Airlines will devalue this year…because they can get away with it. We’ve already seen it with United and Delta. Now we’ve seen it with Southwest Airlines. Expect more. Spend your miles now.
Southwest Airlines Devalues Without Notice…Others Will Too
Although a familiar mantra on Live and Let’s Fly, I’ll repeat it again: miles and points are a depreciating asset, not a nest egg. Think used car, not stock or mutual fund (or even bond).
Today, Southwest Airlines demonstrated why. Points are worth 6% less this morning than they were last night. Southwest, which operates a revenue-based loyalty program, devalued without notice (except to The Points Guy).
I don’t fly Southwest or collect Southwest points, so this isn’t a big deal to me in terms of my own flying patterns or cache of points. Nevertheless, every time a carrier devalues without notice it represents a degradation of trust and respect and sets further precedent for other carriers to copy.
And they do it because they can get away with it…because revenue or distance or zone-based redemptions do not change the fact that consumers have amassed heaps of miles during the pandemic that they are now trying to use. But yes, it is particularly egregious when a revenue-based program devalues without notice because there is an even stronger implied promise that your points are worth a certain, fixed amount.
Folks, Kyle’s analysis on Sunday was prophetic: spend your miles now. There will be opportunities to rebuild your balances at future points. In fact, you can always cancel and redeposit if prices do not rise. But think about your travel for the rest of 2021 and into 2022. Book the space now. There are millions of Southwest Airlines customers this morning who wish they had not waited…
Instead of 76-78 Rapid Rewards points per dollar, you now need 83 points per dollar. It stinks. But it is not unexpected. Quite the contrary, I expect other carriers will continue to devalue.
My prediction? Alaska Airlines will devalue WITHOUT NOTICE (despite assurances otherwise) and we will see an announced award chart devaluation at American Airlines later this year. Singapore Airlines, Air France-KLM will devalue and Delta and United will again jack up partner award rates. I sure hope I’m wrong, but I’m preparing for the worst…