Travel Rewards Credit Cards

Feb 18

When Does Paying An Annual Credit Card Fee Make Sense?

Earlier today, I got a question about the JetBlue credit card. The card is one of my favorites and has some unique benefits. Of course, if you never fly JetBlue, you’re probably not going to be interested.

The question I got was about whether the writer should get the card, but there’s a second question to be asked here. JetBlue offers two cards, one with an annual fee and one without. Which one is worth it?

Should I Pay An Annual Fee (Not Just for JetBlue)?

credit card

Photo Credit: Creative Commons

Fortunately, it’s one of the easier questions to answer. Unfortunately, the answer is “it depends.” Fortunately, it’s usually pretty easy to determine whether that “it depends” is really a yes or no.

If you have a choice of two cards with the exact same benefits, the answer is obvious. Why pay an annual fee when you don’t have to? Surprisingly, that situation does pop up from time to time, usually for the first year that you have a card. Frequently, a credit card will offer to waive the first year’s annual fee if you apply at a certain site or use a particular code. Keep an eye out for those.

Usually, though, a card with an annual fee comes with better benefits than the one with no fee. The question that you have to answer is whether you are going to use those benefits. If you can make more money by paying the fee up-front and taking advantage of everything that the card offers, you might be better off.

JetBlue As A Test Case

jetblue

With a cool blue hue

It’s easy to run a comparison between the cards in the case of JetBlue, since they match them up side-by-side.  So line them right up. The card with the fee costs you $99 per year but in this case, it’s pretty easy to determine that the card with the fee is the right choice for most. Consider…

  • The no-fee card gives you a sign-up bonus of 10,000 points, but the $99 card gives you 40,000 (both after hitting a minimum spending level). A TrueBlue point is worth about 1.5 cents, so right off the bat, you’re up about $350 (the value of the 30,000 points, minus the $99 fee). That is, of course, only a one-time benefit, but it covers more than three years of the fee.
  • The card with the fee gives you 5,000 points on every anniversary. That’s worth $75 right there, so the card is only costing you $24 ($99 minus $75). The free card comes with nothing.
  • Those two are the easiest to come up with a cash value for, but the annual fee card comes with a bunch of other benefits, as well, including more points per dollar spent on JetBlue flights, the opportunity to earn Mosaic status based on your spending and a refund of 10% of the points that you use.

Why Do Airlines Have Multiple Cards?

So what’s the reasoning behind having multiple cards, some with fees and some without? It could be any one of a number of reasons. Many times, the annual fee cards require a higher credit score than the no-fee cards. They are also a way of segmenting customers. And finally, paying the annual fee is one more way to tie you to the airline. Once you have paid for something, you’ll feel like you need to use it more to justify it.

But the bottom line is this: Whenever you have a choice, don’t just go right for the freebie. The card with the fee may end up making you more than the cost of the fee itself.

 

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And finally, you can apply for credit cards through the Credit Cards for Charity link above. All card proceeds are donated to charity, so please do well by doing good!

Feb 16

A New Hyatt Promotion

Apparently, I was the only person in the mileage world yesterday who didn’t write about the new Hyatt promotion so, I dunno, my bad, I guess.

World Of Hyatt First Quarterish Promotion

hyatt

Hyatt Regency Scottsdale at Gainey Ranch, one of my favorite properties

Hey, there’s a new Hyatt promotion! It’s actually straightforward, even if it’s not terribly rewarding. Register by March 31 and stay February 15 through May 15 to earn 1,000 bonus points per night, with the exception of Hyatt Place and Hyatt House, where you’ll earn 500 points per night. One positive on this promotion: You’re earning 1,000 points per night, meaning that a stay of three days at a property will earn 3,000 points, not just 1,000. Oddly, reward nights count, as well. You can earn a maximum of 25,000 points.

The bonus is good, not great. Typically, you would earn five base points per dollar spent at Hyatt, so each night that you stay earns you the equivalent of having stayed a night at a $200 hotel (excluding any tier bonuses that you would get for elite status). It’s free to sign up, so you might as well, even if you don’t have  any Hyatt nights planned. You just never know.

 

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Feb 15

Norwegian Air Lost A Lot Of Money This Quarter. Why You Should Care.

I don’t spend a lot of time talking about either international airlines or airlines’ financials. They are two interesting subjects, but probably for another blog at another time. So why is today different from all other days?

Norwegian Air Shuttle Lost A Lot Of Money

norwegian air

Losing money on every flight but making it up on volume

Norwegian Air Shuttle is a European ultra-low cost carrier (ULCC),similar to Spirit or Frontier in the United States. Unlike traditional ULCCs, however, that fly frequent, short routes, Norwegian has a significant intercontinental presence between Europe and North America (and Buenos Aires). That creates a problem for them, though. ULCCs rely on having lower operating costs than their bigger peers, and the advantage that they have on a longer route doesn’t apply the same way that it would on a shorter route.**

Anyway, Norwegian Air just announced a fourth quarter loss before taxes of 1,432 Norwegian Krone, or approximately $183m. Fourth quarter is a tough one for airlines, because there is less leisure travel, but that’s still an ugly number and represents an all-time high fourth-quarter loss for Norwegian.

Does It Matter? Yes, If You Ever Fly Internationally.

Here’s the problem. You don’t have to fly Norwegian Air for them to matter to you. If you fly internationally at all, having Norwegian in the market is a good thing. Why is that? Because they keep ticket prices down. Remember, their prices are extraordinarily low because they sell you so much on-board. And while none of the legacy carriers are going to match Krone for Krone on price, they set a low enough bar that it is going to matter. The best thing that could happen for travelers flying over the airline would be if airlines like Norwegian and Wow Air expanded even faster.

Can They Lose Money But Still Grow?

norwegian air

Tons of aircraft growth going forward

You betcha. In fact, Norwegian has to grow. Like many other parts of the business, airline economics make no sense whatsoever on the surface, but they are what they are. By the way, this is going to get a little complicated.

Airlines have a certain amount of fixed costs, which are costs that they have to pay even if planes aren’t flying. For example, they have to pay the CEO. They have to pay interest on their loans. They have to pay for gates. Etc. And since costs are measured on a per mile basis, a big denominator (i.e., the total miles flown) helps as much as a reduced numerator (the total costs). When you add an airplane, your costs do go up, obviously, but a certain percentage of them had already been paid for. You don’t have to add another CEO, for instance. You may not have to pay for another gate. You’ve already got a maintenance staff. So whenever you add a plane, you numerator goes up, but not by as much as the denominator.

So airline like Norwegian get stuck in a growth trap. The only way that they can lower their unit costs (cost per seat per mile flown) is to add planes and spread out the total cost over more miles flown.*** Thus, even though they lost money on every mile flown (on average) in the fourth quarter, they are actually going to increasing the number of miles that they are flying in 2018 by 40%.

The Bottom Line: Root for these guys to succeed, even if you never personally fly them. They keep the rest of the industry in check.

 


*Beginner’s Hint: An ultra-low cost carrier is one that sells you a place on the plane and nothing else. If you want a seat assignment ahead of time, you’ll have to pay for it. Got a bag in the overhead? You could end up paying for that, as well. Want a can of Coke? Yup, that’ll cost you. ULCCs can make almost half of their revenue from sales of products other than the tickets themselves. The good news is, in the case of an emergency, you get to use the oxygen mask for free. The actual oxygen might cost extra, though.

**Simply put, the most expensive parts of any flight are take-off and landing. Everything in between just averages out the extremes. Since every airline, whether low cost or full service, has one takeoff and one landing (if done properly), and there are a heck of a lot of miles in between the two, a long-haul flight gives the big carrier more miles over which it can average out its costs than a short one does. Cost advantage (almost) gone for Norwegian.

***Growing does present a different problem, of course. Econ 101 says that when you add supply to a market but not additional demand, prices go down. Sadly for airlines, this is one area where they are not different than the rest of the world.

 

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Feb 14

10,000 Bonus IHG Points With A Kimpton Stay

So maybe acquisitions aren’t all that bad. Many moons ago, I lamented the InterContinental (IHG) acquisition of boutique chain (if there is such a thing) Kimpton. I had described Kimpton as the best hotel company that you had never heard of, and that wasn’t far from the truth. They offered high-touch service with hotels that reflected the cities in which they were located, but did so at a reasonable price. And then they got bought. Here’s a hint: The program hasn’t gotten better.

But Here Are Some Bonus Points…

kimpton

10,000 bonus points and a really cool lobby

It’s not all bad news, though. When you are owned by a larger corporation, they have the ability to offer bonuses that you are not able to. So, as part of its Accelerate promotion, IHG is offering 10,000 points with your next Kimpton property stay before April 1. You will, of course, still get your base points. If you’re not signed up for IHG, you should do so, since it costs you nothing. 10,000 points is not going to get you to the InterContinental in Paris, but it will get you a night at the lowest category hotels.

Note that you can get 60,000 points and that night at the InterContinental in Paris for free each year by signing up for the IHG credit card, but I’d wait until the bonus is 80,000 to sign up, not now at 60,000, unless you’re in a real hurry to get those points.

Thanks to Frequent Miler, where I first saw the post.


 

 

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Feb 13

Hotels: Three Things That Need To Change

Last week, I did a piece about three things that need to change with airlines. Hotels, of course, aren’t completely innocent, either. The scenes are generally more relaxed, since hotels don’t operate on the same touch-and-go schedules that airlines do, but there is still plenty of opportunity for improvement. Here are a few:

Loyalty Programs Shouldn’t Be An Afterthought

check in

You may know more than they do.                                                                                                   Photo Credit: Creative Commons

Say what you will about an airline, but they put a lot of effort into their frequent flyer programs. And why shouldn’t they? They are profit generators. They (usually) structure policies to reward the type of behavior that they want to encourage and you can (usually) find someone who will get you the correct answer to a complex question.

Hotel loyalty programs are newer and less complicated, but the chances of finding someone who actually understands the rules are lower than those on their airline brethren. Part of that is because the hotels haven’t put much time into them, but part of it is also because the lodging companies (Hilton, IHG, Marriott, etc.) rarely actually own the hotels with their names on them. Instead, the hotels are owned by a third party, who operates either as a franchise (just uses the parent company’s name and technology) or a managed property (the lodging company operates the property but doesn’t own it). Thus, training at the line level is inconsistent. Some properties value it, some don’t. But everyone should know if you are entitled to an upgrade, use of the lounge or a late checkout. And if they don’t, they should know who to ask.

Oh, one more thing: That change should apply at the corporate level as well. There is no excuse for a top-tier elite member to call the “Platinum” or “Diamond” or whatever premium customer service line and getting an incorrect answer.

Internet: Cheap, Fast And Good

An old saying is that any project can be two of the following: cheap, fast or good. In 2018, though, I expect all three from a hotel, particularly one with four or five stars. And if something goes wrong, support can only be outsourced to a third-party call center if the representative on the other end of the line has a solution that extends beyond “Try turning it on and off” or “I’ll call the hotel and somebody will get back to you.*”

So why are we still living in the days of dial-up, when AOL sent out those cheap discs? Because internet is a money maker.** It’s the post-millennium phone fees. At their height 30 years ago, telephone charges generated about 2% of a hotel’s revenue. That might not seem like a lot but, considering that there were no real costs associated with it, it was all profit.  But as cell phones replaced in-room phones and Netflix replaced on-demand movies, the hotels had to replace that revenue. Internet is the way to go. But maybe, and I’m just spitballin’ here, it could produce a speed fast enough to load more than a few pages per hour.

Resort Fees

hilton

“That’ll be $15 for the towels.”

As competition in the airline industry increased last decade and ticket prices came down, the carriers were forced to look for another way to generate revenue. Thus, bag fees were introduced.

Hotels, loathe to let an earnings opportunity slip by, chose to match their skybound cousins. They couldn’t charge you for bags (not yet, anyway), so they did the next best thing: Charging for amenities that had always been free.

Welcome to the resort fee. More and more hotels are tacking on an extra $5-160 (Yes, $160 is just the fee.) for such “extras” as access to the pool, a newspaper and beach towels. At the Resort at Fisher Island Club, a high-end destination property, that $160 (which is labeled as a “service charge) doesn’t even get you breakfast. Of course, if you’re willing and able to pay $1,400 for a room, that $160 might not mean too much to you.

It’s their hotel, and they have the right to charge whatever they like, but adding an extra fee at the end and pretending that it’s for additional amenities is, at worst deceptive and at best, simply tacky. Just tell us the price up-front and keep it simple.

 


*Hint: They won’t.

**Those of you who have been around a while know that I don’t begrudge the travel companies a profit. In fact, I encourage it, since profits tend to lead to better products.

 

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Feb 12

Zorkfest: A Las Vegas Extravaganza

My friend Mike writes the blog Travelzork, a site that does for Las Vegas and gambling what I attempt to do for miles (although he generally does it much better). If you have any interest in gaming, his is a site worth visiting, since he knows all the tricks to earn points and freebies at casinos.

Once per year, Mike has a gathering called Zorkfest, which is a full-day (and a half) seminar on everything from casino loyalty programs to generating comps*, even if you’re not a big hitter. Sign up for this year’s event, which is taking place Memorial Day weekend, is taking place soon. He’s offering a discount for using code Zork360, and Treasure Island, the host hotel, is also offering discount rates.

Go Via Southwest…

southwest

Photo Source: Creative Commons

If you want your airline ticket to be taken care of, as well, hurry and take advantage of the 50,000 point signup bonus with the Southwest Airlines credit card. 50,000 points will easily get you to Vegas and back and will also get you about half way to a Southwest Companion Pass.


*Beginner’s Hint: “Comps” are simply freebies that you get for playing and staying at a casino. The most basic comp is a free drink. The most complex comp is, well, let your imagination run. If you’re willing to throw down $100K per hand of blackjack, they’ll do just about anything for you. Want a $5,000 per night villa at The Mansion, or even a $1,000 per room SkyLoft? No problem, just throw down your chips.

 

 

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Feb 09

A He Said/She Flushed Story

Every once in a while, you get an airline story that is simply too strange to be true. And when you do, you can almost be certain that Spirit Airways was involved.

Spirit Airlines And The Emotional Support Hamster

spirit air

Places that your emotional support hamster can’t go

There have been several recent reports that airlines, led by Delta and United, are starting to crack down on emotional support animals.  I dunno, maybe it was the peacock that somebody tried to claim was an ESA on a United flight. So when a college student wanted to bring her emotional support hamster on a Spirit flight, she did the right thing and called the airline, who told her that she could bring her furball. Both parties stipulate to that.

Here’s where their stories diverge. According to Spirit, the agent offered to let her board a later flight while she looked for a hamster Airbnb, which would be a divergence from their traditional policy of “board now or we’re not responsible.” The student, however, had a different story. According to her, the Spirit employee told her that the hamster couldn’t board, and that she had a choice of flushing her hamster or letting it go outside if she wanted to board. The student flushed the hamster.

I wasn’t there and have no idea what was or wasn’t said. I do know enough executives at the airline, though, to know that they would be horrified if this event transpired as the student claimed it did.

 

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Feb 08

Are Airlines About To Win Another Regulations Battle?

Scott McCartney writes a weekly column for the Wall Street Journal called “The Middle Seat,” which reviews current events in the world of airlines. The column alone is often worth the cost of the subscription, and yesterday’s piece was particularly interesting.

Goodbye Red Tape Road, Or Consumer Protections?

doofenschmirtz, red tape

Regulations? What regulations?

According to Mr. McCartney, the DOT and airlines are discussing eliminating certain regulations that either protect consumers or generate unnecessary burdens, depending on which side of the debate you fall.

I foresee an interesting battle of ideology versus popularity. On the one hand, airlines have powerful lobbies and can afford to battle for their own interests. But there’s an issue: Airlines represent excellent whipping boys for the public, and nobody wants to be known as the politician who allowed the airline to bump grandma from her Christmas flight. And going after regulations at the DOT level is particularly brutal since, as Mr. McCartney points out, the DOT is the main venue for consumer action.

Among the issues that they are looking at:

  • Weakening the tarmac delay rule*
  • Eliminating the mandatory 24-hour ticket grace period
  • Charging for wheelchair service
  • Allowing travel agent bias to show preferable fares and carriers to show prices before fees

Passengers consider most of those issues to be basic benefits that come with the cost of the ticket, whereas airlines see them as an opportunity to increase profits, arguing (often correctly) that many of these rules are unique to their industry. Changing regulations in the airline industry are certainly nothing new, but it’s rarely at the behest of a government agency whose job it is to look out for consumers.

What’s The End Game?

Traditionally, when it comes to the rules of the business, I have leaned slightly toward the airlines. They’re a business whose job it is to make money for their shareholders, not a public utility.

Having said that, there need to be some basic regulations put in place to protect passengers, who are subject to a contract that is essentially take-it-or-leave-it. Eliminating all safeguards for consumers is very different from allowing an airline to charge for bags or take away an inch of leg room. There is at least a reasonable alternative for the latter.

But the industry needs to be aware of something else: Nobody likes you. No industry has done such a good job of alienating both its customers and its own employees. There will never be a full customer strike, of course. Travel is often non-discretionary, so the airlines will always have some business. But do you really want to be have an employee who has to tell an elderly passenger that you can’t give them a wheelchair because they didn’t pay, or deal with a customer after they fat-finger a flight that they didn’t intend to take? Air rage is already a real thing. The airlines had better make sure that they don’t perpetuate it.

 


* No regulation has demonstrated the law of unintended consequences better than the tarmac delay rule, which forces airlines to return to the gate after spending three hours on the tarmac while waiting to take off. In theory, it makes perfect sense to allow passengers to get off the plane but, in practice, it has significantly increased the number of cancelled flights and protected very few people. There’s a reason that there’s a newspaper article every time a flight gets stuck on the tarmac for six hours: It happens so rarely that it’s considered newsworthy. By the three hour point, the airline almost always knows whether the flight is going to go, and if it isn’t, it has probably already returned to the gate.

 

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Feb 07

Three Airline Policies That Need To Change

Airlines are complex beasts and, because of that, have regulations books roughly the size of a small elephant. As passengers, we accept those complications and learn to live with them.

But what about policies, rules and regulations that make no sense, or are never enforced? Most people can deal with unusual approaches, as long as they make sense or are enforced consistently. But when airlines communicate poorly or contradict themselves, it leads to passenger frustration. Here are a few policies that not only pop up frequently but also need to be changed or clarified.

Saving Seats on Southwest

southwest

Everyone needs to learn to play nicely in the sandbox.

Nothing creates more havoc than boarding an airplane. Southwest, which divides people into small numbered groups, is generally recognized as one of the more efficient airlines, but there is one big gap in the process: saving seats on airplanes.

Southwest has an “open seating” policy, which means that you can take any available seat. You’ll receive your number based on when you check in, although you can also pay to get into the  first boarding group or receive it because of your airline status. Thus, there shouldn’t be any saving of seats. If you want to sit with others, you should pay to be in a premium boarding group, earn elite status or check in exactly 24 hours in advance.

The problem is that nobody enforces an open seating policy. Employees are advised to stay out of disputes which, to me, indicates that the airline isn’t serious about it. The seat savers are likely to end up winning the dispute, because forcing a seat open would likely involve a physical confrontation. Sadly, that means that people who paid to get on the plane early may not actually get the “premium” seats (front of the plane, exit row, etc.) that they wanted.

My Solution: Sorry, seat-savers. I think it should be banned. If you want to sit together, you should pay for it.

Delta “You Board You Lose” Upgrades

Delta has become one of the best airlines when it comes to getting you to your destination on-time. Part of that (and only part, as we shall discuss later) comes from getting people on the plane as quickly as possible. But if you’re on the wait list for an upgrade, should you board? If you do so, do you risk giving up your spot on the list?

That’s the question behind Delta’s “you board you lose (YBLB)” policy. Technically, if there is an open seat in F after everyone has boarded, a flight attendant could pull up the highest status elite member to do the walk of glory from coach to first. But Delta feels that moving people around once the plane has boarded would simply slow its departure meaning that, if you are on the wait list for an upgrade, you should hold back from boarding the plane.*

Does that policy actually get the plane off the ground faster? Probably not, since you still have to board those people who are waiting behind to see if they got upgraded. In addition, those folks likely have elite status, making them among your more valuable passengers. If they wait until the end of the boarding process, there probably won’t be overhead space.

If you are on the wait list, though, make sure to ask the gate agent if first has boarded in full. They may tell you that first class has checked in in full, but that only means that everyone scheduled to be up front has gotten their boarding pass. If they were connecting from another city and their flight were delayed, though, they may never actually board, opening up a seat for an upgrade.

My Solution: Gate agents and flight attendants should be empowered to move passengers up, and passengers should receive an email when their upgrade has cleared. If they flew the flight in coach, they should be able to call Delta and find out why the system upgraded them but they didn’t move on the plane. Delta must take those inquiries seriously. It’s not a perfect system, and will still likely result in “shenanigans,” as Flyertalk likes to refer to it. But it beats forcing an elite passenger to wait to board and not having overhead space as a result.

American Must Go from A-14 to D-14

This is an issue that I’ve brought up before, but here’s the tl/dr version: American likes to brag about how frequently its planes depart from the gate within 15 minutes of the scheduled time, or D-14 (D=departure, 14=14 minutes or fewer past that departure time). Sadly, departing on-time doesn’t equal arriving on time. We’ve all had occasions when the plane pushed away from the gate on time and then sat on the runway for an hour. Is that really “on time,” as American likes to brag on its conference call? Of course not. If you get to your destination late and miss a connection, you don’t really care that your plane left the gate early. In fact, such a policy encourages gate agents to close the doors early, or at least give up any wiggle room for passengers trying to board. Nothing like having a door slammed in your face, only to watch the plane sit on the runway.

 


*I do believe that most gate agents are reasonably good about upgrading those who should be upgraded, rather than encouraging passengers to board so that they can upgrade employees who are flying.

 

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Feb 06

You Can Get Miles For Valentine’s Day (But Do You Want Them?)

Well, it’s that time of year, when you look at your calendar and realize that Valentine’s Day is only a week away. And since flowers always do the trick, you head to your favorite shopping site and see that they are shoveling out miles to buy online. But is this one of those occasions when you don’t want to order for the points?

Shopping Wisely And Skipping Miles

delta, flowers

Sure, you can get a ton of points for doing your shopping online. Delta, for instance, is offering 30 miles per dollar spent at FTD. And I always encourage shopping through a portal to pick up extra points.

In this case, though, I would hold back on doing so. Flowers aren’t a commodity. If you order a book, for example, you’ll get the same book no matter where you order from. But the vast majority of the large floral wire companies (1800flowers, FTD, etc.) simply farm your order out to a local florist and, because they take such a high percentage of the sale price, the florists barely make any money on these sales. So if a local florist has good roses and bad roses to distribute, guess who is going to get the bad ones? In this case, you’re better off skipping the bonus miles and going straight to the store.

And the last thought: If you’re going to order from a wire service anyway, you might as well get the maximum rebate available. Check out this post on triple dipping.

 

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