The 2024 Reward Seat Availability Survey critiques Alaska, American, Delta, JetBlue, Southwest, and United flight rewards.
SHOREWOOD, WISCONSIN, USA – The IdeaWorksCompany Reward Seat Availability Survey solutions the query, “How expensive is factors redemption for the preferred primary reward kind provided by prime US airways?” This 12 months’s survey assesses six US airways and repeats the identical strategies used 5 years in the past in 2019.
Key general findings embrace:
- Costs of rewards (in miles or factors) have elevated considerably since 2019 and, furthermore, by 7 factors above the speed of inflation for a similar interval.
- Reward payback for 2024, which measures the reward worth offered per greenback spent on base fares, dropped general greater than half from 2019.
- Fundamental financial system fares are disrupting the worth offered by frequent flyer applications by way of insurance policies which cut back or remove mileage/factors accrual. The graph beneath shows the typical financial system reward worth for every service for 2019 and 2024.
Fundamental financial system fares have a big affect on the outcomes of this survey. Community airways, equivalent to American and Delta, place these as their lowest fare and as a instrument to compete with low value carriers. Fundamental financial system has been embraced as an essential income and new prospects, and but airways actively discourage gross sales with insurance policies designed to discourage customers from shopping for these fares. For instance, primary financial system is non-refundable and infrequently doesn’t accrue miles/factors in the identical method as different fares. However, this survey focuses on the bottom costs out there as a result of that’s what most customers search.
For the typical reward worth metric, it’s essential to recollect lowest worth is finest. Southwest leads US airways with the bottom general common reward worth. Merely stated, customers can benefit from the perks of reward journey extra quickly on Southwest. The airline does have an inherent benefit as a result of it focuses on short- and medium-haul routes and frequent flights. Reward costs are typically decrease for shorter flights and demand is extra readily met with extra flights. The airline has an extended custom for the bottom reward worth ends in the 15-year historical past of this survey.
Mileage/level costs have climbed 28% general because the final survey 5 years in the past. The US Shopper Value Index has elevated 21% throughout this era, and this could clarify among the will increase posted by frequent flyer applications. The first purpose is the bigger move of miles/factors from co-branded bank card accrual, which created extra demand and prompted airways to extend reward costs.
Reward payback exposes accrual worth decay
Frequent flyer applications historically carry out their finest income magic for his or her airline masters when members are inspired to purchase extra tickets and fly extra usually. This logic appears misplaced in an period the place the loyalty issue has been disrupted by the push to generate billions from co-branded card portfolios. Reward payback is a metric that displays the reward worth returned per greenback spent on base fares. The beneath graph shows reward payback outcomes for 2019 and 2024.
Southwest has the highest results of 6.7% for 2024 which represents reward worth of $6.70 for each $100 spent on base fares. Reward payback decreased since 2019 and the explanation at most carriers is the arrival of primary financial system fares. Queries carried out in March for the June by way of October interval sought the bottom fares, and these have been usually primary financial system. Accrual insurance policies established by frequent flyer applications for these fares have modified dramatically since 2019.
Alaska, American, and JetBlue considerably decreased accrual charges. For instance, primary financial system fares on Alaska now accrue mileage at 30% of normal fares. Alaska began promoting Saver Fares (their model of Fundamental Financial system) on the finish of 2018 and Saver Fares initially featured full mileage accrual. This explains the big drop since 2019 from 11.3% to three.2% for 2024. Likewise, Fundamental Financial system on American accrues 2 miles per greenback spent, versus the standard multiplier of 5. Delta is essentially the most dramatic, and fully prohibits accrual for primary financial system journey.
Kudos are due United, which applies the identical accrual coverage for all of its fares. Southwest doesn’t provide a primary financial system fare, however makes use of distinct level multipliers for every of its 4 fare sorts from Wanna Get Away to Enterprise Choose. Reward Payback is most helpful for members specializing in flight-based accrual to construct their account balances.
Reward worth of a mile/level focuses on companion accrual
For a lot of members, co-branded bank cards have turn out to be the first technique for constructing frequent flyer mileage/level balances. Just like Reward Payback, this metric compares the bottom reward costs and lowest fares discovered for every date and metropolis pair queried. American leads the best way with a prime consequence; AAdvantage miles present 1.4 cents of coach journey worth based mostly upon queries which embrace primary financial system fares. The 2024 consequence doubles the 2019 fee and displays an apparent change in reward pricing technique since 2019.
When frequent flyer applications appeared within the Nineteen Eighties, shopping for a ticket on an airline was the one method to accrue miles. The business’s embrace of co-branded bank cards has modified this end result. Now nearly all of mileage accrual originates from companion transactions and the minority is generated flying the airline. Monetary disclosures made by American, Delta, and United throughout 2020 reveal this modification. Now these airways are incomes billions from the income offered by their financial institution companions. This makes the reward worth of a mile/level a useful metric for members specializing in accrual by way of a co-branded bank card.
The survey measures low-priced on a regular basis reward availability
The IdeaWorksCompany Reward Seat Availability Survey relies upon 600 reserving and fare queries made by the IdeaWorksCompany on the web sites of six frequent flyer applications to evaluate low-priced on a regular basis reward seat availability. Lowest-price rewards are an essential profit for many members and the first subject of this survey. The town pairs included within the survey are amongst every service’s prime markets based mostly upon passenger visitors.
The methodology utilized in 2019 was repeated for 2024 with departure and return dates evenly distributed throughout June, July, August, September, and October. The queries have been performed in early March. The bottom reward worth or fare, to incorporate primary financial system fares, was tallied. The 2024 survey is proscribed to US home flights of 251-2,500 miles and financial system class rewards. The survey doesn’t consider close-in bookings; it’s restricted to vacation-style bookings months earlier than departure.
Frequent flyer applications have weakened their promise
Customers obtain one of the best reward worth through the use of a service’s co-branded bank card and remaining loyal to the airline for flight purchases. This mixture is extra essential immediately than 5 years in the past. The co-branded bank card normally consists of beneficial advantages equivalent to earlier boarding and the waiver of checked baggage charges.
The banks issuing co-branded bank cards have gotten main journey retailers. Airways could sometime remorse relinquishing a lot advertising energy to their financial institution companions. Frequent flyer applications are shedding sight of their mission. One of the best applications search to construct shopper loyalty, enhance member communication, and generate money in equal measure. However these applications are properly alongside the trail of changing into simply journey reward supply instruments for co-branded credit score cards- and money supply instruments for airline revenue statements. They are often way more.
Accrual of miles/factors for purchasing tickets from the airline ought to proceed to be the highest precedence. Customers who spend $1,000 on flight tickets have way more constructive impression on an airline’s revenue assertion than those that cost $1,000 at Walmart on a co-branded bank card. The unique enchantment of frequent flyer applications stays simply as legitimate immediately as 4 many years in the past: Supply customers a purpose to be loyal repeat prospects who spend cash on the service’s primary product – seats on the airplane. That’s how sturdy gross sales relationships are created, and sure . . . that’s how members can even discover purpose to use for that cash-cow bank card.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Community; his tasks embrace enterprise improvement and planning for TravelDailyNews long-term alternatives.
