Posted by Jack @ 10:57 pm on September 16th 2011

The Frequent Flyer MMORPG

I have been a bit of a road warrior the last five years or so, and during that time I have become fairly competent working to maximum effect frequent flyer and other loyalty type programs. This year it has been a rare flight that saw me seated in other than first or business class, even though I am purchasing all tickets at economy and deep economy coach, and I frequently get upgraded with executive floor access in Starwood or Hilton hotels as well. I have built up a rather large amount of points, allowing me or my wife to make a couple of trips a year at virtually no cost. There is an enormous amount of information out there for anyone wanting to explore a program or improve their use of an existing one, so much so that it can be quite overwhelming. So here is a bit of a primer covering two areas: what you can get out of the programs regardless of you travel pattern, and how these programs are like a Massive Multiplayer Online Role Playing Game, but in a good way. Let’s start with the latter.

Back in the day I was a pretty heavy MMORPG player, particularly during the Diablo I and II period. I even wrote some articles for the largest Diablo II unofficial website, I quite cold turkey just as World of Warcraft was coming out, thank Dawkins, else I would have spiraled into Trainspotting territory for sure. As any reasonably experienced RPG player can tell you, in a lot of games “things” mathematically “stack” such that characteristics, skills, equipment, effects and tactics produce extraordinary results in a well-planned character. Given entirely equal points for all these things, a knowledgeable player develops an incredible killing machine, whereas the noob will likely create a frail and delicate flower since he is not aware of the near geometric progression of attack speed, damage and defense that the proper “build” will produce. The deeper I got into research and use of my frequent flyer and hotel loyalty programs, the more I recognized some of these same stacking characteristics. Given equal dollars spent, a novice will fly a number of trips in coach. The expert will have leveraged specials and program design quirks into elite status, multiplied his miles significantly, possibly flying in upgraded seating, have priority access to the plane and security gates, reduced baggage fees, and many other benefits.

Let’s run through an example using the program with which I am most familiar, American Airlines (AA), and to demonstrate that this information is not just for the hard core road warrior, we will assume a rather moderate amount of flying, say 14-18K miles a year consisting of two coast to coast trips and two shorter itineraries. Leroy is a flying noob and has no interest in worrying over FF programs, while Jenkins is mildly obsessed with miles and points. Both have planned trips from Miami (MIA) to San Francisco (SFO), then Miami to New York City (JFK), and later in the year they expect to do these two trips or something very similar again. Leroy books the cheapest flights he can find, flying American to SFO via Dallas Fort Worth (DFW) and one of the discount airlines on both trips to New York. For this he will earn approximately 10,320 total miles with AA, and another 4,360 on the discount airline. With these miles he can do almost nothing. Perhaps, if he plans ahead, he can purchase a one way short distance domestic flight. Perhaps.

Jenkins, on the other hand, went full geek and researched a bit on Flyer Talk, the premier source for all things loyalty program. Just to keep it fair, we will assume our man J only just signed up for AA’s FFP, and does not have some previous status that will give him an advantage. But prior to the very same MIA to SFO trip that Leroy took, Jenkins did two things different: he signed up for AA’s “Gold Elite Challenge” and he elected to take a slightly longer route to SFO, flying through Chicago rather than DFW. The Gold Elite Challenge cost Jenkins $140, for which he will be granted Gold status in AA’s elite flyer program if he obtains 5000 points in a 90 day period. (For simplicity’s sake, I am not going to differentiate between points and miles, suffice it to say they are not directly interchangeable terms, but close enough for our comparison). The ORD routing will extend Jenkins flying mileage nearly 1000 miles for the round trip. Given equal layovers, he may very well get to SFO an hour later than Leroy. At the end of the first trip, Jenkins has earned gold status due to his 6080 mile round trip. Jenkins works the same itinerary for the second SFO trip, but elects to spend a bit more and stay with American rather than the discount airlines for the New York flights. Part of that price is offset by the significant number of nickel and dime fees the discount airlines charge that are inclusive in the bigger airlines, such as carry-on bags, checked luggage, drinks, snacks etc. Even so, he still may have paid more, and you can do your own value assessment to determine at what point one should abandon their loyalty airline for a cheaper competition. Here is what happens for our traveller:

1. Since Jenkins is now Gold Elite for the remainder of this year and the next, on each of the remaining three trips he has access to the priority security line at MIA, he boards just after the first class passengers, has access to better, though not upgraded seating (think exit row), certain fees get waived and about a dozen other benefits that may or may not be useful to him.
2. Gold Elite members earn a 25% mileage bonus, so the second San Francisco trip will net him 7600 miles and each New York journey gives him 2725. His total mileage for the year is 19,130 miles, all on American. If he were a Platinum Elite member, the bonus 100%.
3. As a Gold member (heh) he earns four 500 mile “stickers” for each 10,000 miles flown. These stickers can be used to upgrade to business/first class on domestic and Caribbean flights, one sticker for each 500 miles in a leg. Next year he can use these for some of his flights and arrive rested with several Glenlivets in system while Leroy is nursing his anger over flying next to the enormous gentleman in coach and having to pay $7 for a Dewars.
4. As a first time AA member, Jenkins has access to a bunch of one time only mileage bonuses that he learned about on Flyer Talk, such as 500 free miles just for letting liberty mutual give you an auto insurance quote, up to 2500 miles for letting AA send you email about flight specials and offers for a couple of months, and a host of new ones that are constantly showing up on the discussion forums. From these he can very easily expect to score another 6000 or so miles by the end of the year. With over 25K in his AA account, if he is reasonably flexible and plans ahead a bit he can now exchange these for a domestic round trip anywhere in the continental US. American, unlike some airlines, actually has lots of seats available for point redeemers.
5. Jenkins, like every adult needs a credit card or three, and decides that if he is going to use them he might as well get something in return. So he applied for both the Citicard AAdvantage Visa and AMEX. After spending $1500 and $4000 respectively, he was given a 75,000 mile bonus for each card. That’s right, 150K. Shit just got real, yo. This is in addition to the 5,500 in points for the actual dollars spent. If he uses these cards to purchase American Airlines tickets, he gets 2 points per dollar. 65 days later (Citibank restriction), he obtained a Citicard AAdvantage Business Visa for another 75,000 mile bonus after $1500 in spend. The annual fee on all three cards was waived for the first year, and he plans to ask for a waiver in the second year or cancel the cards, which he may do anyway since there are always more offers out there.
6. Jenkins can get ridiculous on this, shifting all of his recurring bills to credit cards, at least for those that accept them without fee, such as his cell phone, internet, cable, electrical, car insurance, and gym memberships. The points pile up, especially when you pay attention and get those end of year 2 miles per dollar spent offers. He can also do all of his shopping, when it is cost efficient, through the American Airlines shopping portal, which grants several miles per dollar spent with certain merchants, in addition to the credit card bonus. He can end the year with close to 300K miles, enough for a bunch of domestic coach flights, or two transatlantic trips in first class with points left over.

This is a conservative example. Many flyer talk regulars work the system to an extraordinary degree. For the past couple of years and up until very recently, a lot of members have been taking advantage of a quirk in the U.S. Mint’s desire to get silver dollars into circulation. They offered free shipping and allowed you to pay with a credit card. This resulted in a number of FFP fanatics buying thousands of silver dollars every month, and immediately depositing them with their local bank, in effect “churning” their credit card’s spend through half a million dollars a year, giving them half a mil in flight miles. Up until a year ago, Citibank did not seem to have a system in place to prevent a “churn” of their 35,000 mile bonus credit cards, allowing members to apply, get approved, receive, meet a $500 spend, receive their 35K bonus, and cancel the card in three weeks, then do it all over again through the rest of the year. While these types of exploitable holes are getting rarer, the “honest to god not a bug but rather simply part of the business plan” options out there are quite excellent and without risk, at least if you are disciplined with credit cards.

There are five major and many lesser hotel loyalty programs. They award points based upon dollars spent, with bonuses and frequent specials. They award elite status based upon meeting thresholds in either nights or stays. Elite status confers point bonuses, room upgrades, and free amenities. The stacking in hotels can come from a combination of advertised point bonuses, elite membership bonuses, and branded credit card bonuses. For instance, at any Starwood Preferred Guest property, I end up with at least 5 points per dollar spent. 1 for the regular offer, 2 for my elite status bonus, 2 for paying with my SPG credit card. SPG also frequently runs targeted double and triple point bonus offers, and I am usually offered 500 points in lieu of a welcome amenity gift. For instance, at present one Thursday night in a $100 Sheraton yields 1200 SPG points, which I roughly value at $24. Not a bad discount.

Car rental programs work similarly, rewarding membership with upgrades and discount offers. When in Hawaii last year I was merely a newly signed up Thrifty Blue Chip program member with no elite status at all, and yet I had access to a priority line, a ready key and contract at each location, and upgrades on 2 or 3 of our 7 different rentals.

The keys to working these systems I loosely compress into three points:
1. Never fly, sleep in a hotel, or rent a car without getting credit in their loyalty program. Its free shit, man!
2. When possible and economically feasible, concentrate your flying, sleeping, and renting into a primary company and one back up. This will entail a bit of research to determine which programs best meet your travel patterns, and where your value vs. loyalty cut off point is.
3. Utilize the incredible variety of free offers out there to build miles and points in your primary and back up programs.

1 Comment »

  1. It’s a window into a whole ‘nother world.

    Comment by Adam — 9/17/2011 @ 8:24 am

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