Chris Elliott calls loyalty programs a scam… again

Chris Elliott, everyone’s favorite travel “journalist” and “consumer activist,” scribbled some more of his insights onto the interwebs today. I was hoping he’d take a break from his usual ridiculousness after arguing a couple of weeks ago that minibars should be banned by law, not just because they’re overpriced, but because they’re not good for you. Perfectly logical argument, right?

Now, I don’t even know where to start with his article, because it doesn’t really make sense. The problem with Chris Elliott is that he claims to be a “consumer advocate,” but when people are too lazy to hold themselves accountable for poor decisions, it’s suddenly the travel provider’s fault, and the travel provider is running a “scam.”

He also doesn’t seem to understand the difference between the benefits of elite status and the benefits of having a co-branded credit card that accrues points. Or maybe he chooses not to understand that, because it just wouldn’t fit into his argument.

Why are loyalty programs going to hell?

David Deehl, an attorney who lives in Miami, says he feels betrayed by recent loyalty program changes. As an elite-level traveler, he expects preferred treatment from his preferred carrier, Delta Air Lines. But when he missed a recent flight from Miami to London, he discovered his Silver Medallion status didn’t mean much: The airline asked him to pay an extra $3,400 to fly.

Except the issue is that being rebooked on another flight for free isn’t an elite perk. Not for any airline I know of, and not for any status level. Now, usually airlines will accommodate you if you miss your flight so this doesn’t sound totally right, but even if it is, it has nothing to do with elite status… because it’s not a perk! But it seems like some people take the approach that “I have elite status so I should get whatever I want.”

Delta’s revamped program, which, starting next year, awards elite status based on the amount of money spent and miles flown, makes it significantly harder to maintain Deehl’s Medallion status. It represented the final straw, he says. He’s burning the 400,000 leftover SkyMiles in his account and vows to buy future tickets based on price and convenience, not whether he can maintain his elite status or score a “free” award ticket.

I suppose to Chris this is a novel concept, but believe it or not you can be loyal to an airline and at the same time still make “smart” choices. You should never blindly book an airline simply because you have miles or status with them. You should decide what those perks are worth to you, and if your preferred carrier is more expensive, decide whether it’s worth the incremental cost to fly them.

And then Chris goes after me (and other bloggers):

For years, loyalty programs flourished, thanks to a conventional wisdom that everyone should carry a rewards card. The programs grew at a cancerous rate, fed by an unskeptical mainstream media and a small army of bloggers who were generously compensated for endorsing the loyalty lifestyle. They hawked a handful of bank-issued affinity credit cards with excessive point-bonus awards for which they received a generous commission check whenever a reader signed up.

Now again, it would really help if Chris acknowledged the difference between being loyal to an airline as a passenger and using their co-branded credit card. I’m not going to speak on behalf of others, but I didn’t make a dime for the first two years I was blogging, and by connection I suppose have been “endorsing the loyalty lifestyle.”

By “endorsing the loyalty lifestyle” I assume Chris is referring to all the first class trips I’ve taken internationally on miles.

These program apologists will trot out their same tired reasons why you should always be loyal. The programs are free, they’ll say, and look at what I got by being faithful to my airline: a “free” ticket to Hawaii, or a “free” upgrade to business class.

Nobody should be blindly loyal, and I think most people are smart enough to recognize that. Yes, I do believe you should always accrue miles in some program when you fly. That’s different than being loyal to that program.

These arguments are too easily debunked. Loyalty programs aren’t free. At a minimum, members fork over their valuable personal data and spending history, which is shared with a company’s marketing partners.

Are we talking about using credit cards or joining loyalty programs? Because I’m not sure what “spending history” you’re forking over by signing up for a frequent flyer program. If you’re talking about credit cards, are you suggesting people forgo using rewards based credit cards altogether so they don’t have to give out their data? Even the ones that get you 1-2% cash back? Because those programs also track your spending history and you’re giving them your personal details.

And here’s the real crux of his argument, and I think what sums up his approach to this stuff perfectly:

Here’s what is true: A few people are benefiting from loyalty programs, including top-tier frequent fliers, usually traveling on their company’s dime, and hobbyists who spend their free time figuring out a way to game the system.

He claims to be a consumer advocate. But he’s only a consumer advocate for people that don’t put the effort into understanding the programs. Anyone that puts a bit of effort into understanding the programs or benefits from a loyalty program is a “gamer.” Here’s an idea for a future article, Chris — why don’t you interview people that have “legitimately” accrued hundreds of thousands of miles through credit card spend (not “gaming” the system) and redeemed them for a vacation where they flew in first class and stayed at five star hotels? If you’re interested, Chris, please email me, because I’d even be happy to send some people your way that would be delighted to share their “success” stories.

Anyway, the rest of the article is equally ridiculous, but I won’t continue to rant. It’s going to give us all headaches. So instead let me offer some constructive advice (perhaps to Chris and his target audience, because I assume you guys already all know this):

First some thoughts on elite status. Chris is absolutely right that elite benefits are decreasing and the difficulty of getting elite status is increasing. Everyone needs to decide for themselves whether the benefits are worth it. Nobody should blindly be loyal. About a week ago I even wrote a post entitled “I give up on elite status.” But there are huge benefits to be had, and in many cases it can make sense to pay a premium to fly your preferred airline.

Next, unlike Chris I don’t think there is any downside to joining a loyalty program. If you take a flight, always credit the miles to some program. If they end up expiring then so be it. You spent nothing additional to accrue them so you lose nothing by having them expire (though there are plenty of ways to keep them active with minimal cost).

Lastly on the elite status front, understand your benefits. Understand what you’re entitled to, and don’t expect things you’re not entitled to. If you’re a Silver Medallion you’re not entitled to free flight changes. If you have a certain level elite status you’re not entitled to upgrades a certain percentage of the time. And when you don’t understand the benefits of a program, the only one you can blame is yourself.

As far as credit cards go, I actually agree that it’s rather frustrating that loyalty programs own the points and can change them however they want at anytime. That’s especially true because there’s almost always an opportunity cost to accruing points. But in a way I look at loyalty programs as benevolent dictatorships — devaluations happen and we have no say in it, but if it’s a program we can “trust” they’ll usually give us advance notice and at least be somewhat reasonable.

And it’s true that to some degree accruing miles vs. cashback is a gamble. And like any gamble in life, each person has to determine what’s most valuable to them. Rather than using a credit card that accrues a certain percent cash back I’d rather accrue points that give me the chance of redeeming for international first class, a ticket that would retail for $20,000 and I could otherwise never afford (then again, perhaps Chris would argue that the government should ban international first class as well, since it’s overpriced and the food isn’t good for you).

But not everyone should use a credit card that accrues miles. Everyone needs to decide what their rewards “goals” are on a credit card, and plan based on that. If you have a family of five and want to redeem points for flights to Disneyland, you’re almost certainly better off accruing a points currency with fixed value rewards, like the Barclaycard Arrival, which accrues the equivalent of 2.2% cashback towards travel.

Meanwhile, I’m happy using a card like the Chase Sapphire Preferred for my everyday spend, which accrues a traditional points currency that’s still very flexible based on how many programs the points can be transferred to.

Anyway, I think it’s time for a drink…