The landscape of reward travel at U.S. airlines has seen a significant shift in recent years, with the cost of redeeming points or miles for tickets on the rise. According to a recent analysis by consulting firm IdeaWorks, the lowest daily average price of tickets purchased with points has increased by 28% in March 2024 compared to March 2019. This surge in reward prices has outpaced inflation by 7 percentage points, eroding the overall value of frequent-flyer points.
The primary reason cited for the increase in reward prices is the high uptake of co-branded airline credit cards by consumers. This increased demand has prompted airlines to raise reward prices to reflect the growing interest in loyalty programs. As more travelers seek to accumulate points and miles through credit card spending, airlines have adjusted their reward pricing accordingly.
IdeaWorks analyzed reward travel pricing on the websites of American, Delta, United, Southwest, Alaska, and JetBlue, focusing on city pairs that represent each carrier’s top markets. The study revealed that Southwest continues to offer the lowest reward prices among the six carriers, with an average daily one-way fare of 14,484 points. However, this figure has doubled since 2019, reflecting the overall trend of rising redemption costs.
American comes in second in terms of redemption costs, with an average fare of 17,820 points. Interestingly, American has actually decreased its reward prices by 25% over the same period, bucking the trend of inflation in reward travel. On the other hand, United has the highest redemption rates, with an average one-way cost of 30,460 points. The study included flights of varying distances from 251 miles to 2,500 miles, highlighting the diverse range of redemption options available to travelers.
While Southwest offers the lowest reward prices, American now leads in the value of each frequent-flyer point. IdeaWorks found that American’s AAdvantage points are now worth 1.4 cents for lowest-fare ticket rewards, double their 2019 value. In comparison, Southwest Rapid Rewards points are valued at 1.2 cents, while United MileagePlus points have the lowest value at 0.7 cents per point. Despite having lower point values, Southwest provides more overall reward value for flight purchases compared to American and other airlines.
The study also highlighted the varying reward values offered by different airlines for base airfares. Southwest’s Rapid Rewards members receive a reward value of 6.7% for purchases of the cheapest available base airfares, surpassing other airlines in this metric. United comes in second at 3.3%, while Delta lags behind with a reward value of just 0.4%. These numbers are influenced by airlines’ policies on offering lower awards for basic economy fare purchases, with some carriers like Alaska Airlines and Delta providing reduced points for these bookings.
As the landscape of reward travel continues to evolve, travelers will need to carefully consider the value of their frequent-flyer points and the redemption costs associated with different airlines. Understanding the factors driving inflation in reward prices and the varying reward values offered by airlines can help travelers make informed decisions when redeeming their points for flights. By staying informed and actively comparing redemption options, travelers can maximize the value of their loyalty program rewards in an ever-changing travel environment.