Loyalty Members Have Amassed Billions of Unused Airline Miles
As travel demand hit rock bottom in 2020, points and miles balances in loyalty programs started increasing. Customers were still earning rewards by signing up for new credit cards and using them for everyday purchases, but they weren’t using those rewards as much as in the past.
Even though the earning rate was almost half when compared to 2019, the redemption side saw an even larger drop as travel was virtually halted for many months during the pandemic. Some of that lower earning could also be due to increased spending offers for bank points such as Chase Ultimate Rewards, Amex Membership Rewards, Capital One Miles and Citi ThankYou points.
A new ValuePenguin study found that the five most valuable airline loyalty programs in the U.S. – Delta Air Lines SkyMiles, American Airlines AAdvantage, United Airlines MileagePlus, Southwest Airlines Rapid Rewards, and JetBlue TrueBlue – ended 2020 with a combined balance of $27.5 billion in unused loyalty program miles. That was an increase of $2.9 billion from the previous year. That was more than triple the increase of $889 million increase the year before that.
Customers of those five programs earned a combined $6.8 billion worth of miles in 2020, 46.2% less than the $12.6 billion worth of miles they earned in 2019. They only redeemed about one-tenth of the miles that they had earned, resulting in that $2.9 billion increase in balances.
“Ultimately, this glut of miles might end up leading to more devaluation,” LendingTree chief credit analyst Matt Schulz told Value Penguin. “That would help airlines as they continue to try to recover financially from the devastation wrought by the pandemic, but it would not be great news for consumers.”
With devaluations possible, and airlines possibly resuming miles expirations soon, this is a good time to start planning travel if you are comfortable to start flying again. Devaluations are often unannounced which means that the value of your stash of miles could suddenly become worth less overnight. So start booking early and try to be flexible with your travel plans. With more people getting vaccinated, and travel restrictions loosening up around the world, demand will be higher than usual for award seats.
Let us know how your earning and redemption patterns have changed during the pandemic, and what your plans are for the near future as far as travel goes.
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It’s unpopular in this community but I would like airlines to adopt a fixed value mileage redemption rate of basically 1 cent per mile. It would kill those high value exotic redemptions but would give clarity to those who accumulate miles and allow for use of miles with no award space requirements. Jetblue is nice because points are treated the same as cash when booking fares.
In my experience, half of business class is filled with people on award tickets and mileage upgrades (cash and miles with AA for instance)/certificate sets. No wonder business class fares are so high. With no awards, business class fares can come down so they are more affordable. Those with miles can fly anytime they want with their miles.
There is a price we pay with booking our vacations around availability instead of when and where we want to go. The premium international first class and business seats on foreign carriers like Singapore/ANA/etc are nice but everyone is catching up. Jetblue with the mint is up there. Delta on the A350 is up there, AA seats are nice on the 777s/787s, and Polaris is decent (looks a little tired because of the gray headrest). Going out of our way to fly a particular high value redemption might interfere with the idea trip route and destinations.
I don’t see how it would hurt the airlines for fixed value redemptions. They aren’t even advertising those high value redemptions and those who are aware aren’t good customers for credit card companies.
I guess it’s time for the airlines and hotels to devalue before customers can use most of their miles and points.
“Ultimately, this glut of miles might end up leading to more devaluation,”
There is no “might” about it – absolutely there will be devaluations.
Been spending them as fast as I can for the last year.
Barely made a dent.
30+ countries. Staying in hotels every night for a year.
Points still piling up.
Love this game.
2020 was the best travel year ever. So many business class flights, for soooo cheap!