Miles and Points are Dying – Reselling, Cash Back, and Economy Are the Future

I along with many others new the day was coming when AA would devalue their award chart.  It was only a matter of time.  After the big devaluations from United and Delta everyone and their mother new AA would do the same after the merger. It was a question of when not if.

If you follow along with a lot of the miles and points blogs you read all about it and their collective “anger.”  I have a different view on the devaluation, which is I don’t care.  I don’t care for two reasons. 

First, miles are easier than ever to get.  This of course is part of the problem.  With miles existing as a liability on someone’s balance sheet the easy way to deal with that is to make it cost more miles to redeem an award (there is a second option I will get to in a minute).  Easy miles is the world we live in and I doubt that will change any time soon.  So the cost of a business class award to Europe went up on AA from 50k to 57.5k.  I can earn that many AA miles in a week with reselling and MS.

The second reason, is that the devaluations are not that bad.  If you listen to the bloggers they will make you think that this is the end of the world.  First Delta, then United, now American, what is the world coming to?  If you are a premium cabin traveler like a lot of the sales people bloggers (because their business model depends on it) then yes I can see how you can be angry.  First class to Europe went up from 62.5k to 85k.  That hurts.  My thought on that is if you collect miles and points to feel like the 1% then get over yourself.

Consider this for a minute.  Economy flights stayed the same, 30k.  A roundtrip flight in economy during peak summer season could easily put you back $2,000. Paying 60k miles plus pocket change seems to me like we are still winning.

We are still winning at least in theory.  The real problem that existed before the devaluations and will continue to exist for the future is award availability.  Here is the real problem.

Screen Shot 2015-11-22 at 7.19.15 AM

This is the second option to devalue points that I mentioned above.  It is also much shittier than an award chart being devalued.  You will also never see the bloggers talk about this because if they did it would really hurt their bottom line.  At least with the devaluations they can pretend to be on your side.  But then they go right back to selling snake oil and you are never the wiser.

I run a small side business helping folks book award flights.  I can tell you that this has been an issue for sometime now.  So long as flights are full of paying customers expect to see this continue.  So what can be done?

The picture above is a snap shot of availability on American.  The picture is a bit rosier when you look at partner airlines, but there is a caveat.

Screen Shot 2015-11-22 at 7.33.23 AM

The caveat is that this is all British Airways award availability.  BA has a trade off – they make awards available but they also make you pay for it in the form of “fuel surcharges.”

You can also look at economy, while MilesAAver awards are still bard to come by on AA you can still pay anytime rates.  That may cost you 45k-60k.  Again, my attitude with that is so what, miles are easy.

In the long term, I am not sure how good a winning strategy this all is.  Eventually the redemptions are going revenue based like South West and when that day comes the end is here.  My advice, get in on the cash back wagon.  I go back to my travel slush fund theory. Reselling, cash back, and MS are they way to go.  Work on making a travel slush fund. Think of the money in that slush fund as the most flexible points currency there is and you will be all right.


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