The cost of reward travel at U.S. airlines has seen a significant increase since 2019, impacting the value of frequent-flyer points. An analysis conducted by consulting firm IdeaWorks revealed that the lowest daily average price of tickets purchased with points or miles rose by 28% in March 2024 compared to March 2019. This surge in reward prices surpasses the inflation rate by 7 percentage points.
One of the main reasons behind the inflation in reward travel prices is the growing popularity of co-branded airline credit cards among consumers. This increased demand has prompted airlines to raise their reward prices. IdeaWorks president Jay Sorenson emphasized this point in his written analysis.
IdeaWorks examined 600 booking queries on the websites of major U.S. airlines, including American, Delta, United, Southwest, Alaska, and JetBlue. The analysis focused on popular city pairings and sought the cheapest available daily reward fare for each carrier. Southwest emerged as the airline with the lowest reward prices, while United had the highest redemption rates.
Value of Frequent Flyer Points
Despite offering lower reward prices, Southwest is no longer the leader in terms of the value of frequent-flyer points. American now holds that title, with AAdvantage points valued at 1.4 cents each for the lowest-fare ticket rewards. In contrast, United MileagePlus points have the lowest value among the six airlines, at 0.7 cents per point.
Reward Value for Flight Purchases
Southwest compensates for the lower value of Rapid Rewards points by providing more reward value for flight purchases compared to other airlines. According to the IdeaWorks study, Rapids Rewards members receive a reward value of 6.7% for the cheapest available base airfares, while United comes in at 3.3%, and Delta lags behind at 0.4%.
Influence of Airline Policies
The value of reward points for flight purchases is influenced by airline policies related to basic economy fares. Some airlines, such as Alaska, offer fewer points for basic economy bookings compared to standard economy bookings. This discrepancy in reward accumulation can impact the overall value of frequent-flyer points for travelers.
Complexity of Reward Programs
Airlines often have intricate award tables for flight purchases, with rewards varying based on fare class, loyalty status, and credit card usage. This complexity can lead to disparities in reward values for different types of fares, with some airlines providing higher rewards for premium fares despite lower rewards for basic economy bookings.
The rising cost of reward travel in the U.S. airline industry has implications for frequent-flyer program members. Understanding the factors driving these price increases and the dynamics of reward value can help travelers make informed decisions when it comes to earning and redeeming their hard-earned points.