The Brancatelli File



October 31, 2002 -- Once upon a time--which was 1984, when a pair of unrestricted tickets to Hawaii cost 75,000 miles--your humble scribe produced the complete guide to frequent-flyer programs on just four magazine pages. All the rules, all the awards, all the charts, all the tricks, all in just four pages.

Of course, that was once upon a time, before affinity cards, long-distance partners, pages and pages of incomprehensible rules, hotel frequent-stay plans and the magical, mystical moment when loyalty programs morphed into general travel-marketing schemes. The programs today have spawned non-travel gamers, their own currencies and now aren't even directly tied to the needs and interests of their travel sponsors.

One thing hasn't changed in the intervening 18 years, however. I'm still a contrarian about frequent-travel plans. And long after I have ceded the knowledge of the minutiae of the programs to experts such as Randy Petersen and Tim Winship, I suggest the contrarian's view remains the best one.

So, for your edification and enlightenment, here is the current edition of The Contrarian's Guide to Frequent-Travel Plans.

It really doesn't matter how rich a program seems to be or how well you've been rewarded in years past. This is undeniable: Playing the frequent-travel programs is the moral and financial equivalent of playing an unregulated lottery. The program sponsors--the airlines and hotels--are under no legal obligation to disclose the odds of winning. They don't even have to disclose whether the awards on their charts actually exist. They are not required to tell you how many--if any--seats or rooms are available on any given day. They reserve the right to change any rule at any time and usually without advance notice. They are the police, the judge, the jury and the executioner. And, with minor exceptions, the courts have upheld their right to be the masters of their own domains. In the very broadest sense of the term, they rig the game for their own benefit.

Since the game is rigged, you'd be foolish to treat your frequent-travel accounts as the equivalent of a bank account. Since the airlines and hotels guarantee nothing and control the value and the distribution of the "currency," don't trust them with your miles and points. Don't "bank" miles or points. When you earn enough for an award, cash out as soon as you can. Or think about it this way: The airlines run lousy airlines, why do you think they could run a good bank? Frequent-travel miles and points only have value when you use them. Banking them and leaving them to the vagaries of the changes airlines or hotels may impose is bad planning.

The experts say that more than nine of ten awards successfully cashed are claimed at the lower-priced "restricted" levels. That's fine. But if you're planning a dream vacation around earning enough miles or points to win a restricted award, then you're a fool. I have no sympathy for travelers who tell me the airlines or hotels are ripping them off because they can't claim a seat or a room on the day they want at the restricted level. That's why the awards are restricted. And remember, they are restricted in a game that is already unregulated and rigged. To me, the only "truth" is the unrestricted, supposedly no-strings-attached award levels. If you want a seat or a room on the day you want in the place you want, expect to pay the unrestricted price. If you score at the restricted level, consider it a miraculous bonus.

You need to understand this: Airlines and hotels don't run these programs to reward your loyalty. They are not a tangible expression of their gratitude for your patronage. Frequent-travel plans are travel marketing schemes. They are specifically designed to sell you things: more flights on the sponsoring airline, more hotel-room nights at the sponsoring hotel chain and more products and services sold by the long-distance/credit-card/whatever partners. The cost of the miles and points you earn is built into the price of the airline seats, hotel rooms and other products you buy. No matter how much these things might look like loyalty programs--and, once upon a time, they were loyalty programs--today's frequent-travel programs are about selling you things.

You also need to understand this: There is no such thing as a "free" airline seat or hotel room anymore. Hotels, and especially the airlines, are slapping all sorts of fees on your "free" award. Not only are they unbundling the taxes from the free seat--airlines now claim passenger-facility fees and the 9/11 security levy are not part of your award--they also are inventing an array of surcharges. American, for example, charges you $50 for a free seat if you book it less than 21 days before departure. Most carriers now charge you a $100 rebooking fee if you change your award flights. Most partners (car-rental firms, long-distance companies, et al) pass along the 7.5 percent federal excise tax they pay on miles purchased from airlines and hotels. And Hertz has crossed the final frontier: They now impose a surcharge on your rental for the privilege of earning miles. The trend to load miles, points and awards with cash fees will only escalate in the months and years ahead.

Since there is no free lunch, you should plan accordingly. Don't let a frequent-travel plan control your purchasing decisions. You shouldn't choose an airline, hotel, credit-card firm, long-distance carrier or anything else based solely on the miles and points you may earn. The programs should rate way down on your list of reasons to buy. And this is especially true for "elite" level flyers and stayers. You need not let an airline or hotel chain own you because you are vested in their elite level. You can change at any time. Simply call a competitor and they will almost always match your elite credentials if you switch to them. In fact, Delta Air Lines is currently soliciting elites from other carriers at its ticket counters and passing out sign-up cards.

The rule above is especially crucial when you are earning "free" miles from long-distance and cell-phone providers and via affinity MasterCard and Visa cards. If you can earn your miles and points off your affinity credit cards without rolling over balances from month to month, fine. But the interest rates charged by affinity cards are often twice as high as the rates charged by cards that don't award miles. If you must carry a balance on your credit card, don't use an affinity card. You're paying much more in interest charges and related fees than you are earning in miles and points. Ditto with phone companies. Earning miles and points is a bad deal if you have to pay twice the going rate for a call.

Airlines and hotels are inventing all manner of methods to allow you to buy miles, transfer miles and "launder" miles by switching them from one program to another. As a general rule, these are almost always lousy financial propositions. After all, these guys control the currency and they price the transfers rapaciously. The vigorish you pay for buying and transferring is usually outlandish. The one current exception: The Diners Club and American Express transfer plans. Both were originally designed to transform points earned by your charge volume to airline frequent-flyer miles, so they remain comparatively good deals.

Airlines, hotels and charge-card issuers are increasingly offering merchandise rather than travel as an award. Although the economics are skewed because airlines and hotels control their own retail pricing, it remains fair to say that claiming awards for merchandise remains a bad financial decision. One clean, relatively uncomplicated example: The Bose Wave CD/radio sells for $500 and Bose does not discount. However, you can get the unit free from American Express Membership Rewards for 60,000 points. Not a bad deal, except for this fact: 60,000 Membership Rewards points is equivalent to 60,000 Continental OnePass miles and 60,000 OnePass miles is half of the 120,000 miles required for an unrestricted BusinessFirst class ticket to Hawaii. The retail price on a Newark-Honolulu seat in BusinessFirst is $2,800, meaning 60,000 miles are "worth" $1,400--or nearly three times the value of the Bose radio. (FYI: Continental also offers a restricted BusinessFirst award to Hawaii for 60,000 miles. Value restricted airline awards as you will.)

Airline frequent-flyer programs get almost all the attention, but hotel frequent-stay programs are often much richer and rewarding for truly frequent travelers. Because they are unique to each chain and the value of one frequent-stay point is not as easily quantified as a frequent-flyer mile, hotel programs are much harder to compare. But experts who track this stuff every day increasingly agree that hotel programs are easier to play and now offer more value with less hassle than the average frequent-flyer program.

The dumbest argument on the planet when it comes to frequent-travel plans is the discussion over which program is the "best." There is no incontrovertible best program for all frequent travelers. Why? Because it all depends on where you fly and where you stay. Just for argument's sake, let's say some expert decides United Mileage Plus is the richest plan. What good will that do you if you live in Atlanta, where Delta dominates and United is a speck on a Hartsfield wall? Only gamers who don't travel and rate the programs strictly as a financial play can worry about "best." Real travelers should worry about their travel first, then choose appropriate programs later.

This, I admit, is the ultimate contrarian view: I believe the golden age of frequent-travel plans is over. No matter how they have mutated over the last two decades, the programs have remained true to their core principal: People will buy more if you dangle the allure of free travel in front of their noses. Who among the nation's army of frequent travelers now can be motivated by the concept of free travel? And while heavy business travelers have long been attracted by the perks and upgrades available at the elite levels, the airlines (and, to some extent, the hotel chains) have proven that they are unable to treat their best customers with dignity and respect. Business travelers have reacted accordingly by questioning their loyalty to "their" airline or "their" hotel chain. Moreover, the future of travel belongs to airlines and hotels that make the process simpler, fairer and more cost-effective for their best customers. Frequent-travel plans--at least what we currently recognize as frequent-travel plans--generally won't factor into that equation.

This column originally appeared at

Copyright 1993-2004 by Joe Brancatelli. All rights reserved.