Are loyalty programs worth belonging to?

Aleksandar/Shutterstock
Aleksandar/Shutterstock
It’s time to question one of the most basic tenets of travel: Everyone should participate in an airline loyalty program.

A tectonic shift in the world of travel rewards is forcing passengers to reconsider their allegiances — or whether it’s worth being loyal at all. Given the already hopelessly convoluted nature of these programs, I’m surprised it took so long.

Frequent fliers have been hardest hit. In recent months, both Delta Air Lines and United Airlines revised their programs so that only the biggest spenders get the best perks. Soon, flying often won’t be enough to reach an airline’s coveted elite status. Expect more companies to follow.

Experienced travelers are taking a hard look at their loyalty portfolios. They don’t always like what they see.

David Deehl, an attorney who lives in Miami, says he feels betrayed by recent loyalty program changes. As an elite-level traveler, he expects preferred treatment from his preferred carrier, Delta Air Lines. But when he missed a recent flight from Miami to London, he discovered his Silver Medallion status didn’t mean much: The airline asked him to pay an extra $3,400 to fly.

Delta’s revamped program, which, starting next year, awards elite status based on the amount of money spent and miles flown, makes it significantly harder to maintain Deehl’s Medallion status. It represented the final straw, he says. He’s burning the 400,000 leftover SkyMiles in his account and vows to buy future tickets based on price and convenience, not whether he can maintain his elite status or score a “free” award ticket.

“No more loyalty for me,” he says.

His decision, and that of others like him, may have dramatic repercussions. For years, loyalty programs flourished, thanks to a conventional wisdom that everyone should carry a rewards card. The programs grew at a cancerous rate, fed by an unskeptical mainstream media and a small army of bloggers who were generously compensated for endorsing the loyalty lifestyle. They hawked a handful of bank-issued affinity credit cards with excessive point-bonus awards for which they received a generous commission check whenever a reader signed up.

These program apologists will trot out their same tired reasons why you should always be loyal. The programs are free, they’ll say, and look at what I got by being faithful to my airline: a “free” ticket to Hawaii, or a “free” upgrade to business class.

These arguments are too easily debunked. Loyalty programs aren’t free. At a minimum, members fork over their valuable personal data and spending history, which is shared with a company’s marketing partners. Worst-case scenario? You spend more — maybe a lot more — on travel in a wrongheaded effort to reach elite status or score a “free” ticket. If you use one of those pricey affinity cards, you’re also paying an annual fee to collect points that, as a matter of fact, don’t even belong to you.

Here’s what is true: A few people are benefiting from loyalty programs, including top-tier frequent fliers, usually traveling on their company’s dime, and hobbyists who spend their free time figuring out a way to game the system.

Banks, which sell cards that award a mile for every dollar spent, and the cheerleading bloggers who promote them, are doing very well, too. But no one benefits more than the travel company. Loyalty programs seduce travelers into spending more. And for what? In exchange for your money and loyalty, for example, an airline doesn’t have to treat you much better than the average economy-class passenger in 1975 and doesn’t have to give you anything more than a seat that would have flown empty anyway.

Best of all, most companies can change their loyalty program rules at any time, for any reason. Not only are the points their property, but they can disappear out of your account overnight and with them, any future award ticket bookings.

I call that a scam.

For some, it’s probably too late to leave. Consider Eric Brown, who owns a trading company in New York. After years of flying on Continental Airlines — now United Airlines — he’s earned lifetime gold status and is on the verge of becoming a lifetime platinum-level elite, thanks to its Million Miler program. He’s all-in with United, using a United Club Visa card, which offers 50% bonus miles on all purchases, double miles on his United tickets and airport club access.

Yet, Brown says he’s disillusioned with the airline’s recent program changes. Securing upgrades on flights between the Newark and Beijing using his miles has become increasingly difficult and expensive. He says he’d like to sever ties with United, but he can’t. He’s in too deep. Besides, he doesn’t have much of a choice.

“Where am I going?” he asks.

Frequent travelers such as Brown often tell me that if they had to do it all over again, they wouldn’t participate in the loyalty racket. They wonder why no one warned them of the risks.

Well, that’s what I’m doing. To be clear: Everyone should not participate in a rewards program. Question your loyalties now, before you’re too invested. And unless you’re prepared to offer a travel company even more money for the same limited and elusive perks, get ready to board your flight with the rest of us in Zone 5, and take your seat in the back of the plane — next to me.

Are loyalty programs worth belonging to?

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