reactions to the new full-body scanners. Several quotes in the article were deeply depressing and saddening.

1) “Public opinion polls show widespread acceptance in the U.S. of the technology, with many [people] saying tighter security outweighs inconvenience.”
The U.S. public actually thinks that this is about security?
2) “A small sampling at [Chicago’s] O’Hare [airport] last week showed broad support for the scanners.”
The U.S. public actually thinks that this is about security?
3) “‘If it’s for passenger protection, why not?’ said [traveler] Ann Pagel, on her way home from Houston.”
The U.S. public actually thinks that this is about security?

The article goes on to reiterate everything that’s already been said about the scanners – they’re optional (but you’ll get a full pat-down if you refuse); that the software “masks most of the particulars of a person’s body”; that they’re supposed to prevent a reoccurrence of the Underwear Bomber last Christmas.

The TSA was established in November 2001 by congress (which was effectively 50/50 Republican/Democrat at the time) and then-President George Bush. It is one of the largest federal bureaucracies, with an annual budget of $7 billion. We’d ask “Will it ever stop?” but we know the answer. No politician in America – of either party – would risk hampering the TSA and being accused of being “soft on terrorism.” As if the TSA really has anything to do with truly preventing U.S. or world terrorism.

Sunday, June 06, 2010

Airline Non-Loyalty; Frequent-Flyer Agnosticism; United Economy Plus

I love all the wild speculation about what’s going to happen with the “new” United – the merger of the old United and Continental. The branding of the new company – with the United name, the Continental logo, and a mix of executives (headed by the Continental boss) – seems to indicate that the merged airline will take a similar approach in cherry-picking what parts of the old companies to retain and which to ditch. The blogs are humming with guesses about Starnet blocking, first-class cabins, Economy Plus, foreign vs. U.S. call centers, and more.

We haven’t flown Continental in several years (mostly because of our location and routings), but the last time we did we had an acceptable experience. We do fly United a fair amount, but the ONLY reason we’re United loyalists at all is because of Economy Plus. With it, we can put up with the surly flight attendants and the dehydrated food. We can compensate by bringing our own food; zoning out with our iPod and noise-canceling headphones; and mostly ignoring the “safety professionals” (especially since they mostly ignore us). Without E+, we have absolutely no reason to remain loyal to United (or to any of the U.S. legacy carriers).

As it is, with the exception of United, in the U.S. we try to fly Alaska and Frontier as much as possible. If JetBlue or Virgin America’s routes were more extensive for us, we’d be happy to give them business. And internationally, if we can’t get a decent United price (with E+), we do everything possible to fly on a foreign carrier.

Regarding miles for those or any airline, we are frequent-flyer agnostic. Sure, we pay a bit of attention to mileage bonuses (we recently got a Delta Amex with an exceptional initial-mileage bonus), and have mileage scattered around a few-too-many different frequent-flyer programs. Still, our mileage earning is mostly from credit cards, bonuses, and other activities rather than from flying. We do have enough sense to put as many flying miles into as few programs as possible – right now, primarily United for Star Alliance flights and Alaska for OneWorld or SkyTeam flights (whenever possible; Alaska partners with many OW and ST carriers, but not all).

Dog is my copilot

Wednesday, June 02, 2010

Enhancements That Are Really Enhancements

Airlines aren’t known for reducing fees or adding benefits without some (usually sneaky) tradeoff. But an email we just received from Frontier Airlines sounds like the airline is truly enhancing their product and customer service. The email says, in part:

“You told us you wanted lower and fewer fees and the ability to select your seat assignment when booking an Economy ticket. We heard you, and made the following changes, effective immediately for all Economy tickets:
· We've reduced the fee for a confirmed alternate flight on the same day of travel from $100 to $50. Available at the airport only.
· We've eliminated the $25 Ticketing Service Fee.
· We’ve extended the option to select an advance seat assignment at the time of booking.
We’re committed to providing you with the best care in the air. The following service enhancements are also effective immediately:
· Classic Plus passengers will enjoy FREE access to the Best Care Club, on their day of travel. The club is located at Milwaukee’s General Mitchell International Airport, on Concourse D near gate 38.”

We truly have been impressed with Frontier so far. This is another example of why we’d rather fly Frontier or Alaska or JetBlue than United or Delta or any other U.S. legacy carrier.