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What Changes to Airline Miles Programs Mean for Your Wallet

Susan Johnston

Frequent fliers may soon find it harder to earn and redeem airline miles for flights due to changes among three of the nation's largest carriers.

Delta Air Lines recently announced overhauls to its SkyMiles program. Starting Jan. 1, 2015, travelers will earn miles based on dollars spent on tickets rather than miles traveled.

And as American Airlines and US Airways merge, American Airlines' AAdvantage and US Airways' Dividend Miles programs may undergo changes as well (the mileage programs have not fully merged, although customers can currently earn or redeem miles when traveling with the other airline). As of March 31, US Airways left the Star Alliance to join the Oneworld alliance (American is already a Oneworld member), which affects travelers booking awards tickets on partner airlines.

[See: Best Airline Rewards Programs.]

While American and US Airways no doubt have many other changes to iron out in the merger aside from frequent flier programs, experts say they wouldn't be surprised if other airlines eventually switch to Delta's revenue-based model (some low-cost airlines already use this method). "They're going to wait to see what happens with Delta's radically new program," says Jeff Klee, CEO of airfare search engine CheapAir.com.

Not surprisingly, Klee predicts that the travelers most affected by Delta's changes will be those who scout out the least expensive tickets. He ran a comparison on a cross-country flight from Los Angeles International Airport to New York City's John F. Kennedy International Airport. "You'd be getting 1,700 miles under the new program, where you used to get 4,950," he says. "So now you'd have to pay roughly three times that price to get the same number of miles."

While some travelers might pay an extra $50 or $100 to fly the airline they have a mileage membership with, changes to mileage programs make those decisions "harder to justify," Klee adds.

Frequent business travelers might also be affected because of Delta's new cap limiting the number of miles passengers can earn per trip to 75,000 per ticket (in the past, they might have earned as many as 90,000 on a round trip). But those who take expensive trips, perhaps booking business or first class at the last minute, potentially stand to benefit from Delta's new program, says Hilary Stockton, founder and CEO of travelsort.com, a travel website that helps users with frequent flier miles and award tickets. Miles are awarded for fuel surcharges paid but not taxes, she adds.

[Read: 8 Unexpected Travel Costs -- And How to Minimize Them.]

The change could also negatively affect large companies. "Corporate travelers, many of whom are elite frequent fliers, may now delay the purchase of tickets in order to wait for the price to go up to get more miles for the flight," says Chris Lopinto, president and co-founder of ExpertFlyer.com, a website that helps travelers monitor their flight awards and upgrades. "After all, they're not paying for the ticket. That is exactly the opposite of what corporations want, which is to spend the least amount of money possible on air travel."

Currently, Delta has three levels for redeeming miles: saver, standard and peak. Starting next year, the airline will rename the levels as numerals one through five (thereby adding two intermediate levels). For a trip within the continental U.S., Alaska or Canada, you'd need 25,000 miles to redeem for a level 1 trip and up to 65,000 miles to redeem for a level 5 trip (presumably during peak travel times). Formerly, a peak trip within the U.S. required 60,000 miles. "It may look good in theory [to have those extra levels], but you don't know how availability among those five levels are going play out," Lopinto says. If the airline offers only a few awards flights at your level, it won't do you much good.

Delta Mileage Changes Round-Trip Travel
Level Former Level Distance
1 Saver 25,000 miles
2 New level 35,000 miles
3 Standard 40,000 miles
4 New level 50,000 miles
5 Peak 65,000 miles
Source: Delta Airlines

In addition to flights, many airlines allow customers to redeem miles for magazine subscriptions, hotel stays, car rentals or other options. But even as awards flights become harder to earn and redeem, experts caution that these alternatives aren't always the best use of miles. "You have to compare the amount of miles used to the cost of paying with cash," Lopinto says. "Too many people look at the value of a mile in a vacuum and don't consider the alternative costs of that ticket or hotel room."

One positive change, however, is that starting next year, Delta will offer one-way award redemption options, giving travelers more flexibility instead of requiring round-trip travels. One-ways will start as low as 12,500 miles.

[See: 11 Easy Ways to Slash Travel Costs.]

In years past, those with elite status might book an inexpensive but mileage-intensive flight toward the end of the year to top off their accounts and maintain status with the airline in the coming year. Changes to Delta's program won't necessarily end these mileage runs, but they'll certainly change the equation. After all, as Klee points out, the real benefit of airline loyalty programs comes with elite status and perks like priority boarding, free checked bags and complimentary upgrades. "Frankly, [elite members] are the people that the airlines are trying to cater to anyway," he says. "For the casual traveler, the leisure traveler, it's getting harder and harder to derive any benefit from the loyalty programs."

As airlines make it harder to earn miles, Klee says it may become more attractive to earn miles using a credit card instead. "Historically, credit cards haven't been as good mileage-based programs," he says, "but it might reach a point where the bank programs are actually better than the airline programs."



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