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Competition Heats up for the Best Mileage Program

The undisputed stars of the airline industry over the past seven years have been the discount carriers. But as full-service airlines have lowered their costs through bankruptcy and restructuring, they’ve been able to close the gap between their “full-service” ticket prices and those of the discount carriers. At the same time, the discount carriers’ costs—for fuel, to underwrite expansion, etc.—have been on the rise, forcing them to raise their ticket prices to maintain profitability.

Bottom line: The historic price advantage claimed by the low-cost carriers has never been slimmer. For all the discount carriers’ boasting about their rock-bottom fares, consumers in many cases can find comparable prices from the legacy airlines.

With prices closer to parity, the value added by frequent flyer programs can in theory be a tiebreaker, moving the needle in favor of the legacy airlines and away from their lower-cost rivals.

Whether mileage programs are a difference-maker for any particular traveler depends on which aspects of the programs are most important to that individual, and just how important they are. Following are some of the key program features and benefits that today’s savvy travelers factor into their choices between old-line carriers and discount airlines.

Earning and redemption

Airline loyalty programs, first and foremost, are about earning miles and cashing them in for meaningful rewards. The more opportunities to earn miles, and the more available award options, the better.

If bigger is better, the mileage schemes of the major airlines are clearly the best. The programs of American, Delta, United, and their ilk boast hundreds of partner companies that provide miles to program members. On the award side, their tie-ups with multiple airline partners mean miles can be redeemed for flights to destinations practically anywhere in the world.

By comparison, the programs of such low-cost carriers as Southwest and JetBlue are bare-bones affairs. Southwest Rapid Rewards participants can earn credits with four car rental companies and six hotel chains, as well as for credit card charges and flights on ATA. On the award side, credits can be redeemed for flights on Southwest or ATA. Members of JetBlue’s program are limited to earning points for JetBlue flights or charges to the TrueBlue credit card, and redeeming points for more JetBlue flights.

Advantage: the full-service airlines.

Promotional opportunities

In addition to the ongoing mileage-earning partnerships, programs are more or less attractive insofar as they offer their members more or fewer limited-time opportunities to earn bonus miles for flights or other activities. It’s no surprise that the largest programs offer the most opportunities.

To appreciate the point, one has only to compare the special offers currently in place for members of the programs of American and JetBlue.

According to American’s website, AAdvantage members have, as of this writing, a wide range of mileage promotions to choose from, including eight separate flight bonuses, three bonuses from hotel chains, nine car rental offers, and six other miscellaneous bonus mile offers.

Perusing the JetBlue website, by contrast, there’s only one special offer for TrueBlue members: double points for flights booked online. That’s not even a true promotional offer because it’s a permanent feature of the program.

Advantage: the full-service airlines.

Elite benefits

For those who travel enough to earn elite status in an airline program—typically awarded for flying 25,000 or more miles during a calendar year—full-service carriers have a definite advantage over discounters. That’s very simply because the discount airlines generally don’t have first-class cabins or airport lounges, so they simply aren’t in a position to offer the upgrades and other perks associated with elite status in a full-featured program.

Advantage: the full-service airlines.

Mileage expiration

Until recently, the contrast between the mileage expiration policies of the full-service carriers and their low-cost counterparts was especially stark. Where the former allowed program members to extend the life of their miles indefinitely by earning or redeeming miles every three years, the latter summarily wiped members’ miles off the books after just one year. If hoarding miles for the long term—or just having sufficient time to reach an award level before points disappeared—were a priority, the old-line carriers were the clear choice.

As with ticket prices, the gap between the expiration policies of the mainline and discount airlines has been narrowing. It began with Southwest, which in 2005 changed its policy to allow Rapid Rewards members two years, versus one previously, to earn enough credits for an award. Several other low-cost carriers, including JetBlue and ATA, liberalized their policies as well, shifting the average lifespan of discount carrier miles into more generous territory.

Among those airlines that previously boasted three-year policies, US Airways, Delta, and United have announced plans to cut back the life of miles to 18 months (US Airways, United) or two years (Delta).

So the more and less generous carriers have seemingly met in the middle, splitting the difference between the policies that once divided them. However, the mainline carriers retain one significant advantage over the discounters: The life of miles in their programs can be extended by practically any earning or redemption transaction, while miles in the discounters’ programs generally expire terminally, with no chance of extending or reviving them.

Advantage: the full-service airlines.

And the winner is…

Clearly, the frequent flyer advantage goes to the large, robust programs operated by the major airlines. If all else is equal—ticket price, travel time, in-flight comfort—earning miles with a major carrier program can be the added value that gives consumers a reason to fly with a full-service airline over a discounter.

But do those advantages warrant paying $5 more for a ticket on an airline with a superior mileage program? $10 more? $50?

There’s no simple, definitive answer. Whereas mileage junkies will pay a premium to keep the miles flowing into their accounts, mileage program skeptics will purchase the cheapest ticket, ignoring mileage considerations altogether.

Whether you’re willing to pay a premium for miles, and how much, will depend on where your priorities lie along that spectrum.

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