Defending the Chase Sapphire Preferred as if it’s my firstborn…

Yesterday Gary made a post saying that Aeroplan’s recent addition of fuel surcharges isn’t changing his credit card spending habits. I responded saying that Membership Rewards is more or less dead to me for now (not because of that one change but because of all the changes we’ve seen over the past six months), and he responded saying that the sky isn’t falling.

Rather than rehashing all the posts go ahead and read ’em, cause this definitely isn’t a “mileage 101” topic.

Let me start by saying two things. First, Gary’s probably the brightest guy I know and we almost never disagree on mileage related topics since we have similar travel styles. I’m almost afraid to disagree with him, because he’s always right! But that’s what makes this fun, that I’m genuinely excited Gary and I can disagree on something in a positive way, hopefully without me being too far off. 😀

Second, I want to remind everyone what the title of my last post was: “Why Membership Rewards is more or less dead to me (for now)…”

I’ve bolded the two most important parts. First “to me,” because I’m not suggesting Membership Rewards points are suddenly worth a ton less to everyone. Let’s not forget there are people out there that redeem points for gift cards… oh, the humanity. Second, I said “for now” because I do have faith in Membership Rewards in the long run, that they’ll acquire new partners or at least run promotions. For the time being, though, my valuation of Membership Rewards points has dropped by about a third.

But to respond to some of Gary’s points:

I had written the following:

Well, you can use only 63,000 Membership Rewards points to fly Upper Class from New York to London on Virgin Atlantic by transferring to ANA… but you’ll pay $800 in taxes/fuel surcharges.

To which Gary responds:

And that’s still a great deal! Only some of that is fuel surcharge, remember that about $300 is airport taxes, international taxes, and the UK ‘passenger duty’ that’s extortionate on premium cabin travel.

There’s a $500 fuel surcharge that you won’t be hit with if you redeem 100,000 Continental miles, sure. But I’d save the 37,000 miles by spending $500. And further, I expect the option to redeem Continental miles on Virgin to go away next year anyway.

The difference is that you can do so much more with those 100,000 Continental miles. You can originate somewhere else in the US and include your connecting flight to a Virgin Atlantic gateway, you can connect onwards beyond London after your Virgin Atlantic flight, you can have a stopover and an open jaw, and you don’t pay any fuel surcharges.

The ANA award wasn’t just great for people living in New York, but also good for people that needed to position themselves from elsewhere. I know I flew Virgin Atlantic in Upper Class on the award to New York, and had no problem booking a separate revenue ticket to/from the gateway because the deal was so spectacular.

What made the 63,000 mile deal on Virgin Atlantic so great was that there were no fuel surcharges. If we agree the fuel surcharges are around $500 and we value Membership Rewards points at two cents each, that’s basically a new “cost” of 88,000 miles. For anyone that’s originating anywhere but the east coast, or anyone that’s visiting more than one place in Europe, I’d say 100,000 Continental miles is a much better value.

What would you rather fly, New York to London roundtrip for 63,000 miles and $800, or Los Angeles to London to Istanbul with stops in both cities for 100,000 miles and $300 (or less, if you know how to minimize the UK air passenger duty)?

Then I had written the following:

You can use 90,000 Aeroplan miles to fly to Europe in business class through Aeroplan, though any domestic US segments will be booked into coach and if you fly Lufthansa transatlantic you’ll pay $600+ in fuel surcharges and taxes.

To which Gary responds:

Not true. Domestic segments on Continetnal still book up front. Aeroplan is refusing to book domestic first class seats as part of a business class award, but Continental codes their front cabin as business class for award redemption so you’re good there. And the combined United/Continental will be coding their front cabin as business. Which means you only won’t be able to include US Airways first class in an Aeroplan award (you will of course be able to include US Airways first class in a first class award).

I’m looking at the program for what it’s worth now, and you know as well as I do that all of transatlantic award availability is out of United and US Airways hubs! Charlotte, Chicago, Washington? Yes. Houston? Heck no! Newark? Yes, but good luck getting a Continental award ticket there from just about anywhere.

Then I said the following, which Gary disagrees with me the most on:

I had a longtime client with tons of Membership Rewards points email me wanting to travel from Detroit to Tel Aviv in business class. In the past we transferred to Continental and usually had a nice one-stop routing on Lufthansa for 120,000 miles in business class. Now the only option is to transfer to Aeroplan and pay 135,000 miles plus about $1,000 in taxes/fees. If we want to avoid Lufthansa and the fuel surcharges associated with them, we would have to add two additional stops (based on availability for his dates) and the domestic segments would be in coach.

Gary responds:

I’d argue that Ben’s approaching this wrong. For Detroit to Tel Aviv in business class with American Express points, it’s not “the only option” to transfer to Aeroplan and pay 135,000 miles plus fuel surcharges to get a one-stop award.

Instead, I’d offer that I would rather transfer 90,000 points to All Nippon for that very same award and pay fuel surcharges. That’s 45,000 fewer miles, And the last time I did this on ANA, total taxes and fees inclusive of fuel surcharges were $611.

Totally valid point, with one major issue — All Nippon Airways is one of the few Membership Rewards transfer partners that doesn’t offer instant points transfers. Furthermore, they don’t hold award tickets unless you have the miles in your account. Gary, you know as well as I do from booking award tickets that award availability can change radically over the 2-4 days it takes to transfer points from Membership Rewards to ANA. And as we’ve both written about many times before, the beauty of programs like Membership Rewards and Ultimate Rewards is that you don’t have to make speculative transfers. With instant transfers and the holds most airlines allow, you can hold the ticket, transfer the miles, and then purchase the ticket, all without any risk.

If it were my travel I’d have no issue risking it, though I’d have a hard time presenting an itinerary to a client and telling them to transfer points with the disclaimer that the award space may or may not be there when the miles arrive.

Lastly Gary writes:

About half the year there’s a transfer bonus, sometimes as high as 50%, for moving Amex points to Delta. Say I earn 3 Amex points per dollar on airfare spend via the American Express Premier Rewards Gold card. With that 50% transfer bonus I’m earning 4.5 Delta miles per dollar. That means I can literally spend double the Delta miles and come out ahead compared to Chase Sapphire Preferred for the same award ticket. But of course, if you follow my advice you should be able to avoid spending double the Delta miles on many awards.

Gary, I know we’ll agree on this one, because we have the same mileage redemption preferences. How many SkyMiles does it take to fly Air France or Korean Air first class? 😀

The thing I’ll concede on is that you’re probably better off putting gas and groceries on the Premier Rewards Gold card (two points per dollar) vs. the Chase Sapphire card (1.07 points per dollar). But as far as airfare, travel, and dining goes (which constitutes about 90% of my spend), I’m sticking to the Chase Sapphire Preferred card.

So is two points per dollar on gas and groceries worth paying a $175 annual fee for? Well, unless they count fuel surcharges in the “gas” category, I’m going with no. 😀

Anyway, for the two of you that still don’t have the Chase Sapphire Preferred card, more on it here.