Reader Ed emailed me the following question:
I’ve got a question that’s been on my mind lately. Why would someone get elite status if there are so many credit card sign up bonuses that he can just travel on award tickets? And as a follow up, do you think earning >500k miles/points year after year is sustainable? And can somebody travel exclusively on award tickets? It seems like there is diminishing returns since there are only so many good offers and they are mostly limited to first time card members.
I thought this was an interesting question, so decided to respond to it here, since I think it addresses an issue a lot of mileage “nuts” face.
The struggle with maintaining status and redeeming miles
I’m extremely fortunate to have the flexibility to be able to work from anywhere in the world, so it’s not an issue I face, though it’s one many others face. For those that don’t have very much vacation time, it can be very tough to strike a balance between maintaining elite status and redeeming miles. And the added challenge is that qualifying for status is like a drug — once you qualify it’s tough to give it up.
What ends up happening to people is that they just squeak by with requalifying for status every year, but don’t have time to redeem their miles. They build up massive, massive mileage balances. In an ideal world you should burn miles just as fast as you earn them. Miles are a currency that not only doesn’t accrue any interest, but is also subject to major devaluation or even liquidation at the program’s discretion. After all, the miles belong to the points program and not you.
Why most people shouldn’t mileage run anymore
Nowadays the best way to get into the points hobby is through credit cards. As a matter of fact aside from an especially compelling promotion, I don’t even encourage most folks to get into mileage running anymore, unless they have a ton of vacation time.
Five years ago fares were cheap as could be, routing rules were generous, and airlines ran all kinds of promotions. Making status was easy and cheap. As a matter of fact back when I first started mileage running with United they had a promotion whereby they were offering 5,000 bonus elite qualifying and redeemable miles per segment flown. Yes, those were the days…
On top of that, credit card offers weren’t great for the most part. Yes, some folks were already credit card “churning” and there were good offers out there, though they weren’t nearly as good as they’ve been over the past couple of years. But the big reason I suggest that people don’t mileage run for the most part is because nowadays virtually all airlines have promotions whereby they sell miles for very little. This wasn’t the case years ago, but just in the past year we’ve seen extremely lucrative promotions for purchasing miles through Avianca, Delta, United, and US Airways, just to name a few, all of which would be cheaper and more efficient than mileage running.
We’ve seen the airlines massively cut capacity over the past couple of years, and it has worked. We’ve seen fewer promotions and much, much higher airfares.
Is earning miles through credit card bonuses sustainable?
In the short term there’s diminishing return with credit card churning. After all, you take advantage of the best offers first, and over time they run out and you start taking advantage of lesser offers. That being said, as is the case in virtually all industries, there are constantly new promotions, offers, and products. Beyond that, keep in mind that most credit cards are churnable in one form or another. Not in the traditional sense as they used to be with Citi, whereby you could literally apply for the same card every 90 days, but for the most part you can apply for cards every few years (exact time period varies depending on the card). Given the ever increasing number of products, that means you can typically maintain a pretty consistent “churn” schedule.
But I’d say the other aspect of credit cards that has made them all the more lucrative is the bonuses they offer nowadays for certain spend categories. Going back a few years there weren’t nearly as many cards that offered bonus points in certain spend categories, which can cause your everyday spend to result in some serious points earning. Many cards offer up to 5x points per dollar spent in select categories, so by taking advantage of that you can earn a nice chunk of points.
Why status is still extremely valuable and I work hard to maintain it
It’s funny, because I don’t believe Ed attended the Chicago Seminar this weekend, but Steve (beaubo) and I got in a discussion about the value of elite status. I argue it’s as valuable as ever, while he argues most status just isn’t worth it anymore.
If you’re a credit card churner you should be able to generate enough miles to travel internationally in premium cabins just about as much as your schedule can allow. That being said, the major challenge is that using miles for domestic flights is neither economical or efficient for the most part. I travel a lot domestically, and that’s largely travel I have to make. Redeeming miles for those flights wouldn’t be economical, especially in a premium cabin.
Yes, you could just otherwise book the cheapest coach fares or use miles for coach, but you’d be missing out on the benefits that make the domestic flying experience ever-so-slightly tolerable — access to a phone agent in the US, priority check-in, priority security, priority boarding, upgrades, priority rebooking when things go wrong, etc.
And the investment for status isn’t actually huge in most cases. You should be able to earn top tier status for roughly $4,000 per year, and for that you can earn 200,000 redeemable miles, eight systemwide upgrades, lounge access on international flights, all kinds of benefits for domestic flying, etc. And I actually think one of the benefits of status that’s commonly overlooked is fee waivers on awards tickets. With award availability worse than ever it’s often necessary to “settle” for a worse routing at the time of booking, and make a change closer to departure to “perfect” your itinerary. That would often cost $150 per change, and when I think of how many changes I make on my average award ticket, that’s extremely valuable.
Conclusion
Long story short, you should be able to take care of your international premium cabin travel needs exclusively with credit card churning. And if you don’t have much vacation time or wouldn’t otherwise travel much for work, I don’t recommend going for top tier status at the expense of redeeming miles.
But if you love to fly and travel, and have either have lots of vacation time or a flexible schedule, I still think it can be rewarding to go for top tier status. The main benefit I see is making domestic flying tolerable and even enjoyable, while earning other benefits that can save you a lot of money and hassle.
What do y’all think?
I got EXP this year for about $3500
(based in SFO)
If I had more time off this year, I could've got 1K on United for around $2,800. Ended up booking just 37,000 miles for $650 out of pocket ($300 in ecerts as well).
Oh, so "And the investment for status isn’t actually huge in most cases. You should be able to earn top tier status for roughly $4,000 per year, and for that you can earn 200,000 redeemable miles, eight systemwide upgrades, lounge access on international flights, all kinds of benefits for domestic flying, etc." means: if you live near a costal airport with lots of "competition from low cost carriers". For the rest of us, 'I wasn't really talking to you'....
@ Joseph -- Generally airports on the coast get you the best cent per mile ratio. Also, prices are usually cheaper out of airports with a lot of competition from low cost carriers.
Ray mentioned that Memphis is the most expensive airport to fly out of. So now I'm wondering what the cheapest airport is to fly out of? Any ideas? It seems like Denver has cheaper flights than Chicago whenever I put together a mileage run. But my sample size is small.
You can easily earn US Airways Chairman's status for about $2500 or less, as long as you have the US Air mastercard and take advantage of the Double EQM promotion.
Top tier for $4,000 is very doable. For example, today I booked IAD-SFO-LAS round trip for 5700 miles for $250.00 a/i. Taking that to the extreme, $1,000 would net me a little over 20,000 miles...or around 4 cents a mile. For $4,000 thats only a little over 80,000 miles, but there are fares much better than 4 cents a mile. The key....and what I take away from Lucky....is unless you have a flexable schedule you...
Top tier for $4,000 is very doable. For example, today I booked IAD-SFO-LAS round trip for 5700 miles for $250.00 a/i. Taking that to the extreme, $1,000 would net me a little over 20,000 miles...or around 4 cents a mile. For $4,000 thats only a little over 80,000 miles, but there are fares much better than 4 cents a mile. The key....and what I take away from Lucky....is unless you have a flexable schedule you can't take a flight on a tuesday morning with a red-eye back for the 3 cents a mile fare.
For me personally, I'm 8,000 miles away from my United 1K for this year for about $4200 spent thus far, but for a few of those flights I had set dates I had to fly.
With AA, DEQM between ORD>LAX, fares at $229 RT, you could hit EXP for $3,435.
OK, I'll bite too. I get United 1K status every year the hard way - business travel, but I'd love to see the plan for getting it for $4K. What "home cities" that possible for would be really awesome.
Abbas.
One KEY thing that is priceless of elite status is during irrops. As AA EXP i have been treated very well by gate agents or elite line. When a flight is delayed, cancelled, weather, MX, etc and there are hundreds of people in the same situation, I have been rebooked and upgraded. I have been proactively called by EXP desk, been rebooked, have been protected, etc, etc. Also compensation is more generous in these instances.
I think it all boils down to what kind of travel do you do.
I'm happy to fly my family (4 people and sometimes 6) to Europe and we're satisfied to go coach on award tickets and then pay for the better coach seats like Economy Plus.
We mostly fly domestic on Southwest as the routes are best for us out of BWI.
We've gotten some more miles of late with the 5x trick and...
I think it all boils down to what kind of travel do you do.
I'm happy to fly my family (4 people and sometimes 6) to Europe and we're satisfied to go coach on award tickets and then pay for the better coach seats like Economy Plus.
We mostly fly domestic on Southwest as the routes are best for us out of BWI.
We've gotten some more miles of late with the 5x trick and some family members will fly to Asia business/first, but that is the first time we've used miles to fly towards the front of the plane. We have flown IAD-PEK on the UA flight on E+ and it was tolerable.
That being said, I don't see how status would really help me at this point. If my life changed where we were flying a lot of places that Southwest didn't go, I'd consider changing my mind. Also, I've not found the front of the plane is anything to get excited about on domestic flights.
For me, the domestic trips by paying with Miles are a necessity, unlike most airports, I live in Memphis which automatically add 150 dollars to the fare and is one of the most expensive domestic airports in the US, so if I can get a credit card bonus when I don't have to spend 500 to fly to Boston, when I could fly from MCO to BOS for 250 dollars, the equation changes significantly.
I think that elite status is insanely valuable...one reason is that the elite benefits of one family member can be leveraged for all of the family members, so that makes it even more valuable than if just one person is benefiting. Of course, having a family makes it harder to do MR in the first place, so there is that balance...
Regarding "How to get top-tier status for $4K?", I think there's a pretty easy answer to that one. Mileage runs. I'd say there's about 9 months of the year where I can go on ITA and find fares at less than 4cpm on United. The best of those (limited-time fare sales) are between 2.5cpm and 2.8cpm. So I'd say Lucky is being pessimistic -- you can still rack up 100K PQM for $3K!
The trick,...
Regarding "How to get top-tier status for $4K?", I think there's a pretty easy answer to that one. Mileage runs. I'd say there's about 9 months of the year where I can go on ITA and find fares at less than 4cpm on United. The best of those (limited-time fare sales) are between 2.5cpm and 2.8cpm. So I'd say Lucky is being pessimistic -- you can still rack up 100K PQM for $3K!
The trick, of course, is that those fares aren't usually (a) on weekends; (b) convenient; (c) from your airport. But if you've got a free schedule and you're willing to spend 10 days flying back and forth between Kansas City and Fort Lauderdale (for example), you can do it.
Guess I'll have to write a new post on that today... stay tuned! :D
@ Josh G,
If Lucky is just referring to DEQM offers then why would he suggest people don't mileage run?
Besides, DEQM offers can't be counted on regularly, and when they are chances are they are tied to a specific route not accessible to everyone.
Let's hear Lucky tell us what he meant...
I'm also curious about the top status for $4,000. I probably spend close to that for tickets to India from Newark per year on United and I can never achieve top status, or even Platinum.
$4k AA EXP or UA 1K is easily attainable especially with all the DEQM offers this year. If you live on one of the coasts there are still sub $300 transcons readily available and often lower and you can maximize routing.
I agree with the industry trend of unbundling having status is increasingly valuable. Longer term I see elite benefits being curtailed and aligned with revenue rather than segments or qualifying miles/segments.
Another reader interested in the $4000 top-tier status comment. Perhaps this one-off line deserves its own post?
I too would love to learn how one can earn top tier for $4,000. What about mid-tier--how much less do you think one would need to invest for that?
I actually get decent value out of using miles domestically. I take a lot of random direct flights (EWR>GRR, LGA>XNA) and those tickets are almost always $500-1000. Using miles for those makes sense. Also, I take a few trips to SEA or LAX each year and I don't mind using miles to upgrade to F saver. That's about $750 worth of miles for a ticket that would cost $400+ in coach.
"Status is like a drug — once you qualify it’s tough to give it up." So True!! I didnt do as much business travel this year as I usually do, so Mileage running it is to maintain PM. Off to Bangkok next mth. That trip plus a couple west coast trips should put me "just" over the threshold to maintain.
Yes, that was the part of your article that stopped me in my tracks. Top status for $4,000? How?
I'd be awfully interested in hearing more about getting to top tier for $4000—can you elaborate?
I agree with Geoff. $4000 seems like a very low number for top-tier status.
Would you mind laying out a strategy for earning top-tier status for $4000 in a post, Ben? Obviously, US Airways is easy and straightforward at that price (simply buy it for $3999), but I'm curious about the other major carriers.
How do I earn top tier status for $4000?
To weigh in on what Geoff said: It's even more amazing if you look at this from a European (in my case German) perspective. I can not think of getting any kind of status for the equivalent of 4000USD here. You might be able to just barely make it to Lufthansa FTL or Air Berlin Silver. But that's it. If you know better, please (PLEASE!) let me know :-)
Also: There are just not that many credit cards available here which would give you the miles you'd like.
I'm still amazed people can earn top tier for ~$4000, for some of us who don't live near an airport where cheap fares are available the proposition changes significantly I think. For example for me to get to an airport where one could even consider a MR I'd have to spend at least $300 and only earn about 2000 miles for that which raises the cost significantly. I'll hit plat this year as a combination...
I'm still amazed people can earn top tier for ~$4000, for some of us who don't live near an airport where cheap fares are available the proposition changes significantly I think. For example for me to get to an airport where one could even consider a MR I'd have to spend at least $300 and only earn about 2000 miles for that which raises the cost significantly. I'll hit plat this year as a combination of a couple vacations, a work trip, and 1 MR due to the cheap fares from JFK-hnl and reasonable flights to get to JFK from St Croix. But award tickets still count us as us domestic (which we are) so they present a good value especially to the west coast, Hawaii or international.
I couldn't agree with your assessment more, Ben. As somebody who travels quite a bit...okay...too much, domestically, I can't imagine doing so without status. Sure, the credit cards are now making many of their benefits equivalent to silver status, but as you said, the ability to reach a US agent, theoretically cutting to the front of the phone queue during irrops (which, on certain days is very important), having separate check-in areas (American is still...
I couldn't agree with your assessment more, Ben. As somebody who travels quite a bit...okay...too much, domestically, I can't imagine doing so without status. Sure, the credit cards are now making many of their benefits equivalent to silver status, but as you said, the ability to reach a US agent, theoretically cutting to the front of the phone queue during irrops (which, on certain days is very important), having separate check-in areas (American is still especially good at this and hasn't diluted the EXP benefit here like UA has with 1K in most airports), priority security lanes (and the ability to qualify for Precheck for those that don't have Nexus, or global entry), and being FIRST to board, are of major value. And while 1K status no longer guarantees an upgrade on UA, I've been 100% so far this year on AA with EXP status domestically, (and via SWU on ANY fare internationally, which, I might add, I've gotten on fares cheaper than the "fuel surcharge" on premium award tickets). Compensation for irrops is generally better, etc, too, so I still find elite status to be of great value. But, as others are stating, silver status on most airlines is no longer what it was (gone are the days of 2P upgrades, for the most part). Still, the Explorer card, for example, doesn't give you E+, and for those with no status flying domestically, E+ is very important. Or perhaps I'm just rationalizing the fact I spend more time in the air than I do at home... ;)
Thanks for answering so thoroughly. Now what do I do with my 8 SWUs that I got from my EXP Jan MR thanks to you?! =P
But seriously though, I do appreciate the perks that I've enjoyed this past year: lounge access, upgrades, award ticketing, and rebooking. There are also instances where award travel is near impossible like during the holidays and status can come in very handy.
FWIW, Rick is also abandoning...
Thanks for answering so thoroughly. Now what do I do with my 8 SWUs that I got from my EXP Jan MR thanks to you?! =P
But seriously though, I do appreciate the perks that I've enjoyed this past year: lounge access, upgrades, award ticketing, and rebooking. There are also instances where award travel is near impossible like during the holidays and status can come in very handy.
FWIW, Rick is also abandoning elite status http://www.frugaltravelguy.com/2012/10/my-last-year-as-top-tier-airline-elite.html
Interesting. I have the explorer card and I certainly didn't see any ON inventory when looking a few months ago. Won't matter in a couple months, when I will finally be Platinum, which gets ON/IN.
@Kris
If you have the MileagePlus explorer card you also get to see ON availability.
I'm with you on your conclusion. I do a lot of domestic travel for work, and I'm required to buy discounted economy tickets; top-tier status is what makes it (more than) tolerable.
I actually use my miles to earn status. I think Qantas has the only frequent flyer program that allows you to do this.
@ Jason -- LOL, only a third of it was on mileage runs... the rest was on award travel.
"I don’t even encourage most folks to get into mileage running anymore" - you just hosted a 7 hour Mileage Run seminar ;)
I do think you should mileage run to earn elite status, if necessary. Especially if there is a DEQM promo.
I'm not sure about AA, but on United, elites get access to a lot more saver inventory. When I was looking at intercontinental flights on United, only a few days had two seats on O, but ON was 7+ on nearly all the days I looked. Another thing that has saved me a few hundred dollars is no SDC fee for Gold and higher, which apparently isn't even waived for exec plat over at AA.
I'm not sure about AA, but on United, elites get access to a lot more saver inventory. When I was looking at intercontinental flights on United, only a few days had two seats on O, but ON was 7+ on nearly all the days I looked. Another thing that has saved me a few hundred dollars is no SDC fee for Gold and higher, which apparently isn't even waived for exec plat over at AA.
Can't get cards, so I have to fly to get miles (it doesn't hurt that I love to fly and have a fairly flexible schedule).