Burn ‘Em: Do As I Do With Airline Rewards Miles

By Robert McGarvey

On Saturday I logged into Delta Air and, after checking flights, hopped into my Amex account, transferred 244,000 points, then spent those SkyMiles on two tickets to Spain six months down the line

Why the hurry?  Why didn’t I wait?

Just coincidentally, the next day’s New York Times featured a lead travel story headlined: The Best Time to Use Your Airline Miles? Now.

Yep. The reasons are powerful for emptying out your airline rewards stashes. But I also was just taking my own advice: If you have miles, burn ’em. Soon.

Listen up: miles are a fast deteriorating asset, especially nowadays with sky rocketing petroleum prices and massive route uncertainties.

As for the latter, Russia is a huge country by land mass – 11% of the globe, almost twice as big as the U.S.  As airlines rush to route outside Russian air corridors, who knows how many flights will be canceled? For how long?

Meantime, our points stashes are growing. In the pandemic we used credit cards that generated points but many of us traveled much less, meaning we did not burn points on travels.  (Yes, I am an exception.  In fall 2021 I used a few hundred thousand Amex points to buy Delta tix to Spain where I walked 150 miles of the Camino.  But that was atypical.)

Most of us are sitting on mountains of points.  Per Value Penguin, “In 2020, customers of five key airline loyalty programs earned about half the miles they did the year before, while only redeeming about one-tenth of the miles they had earned.”

Value Penguin goes on: “The U.S.’ five most valuable airline loyalty programs — Delta Air Lines’ SkyMiles, American Airlines’ AAdvantage, United Airlines’ MileagePlus, Southwest Airlines’ Rapid Rewards and JetBlue’s TrueBlue — ended 2020 with a combined $27.5 billion in rewards program liabilities, according to a new ValuePenguin study that examined annual filings.”

So what? Here’s why these riches are important: The masters of the currency (the big five carriers) almost certainly will devalue them.  Said Matt Schultz, Value Penguin chief credit analyst: “Ultimately, this glut of miles might end up leading to more devaluation. 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.”

You bet, not great news at all. We are living in what may soon resemble a Weimar Republic of currency devaluation where money received at breakfast was worth substantially less by dinner so smart people bought useful stuff as soon as money hit their hands, just because a pair of shoes or a bottle of beer would hold value even if the currency couldn’t.

Expect similar with rewards miles.

I pat myself on the back for spending 244,000 Amex points on Saturday because I had wide choice of flights as well as a wide choice of seats.  Yeah, I grumble at the value I received – roughly a penny a point when converted into SkyMiles – but who knows what I would have gotten had I waited until the summer.

And who knows what choices would have been open to me.

Listen up: even with the Ukraine war and its disruption of a significant slice of air travel (as well as triggering understandable unease about taking flights to central Europe) there will be a devaluation of airline miles, just so carriers can reduce the liabilities on their books.  Rising award costs also may prompt some of us to spend cash instead – I know I did the math before deciding burning points was the wiser course – and, definitely, the carriers want to up cashflow and profits so that they seem more desirable investments.

But spending money is not the right move, not in 2022.

Burn your points. Now.

Right now, my miles stash at Delta, AA, United and Amex amounts to under 25,000 – and I am plotting a use of most of those miles (in an Amex account) as I type. My hope is to finish 2022 with under 10,000 miles in all accounts.

We are all living in a Weimar Republic of airline rewards. Pflücke Den Tag.