The cost of reward travel at airlines in the United States has jumped sharply since 2019, eroding the value of frequent-flyer points, according to an analysis by consulting firm IdeaWorks.
In a study published April 2, IdeaWorks found that the lowest daily average price of tickets purchased with points or miles was up 28% in March 2024 compared with March 2019, a figure that exceeds inflation by 7 percentage points.
The jump in reward prices is also outpacing the overall inflation rate for domestic airfares. According to data released last week by Cirium, domestic ticket prices were up 9% in 2023 compared with 2019, trailing inflation over that time by 10 percentage points.
IdeaWorks president Jay Sorenson wrote that the primary reason for the amped-up inflation in reward travel is the high uptake by consumers of co-branded airline credit cards, “which created more demand and prompted airlines to increase reward prices.”
In conducting its analysis of reward travel pricing, IdeaWorks analyzed 600 booking queries on the websites of American, Delta, United, Southwest, Alaska and JetBlue, using city pairs that are among each carrier’s top markets based upon passenger traffic. Queries were made in early March for award travel spanning between June and October. The study’s findings are based on the cheapest available daily reward fare for each airline.
Just as in 2019, Southwest offers the lowest reward prices among the six carriers that IdeaWorks evaluated, with the lowest daily one-way fare averaging 14,484 points. Still, that was double the Southwest average of five years earlier.
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American offers the second-lowest redemption costs, with its cheapest reward fare averaging 17,820 points. American also bucked the overall trend, having dropped reward prices by 25% over that period. United’s redemption rates are the highest, with an average one-way cost of 30,460 points.
The study included flights ranging in distance from 251 miles to 2,500 miles.
IdeaWorks pointed out that Southwest’s network emphasis on medium- and short-range flights gives it an advantage.
Still, wrote Sorenson, “Simply said, consumers can enjoy the perks of reward travel more rapidly on Southwest.”
Southwest, however, is no longer the leader when it comes to the reward value of each of its frequent-flyer points.
That distinction now belongs to American, whose AAdvantage points are now each worth 1.4 cents for lowest-fare ticket rewards, according to IdeaWorks, double their 2019 value. Southwest Rapid Rewards points are next best, with a value of 1.2 cents. United MileagePlus points have the lowest value of the six airlines, at 0.7 cents.
But while Rapid Reward points are each worth less than AAdvantage points, Southwest overcomes that gap by providing more reward value than American and other airlines for flight purchases.
According to the IdeaWorks study, Rapids Rewards members get a reward value of 6.7% for purchases of the cheapest available base airfares. United comes in second in that metric at 3.3%. Delta comes in last with a reward value of just 0.4%.
A key driver of those numbers, Sorenson noted, are policies by several airlines to offer lower awards on basic economy fare purchases. For example, Alaska Airlines customers buying a basic economy fare accrue points at 30% of the economy rate. AAdvantage members receive just two points per dollar on a basic economy booking instead of the five they receive for economy bookings. And Delta doesn’t award any SkyMiles points for basic economy fares.
Southwest doesn’t sell basic economy fares and awards six points per dollar spent on its bottom-level fare product, Wanna Get Away.
United, meanwhile, awards the same five miles for basic economy purchases as it does for economy tickets.
Award tables for flight purchases tend to be complicated, with airlines often multiplying awards based on the fare class, a customer’s loyalty status and on whether they make the purchase with a co-branded credit card. Airlines that provide low reward values for base fares don’t necessarily offer low values for premium fares.
*This story originally appeared in Travel Weekly, a fellow Northstar Travel Group brand.
