Ben-Shahar on the Honey Trap of Frequent Flier Programs

Love Your Frequent-Flier Program? Let It Go
Omri Ben-Shahar and Oren Bar-Gill
Bloomberg View
June 13, 2014

Yes, United Continental Holdings Inc. has gone ahead with those dreaded changes to its MileagePlus frequent-flier program. Starting March 1, 2015, the company confirmed this week, travelers will earn rewards based on dollars spent rather than miles flown. Delta Air Lines Inc. already made the switch earlier this year, and American Airlines Group Inc. is expected to switch to a dollar-based reward system after its merger with US Airways Group Inc.

You would think these changes are bad for leisure travelers. While business travelers may get more rewards, consumers flying on discount fares will get less. A coast-to-coast round trip will no longer earn you 6,000 miles. At the high end, no-restriction fares may accrue more award miles; the miles earned for sale-price fares will be significantly fewer.

United has thrown a “curveball at customers,” Brian Kelly of mileage blog said. "For the general traveler, this is a reduction in value earned from the program.”

But the view that stingier loyalty programs hurts consumers is wrong. Here’s why.

Omri Ben-Shahar