Redeeming airline miles feels tougher than ever, even as loyalty schemes gain popularity among frequent flyers. Flight disruptions, soaring airfares and uncertainty are clouding travel plans, prompting passengers to use miles as a hedge, booking multiple routes and cancelling later if needed.
Award tickets typically carry minimal or no cancellation fees compared with cash fares, so travellers can simply drop extra bookings at the last minute, travel experts told Bloomberg News. While this flexibility benefits passengers, it clogs limited award inventory, making seats harder to find and eroding the value of miles, the news agency reported.
Flight seats reserved for redemptions are running out fast, deepening the crunch. With airfares remaining high (fuel tankers remain stuck in the Strait of Hormuz despite a ceasefire), ghost bookings are unlikely to ease anytime soon unless airlines intervene.
Redemption demand surges
Demand for award seats is surging as travellers seek flexibility. Roame, which tracks the availability of award seats across more than two dozen airlines, has reported a 44% jump in searches in the month after the late-February closures. Meanwhile, rival website PointsYeah, which processes millions of monthly queries, said searches for US to Asia routes have spiked up to 50% as flyers reroute their flights to avoid flying through areas disrupted by the war, according to data compiled by Bloomberg News.
“Using miles at a time like now is like low-risk insurance,” said Rob Burgess, founder of travel loyalty site Head for Points. “They give you flexibility, and right now that flexibility is extremely valuable.”
Additionally, flexible programmes are also seeing a surge in demand. HeyMax, a travel rewards app that allows customers to redeem merchant spending for travel, said the transfers of reward points from its platform converted into Cathay Pacific Airways Ltd’s Asia Miles jumped 130% in the month after the onset of the West Asia conflict on 28 February, as the airline expanded service to fill gaps left by Gulf carriers. Meanwhile, transfers into United Airlines Holdings Inc’s programme, which allows free cancellation of award tickets and redeposit of miles at any time before departure, surged 800% over the same period.
Prior to the war, most travellers would prefer to save their miles to upgrade to premium economy, business or first class, rather than redeem economy tickets because of the better value, according to Tim Qin, chief executive officer of Roame. Now, higher ticket prices and redemption costs are pushing more people to use their miles to lock in a seat in coach, he told the news agency.
Airlines clamp down on ghost bookings
War-related airspace closures have reduced flights. Last-minute cancellations and multiple bookings leave airlines with unsold seats, even as demand rises. This growing issue has put pressure on the industry to take further action, said Bryan Terry, a managing director at Alton Aviation Consultancy.
Some airlines have taken measures to curb speculative bookings. Etihad Airways last year introduced stricter award rules, including a 72-hour cutoff for award cancellations, adding fees and imposing a penalty of 25% of the miles redeemed if frequent flyers change their minds about travel on some seats. A day before the Iran conflict began, United Airlines updated its terms to ban multiple tickets to undercut fares and bypass inventory controls.
Qantas Airways Ltd has automated sweeps in place to detect duplicate bookings that clog inventory. Duplicate bookings “can lead to a reduction in seat availability for other customers, and an increase in unnecessary waitlists.” Flagged reservations are subject to cancellation, according to Qantas’ website.
At the same time, airlines and credit card companies are reducing the cost of those liabilities by making miles worth less. American Express Co recently reduced conversion ratios for some airline partners, including those of Cathay and Emirates. Cathay is also raising award prices again in May, its third increase in under three years, according to the news agency.
