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Two things stood out in the devolving miles & points world: Etihad First Apartment award space opened up if you can get your behind to Abu Dhabi and also award space opened up on AA (wow, shocking news!) to Australia. Or LAX to Sydney more specifically if you prefer. Other than that, give me a yawn.
A Fascinating Look at the Evolution of Human Transport. Oh, how fascinating this is! We are now at…hoverboards, oh oh.
Coming soon! Six Days Visa Free Transit In Shanghai, Hangzhou & Nanjing!! This is exciting, make a short trip these days so much more convenient, two thumbs up!
Joe Brancatelli shares his thoughts about where the frequent flyer programs are going. He concludes that they may no longer matter and then, in a conclusion that spreads terror among of us The Hobbyists, we read this excerpt, please sit down:
As one bank executive told me recently, airline credit cards are at a tipping point because banks now pay upwards of two cents each to buy those miles. “That’s close to unprofitable for us and very close to the point where banks may walk away” from the frequent flier game.
After posting this, I saw this article by MJ on Travel on looking ahead for airline loyalty and even quotes the same quote above!
Iceland from the air. I am starting to love this drone stuff…a lot!
17 Coolest Signatures from famous people throughout history. This is pretty cool indeed!
Meth user arrested after joyride on Walmart motorized card. Only in America’s greatest store, mega lol stuff only for your…entertainment!
One powerful making money move for 2016. Pretty basic but so powerful. Lots of personal finance advice is simple, the key is to get people to change their behavior and actually DO IT!
Another totally awesome picture of the day at Twisted Sifter. Earthrise 2015
50 most unforgettable photos of 2015.
And I leave you with this…
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First!
Second!? 🙂 Thanks for the mention. While I find that 2 cent per mile number a little difficult to believe, the underlying premise of banks getting tired of the frequent flyer game was daunting to me. Made me go hmmmm.
George, What do they think, THAT WE ARE A BUNCH OF MORONS!!?? MMS and VFTW put out the same crappy post on IHG points yersterday. ARE THEY USING THE SAME GHOST WRITER? Is it DREW AGAIN? I sure hope not. Please don’t give me the brilliant minds think a like bullshat, because I ain’t buying anything these Hucksters are selling. Templates? George please explain what they are up to, you are wise and omniscient.
Hard to figure that banks are paying close to 2 cents per mile to the airlines. If that were so, I think we’d see a lot more cash back cards paying closer to 2%. With those, they could reduce sign-up bonuses and eliminate fat conversion commissions to the Titans.
Also, a 2 cent a mile cost would mean they are spending a fortune on bonus categories.
Agree I find it hard to believe. Plus, after spending that much, you’d think there would have been some contractual arrangement whereby the airlines have to make x number of seats available.
George, you are in the business world, is there some source of industry standards where we could learn the true numbers on this ?
No, padawan, that’s proprietary and thus highly confidential information.
Every now and then a bank will disclose that they spent $X million purchasing frequent flyer miles, but I’ve never seen a disclosure on the # of miles or cost per mile.
Every time I read about people falling off these Hoverboards and land up going to the Hospital, I think of Navin R. Johnson’s (Steve Martin’s character in the movie,The Jerk) invention of the ‘Omni Grab’.
https://www.youtube.com/watch?v=qaz2hxZLycY
Transactions have two parties: a buyer and a seller. An airline that sells miles for two cents each has a sucker for a client. I imagine that banks bid on multi-year contracts to issue cards for airlines (and Costco, and hotel chains) and some banks may balk at paying so much for miles and leave or threaten to leave. Balking, competition, or better bargaining by banks should drive down that price.
I agree with the recent mention that 2016 will probably be the start of the 1 mile = 1 cent of airfare trend.
Now if you’ll excuse me, I’m going to go start a Kickstarter for suckers to add their miles to my account so I can fly the apartment suites and write all about it….
Industry statistics I’m curious about:
1. How important are online credit card referrals to issuers?
2. What percentage of online referrals are from BA/MMS? Are they a major source or a drop in the bucket?
3. How profitable are new accounts from referrals compared to all other channels?
4. Do banks actually know the answer to #3?
Nick:
1. To issuers-Don’t know. However they really increase the YTB (Yield to Blogger).
2. I imagine the referrals are vital to the sub-group within the bank setup to market them.
3. Shut yo’ mouth.
4. Let’s hope not.
Happy New Year.
Hi George, I get the following error when i enter my mail id to subscribe to your posts – “No lists to add selected in admin area – contact site owner to resolve this issue.”
Can you please have one of your interns look in to this issue 😉
BTW (note citation needed)
from Wikipedia OK best I can do in a few minutes, come on, it may be proprietary but there has got to be someone on either side of the transaction who may have let slip some clues ? ? ? Or am I wrong ?
“The airlines themselves value points in their financial statements at less than one one-thousandth of a cent per points.[citation needed]. That loyalty points undoubtedly have an estimable monetary value is also reflected in the fact that some programs allow for the donation of frequent-flyer points to certain charities.[22]”
I reckon the cards which allow one cent per point to be taken off air fares and such are worth a cent (?)
Nick may have mentioned the key, somewhere buried in the financial records of publicly held corporations may be the best clues.
I’ve often wondered about it. Who if anyone gets “hurt” by some of these maneuvers ? Does Walmart by use of BB ? Does AE by use of BB ? Does Chase or Staples by use of Ink of those two in conjunction with each other ? Or does it actually bring them more business ? Do the people who fall through the cracks more than make up for the people who don’t ? (There’s an article about that, right ?) Not to mention all the FF miles that go completely unused. I supposed the used/ununused ratio has gone up just as the # of awards travelers.
The cost of the FF miles is just the cost of aquiring customers for the CC companies and one would think it makes economic sense for them. I just don’t see exactly the juxtaposition between them and the airlines. There has got to be collusion going on, because if the miles get devalued too far, then many fewer people will want the credit cards, right ? So the CC companies would pay less for the miles. Lots of secrets here, it would be great to find out what’s really going on.
For that matter, the way airline sales come up. It would be great to have an inside source to have some hints as to when these are going to happen.
People over on FT are trying to read the tea leaves with airline sales and with FF programs, workarounds, etc. for that matter.
I’ve looked through financial statements for several different banks and have yet to find a smoking gun laying out miles valuation. Not saying there isn’t one, but if there is I haven’t found it.
I prefer to keep my head in the sand while I churn away. Make sure you’re prepared to hear the answer before you ask the question.
To all:
I apologize for not answering any comments. Got bumped coming back from Dallas only to come home and deal with some issues (water heater, cat, etc) plus catching up with so much.
Tomorrow’s post is scheduled.