Maybe the era of dirt-cheap airfare isn’t eliminating the need for points and miles after all

I’ve been thinking about the various threads in this post for a while, but an excellent article by Robert Dwyer on Milenomics this past weekend really helped crystallize everything for me. Go read it, then come back here.

I think Dwyer’s article resonated with me because I’ve always gotten annoyed by the idea that there’s some magic secret that enables you to travel “for free,” whether it’s subscribing to some crazy deal aggregator site or opening a bunch of credit cards. Sure there are tools that can help you travel better (whether that means for less money or more luxuriously than you otherwise would), but there’s always a cost involved. A long time ago, I signed up for alerts from one of those sites that promises to find you the best deals under the sun, and like 90% of what they sent me were $300 all-inclusive trips to China where the tour operator requires you to spend 15 hours a day visiting trinket shops in so they’d get a kickback from each shop.

The advent of ultra low cost international travel has been amazing, because it has enabled people who couldn’t otherwise afford overseas trips to see the world. However, there are hidden costs to booking trips on Norwegian/WOW/etc, and even when travelers are prepared for the restrictions and understand how to avoid add-on fees for food and baggage, there are risks. It’s why I don’t quite buy the argument that the decreasing cost of airfare in general makes points and miles worth less (in terms of value per redemption).

First, ULCCs use rock-bottom fares to market their overall value proposition the same way Emirates uses the on-board shower to create a halo around the entire brand. WOW may dump a handful of $99 transatlantic fares onto the market, but you’d need to book them almost immediately and also have the flexibility to sign up for an 8-night stay in Iceland in January or whatever. Points and miles trips are similarly constrained by finding availability, but it’s still much more likely that you’ll be able to find a suitable points/miles itinerary on a random date than a rock-bottom fare.

People twist themselves into knots trying to figure out how to value their points redemptions (which is how you get statements like, “Well, your points and miles would only be worth what you’d be willing to pay in cash”), and one of the ways skeptics love to diminish the value of miles is by throwing around dirt cheap airfare as a baseline for comparison. In other words, the naysayer argument goes that if it’s possible for any transatlantic flight to cost $100, then that’s what all transatlantic flights are worth, regardless of what the flight actually costs or would have cost on any given date/airline.

With the hypothetical value of a flight in the toilet, people get deal boners around making sure they never overpay (is there a greater sin in the American economy than overpaying for something?), which is how people who can afford much more end up scheduling trips for no other reason than because the flight is so cheap. I’ve said before in other contexts that there’s nothing wrong with traveling because you can — I maintain that traveling is always beneficial, regardless of what motivates it. The problem here is that travel takes time as well as money, and for many people, the time part of it is actually the limiting factor. I’m so in love with points because of how much more I’m able to enjoy the trips I have time to take, and I can’t imagine scrimping and saving on those trips just so I can brag that I’ve never overpaid for a flight.

The distortion involved in pegging all flights’ value to the very lowest cost of any one flight comes out when things start to go wrong. While it may not be all that different flying in a 787 with Norwegian or American Airlines, it will be different when Norwegian cancels your flight because their fleet is spread so thin that one plane going down for maintenance disrupts flights for a week. And while American’s call center isn’t known for its warm fuzzies, I can guarantee that you’ll get a better attitude from them than Norwegian’s “fuck it, thats what you get for booking Norwegian” approach to rebooking.

I’m not even speaking hypothetically here: Windbag friend Patrick Pibb recently booked a super-cheap Norwegian trip to Paris and back, and due to the engine issues with Norwegian’s 787-9s, they canceled her return flight. They informed her by way of an email saying that she was now booked to fly out of London three hours earlier on the same day. It was only a four-day trip to begin with, and Norwegian effectively cost her half a day (not to mention the cost of a ticket from Paris to London). She called to protest, and the best Norwegian offered was to book her on a Vueling flight at 6AM. No matter what happens, though, it won’t be worse for her than it was for all the people stranded overseas when Primera ceased operations overnight.

Booking award tickets with legacy carriers isn’t a foolproof plan or anything, but I’d still like my chances better with them if a plane were to go out of service or I needed them to rebook me through a different city. The bean counters will still insist that award tickets aren’t worth any more than basic economy on ULCCs, but I guess the whole point of this article is that those people are wrong.

Second, travel costs money. Flights are only a small part of it, so even if you get your flight “for free” (either using points or an absurdly low amount of money on a cheap ticket), you still need to get to/from the airport, to eat, to sleep somewhere, etc. You might find a great deal on a flight, a hotel, or a rental car, but you’re awfully unlikely to find all three at the same time. I’m kind of repeating what I wrote back in this post, but you get the gist.

Like I said before, rock-bottom fares are great when the enable people to travel who couldn’t otherwise afford it. On the other hand, the people who slavishly follow flight deals and can travel at the drop of a hat presumably have enough money to pay for the rest of the trip, and when you add up the entire net cost of the trip, a great fare is probably going to save you around 25% on the total cost. I mean, that’s not nothing, but the way some sites talk about these deals, you’d think Jesus was shitting winning lottery tickets or something. (I should admit that there’s an obvious counterargument here, but I’m kind of tired of working on this post, so I’ll wait until someone points it out in the comments to respond to it.)

Third, ULCC’s have a nasty habit of going out of business. I mentioned Primera before, but WOW and Norwegian aren’t on the most solid ground either. WOW seems to have narrowly avoided going under, and Norwegian will probably be acquired before they go bankrupt, but the two still make me nervous. I was thinking about this recently when I redeemed 100,000 Alaska miles for two “business class” tickets to Reykjavik on Icelandair. I didn’t want to, because it’s a lot of miles for what’s essentially 9 hours in domestic first class. It made sense, though, since I couldn’t find any other good transatlantic business options, and at least it’s direct instead of overflying Iceland and then backtracking from mainland Europe. And I twisted myself in knots trying to value this redemption, since I didn’t really know how much a flight from SFO to Iceland in 2×2 seating was worth to me.

At 9 hours, I knew I didn’t want to fly economy, and Icelandair’s business class is very expensive for what it is. In fact, it’s possible to fly in WOW’s premium sets for around $500 each, meaning my redemption was worth only around a penny per point — way too low for Alaska miles in my opinion. I value Icelandair and WOW roughly equivalent in terms of quality — I think the WOW seats actually have slightly more room, but they don’t have any inflight entertainment or TV, and Icelandair also offers access to SFO’s China Airlines lounge, which looks lackluster enough that I value Icelandair and WOW roughly equivalent in terms of quality. (I do have to admit I’m excited to kick off my Scandinavian vacation in the China Airlines lounge, though.)

Back when I was booking this trip, I was actually waffling between paying cash for the WOW flights or redeeming Alaska miles for Icelandair. Now that WOW just sent half their fleet into storage and it’s not currently possible to book SFO-KEF flights on their website, I’m pretty happy I didn’t spend a bunch of money booking something that far in advance with them. I don’t know how to value my redemption now, but I also don’t really give a shit, since I found the most comfortable way to get my wife and I to Reykjavik from San Francisco, and I had the Alaska miles sitting in my account. It’s worth “I’m happy we’re taking this trip”-per-point.

I don’t want it to come across like I think travel deal hunters are in the wrong or anything, just that there are opportunity costs to every tool in the savvy traveler’s toolbox. It could be annual fees, time spent researching deals, or risk booking flights on a carrier with poor reliability. There’s nothing inherently better about a cheap fare than an expensive fare if the expensive fare guarantees you the ability to travel where and when you want… just like there’s nothing inherently better about a first class ticket booked with miles versus an economy ticket booked with cash by someone who’s too busy living their life to read blogs like this one.

Updated 12/12 to add: Patrick Pibb is having a run of bad luck with flights lately, but her latest tribulations provided a great opportunity to see if I was right about American’s customer service being better in a pinch than Norwegian. A few days after Patrick’s Norwegian itinerary changed and she was given no compensation whatsoever, British Airways canceled a domestic European flight that would have left her stuck in a city without many outbound flights to major international gateways. Since this was part of an itinerary she booked with American, she called them to straighten it out. Unlike Norwegian, there were plenty of backup options, and they pieced together a suitable alternative on American with a connection in the US. Plus, they proactively offered Main Cabin Extra seats for free as compensation and refunded the British Airways fuel surcharges as well. Turns out I was right all along!

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