Even if domestic travel has picked up in the last few months, lots of people today have unused airline points since the pandemic started. Since most can’t travel last year, Delta Airlines, American Airlines, United Airlines, Southwest Airlines, and Jet Blue grew their reward programs liability to a combined $27.5 billion in 2020. That represents an 11.6% jump from 2019 according to Value Penguin.
Under-Utilized Airline Points
In 2020, customers were only able to use 46.2% of the miles accumulated during 2019. Also, Americans were only able to use 10% of their available miles last year. These are points are from credit card spending according to chief credit analyst for LendingTree Matt Schulz. Schulz mentioned that “There were undoubtedly many people who…cashed in rewards points for statement credits for groceries and other necessities, but many people held on to their miles”.
Among the airlines that we’ve mentioned earlier, JetBlue customers redeemed the most airline points. 18.4% of JetBlue miles were redeemed last year. United, on the other hand, had the least number of miles redeemed at less than 9%.
Things can get tricky for airlines. With reward miles now accumulating and are not being used, you’d wonder how it can affect the airline industry in the long run? Delta, United, and Southwest already devalued their airline reward points. Nowadays, members will have to use more points for the same flights.
According to Sophia Mendel, who is a travel specialist at Value Penguin, “Southwest, in particular, is getting a significant amount of heat for having changed their points program”. However, this has become a norm since different international carriers have done the same. Qatar Airways is known for doing this.
And who could blame airlines considering the losses they’ve incurred in the last 12-15 months. Other airlines used what is called dynamic pricing. Here, the points required for seats will vary depending on the demand. Since there’s a strong demand for travel in the past months, you can also expect to shell out more points to fly for free.
If you’ve accumulated miles from your credit cards, it might be a good idea to use them now. If not, you can always redeem the points in other forms such as buying groceries.
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