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Travel companies are desperate for money at the moment. With very few people travelling – or even booking future travel – airlines are not receiving much revenue. And despite a willingness to treat their employees like inconvenient mud (or worse) on their shoes, many travel companies are still spending far more money than they are receiving. For now, many firms have cash balances they can access, but some companies can last longer than others…

One possible way of generating revenue is to sell miles and points to loyalty programme members. This strategy should be familiar to many of you, as InsideFlyer UK tends to highlight the more interesting or popular deals, such as this recent offer from British Airways Executive Club. And, as the lockdowns and travel restrictions continue, I suspect that we will continue to see further “unprecedented” deals.

But even when the price seems cheaper than ever, should you be tempted?

Why Buy Miles or Points?

In general, you do it to save money. Hoarding points isn’t a good idea, but buying points for an immediate redemption can offer fantastic value. All you need to do is figure out how much it would cost you to buy the miles or points and redeem them for a reward. (along with any co-payments such as taxes and surcharges)

But it’s not so simple as comparing to the retail price of the flight or hotel stay.  Let’s look at a made-up example:

• A First Class return ticket might cost £10,000.
• Alternatively, you could spend 200,000 miles + £500 for an award ticket in First Class

Assuming that you could buy 200,000 miles at 1p each, you could spend £2,000 for the miles, add the £500 in taxes, and fly in First Class for £2,500. Some people frame this opportunity as:

I can get something “worth” £10,000 for only £2,500 –> BARGAIN!

Those people are completely wrong and are deluding themselves. A flight is only “worth” what you are willing to pay for it – otherwise you would just stay at home. The correct perspective is:

Am I willing to pay £2,500 for a First Class return ticket?

If the answer is yes, then you can go ahead and buy those miles. If the answer is no, then you look for alternative ways of obtaining 200,000 miles.

The Impact of Zero Travel

I mentioned above that hoarding points is a mistake. Devaluations are a constant threat. But I’m not planning to debate whether travel companies are dumb enough to devalue their loyalty programmes during a pandemic – some might be! – but I simply want to make the following statement:

Since you’re not booking travel right now –> don’t buy points right now!

Because you’re not buying miles or points for a specific redemption, then you should be ignoring the urge to buy them. Moreover, the longer travel is impacted by low demand and entry restrictions, the more likely the price of miles and points might improve. Have you ever negotiated for something where the salesman’s first price was truly the lowest? Marriott has recently launched its best ever promotion – wouldn’t you rather wait and see if they can do even better in late 2020? I normally find “Black Friday” in November to be over-hyped, but this year might genuinely be worthwhile.

We are Going to See Some Really Low Airfares

Airlines have substantial assets lying dormant. Those planes have cost billions to purchase, but are nearly worthless if they are just abandoned in an airfield somewhere. As soon as an airline thinks it can cover its variable costs from flying planes – fuel, staff costs, etc. – it will do so. Moreover, many airlines have a very valuable portfolio of airport take-off and landing slots, most notably at London’s Heathrow airport. Airport slots are “use them or lose them”, so airlines are most definitely going to use them.

What does this mean? Well, British Airways in particular is eventually going to run a full slate of flights from Heathrow. BA might use smaller aircraft on average, but those flights are coming back, no later than the end of October 2020. I absolutely guarantee it!

In order to fill those flights, BA will be offering low fares!  Simple supply and demand. There will be a substantial number of seats available, but much reduced demand for those seats. If business travel doesn’t bounce back – now that Zoom is a household name and actually rather practical, not to mention that nobody in their right mind is going to attend a major conference / trade fair until vaccination is widespread – I have little doubt that we will see some amazing fare sales for Club World and even First Class. Thanks to BA’s surcharges on award tickets, it’s already a marginal proposition to spend Avios on British Airways long haul flights. Once you start comparing to great fare sales, you’ll regret ever having bought Avios…

We’re Going to See Some Lucrative Bonuses

Along with reduced air fares, airlines can also attract business by offering bonus miles on paid fares. Even during the good times, British Airways often offered a double Avios promotion. I recall with great fondness a quadruple miles promotion from Turkish Airlines.

These bonus promotions usually require that you book a paid fare.  I’m sure that you would rather pay £1,000 for a ticket and receive 25,000 miles for flying, rather than spend £1,000 on miles and taxes and receive nothing because you are flying on an award ticket…

With hotels, I can hardly wait…  People still speak fondly of Hyatt’s “Faster Free Nights” promotion during the 2008 financial crisis. Stay two times at any Hyatt hotel – no matter how cheap – and you would have received one free night at any Hyatt hotel… no matter how expensive!  A travel hacker’s dream!  Will we see something similar?  I certainly hope so…  But again, I wouldn’t want to have a big points balance to spend, when paid stays might be so lucrative.

Cash is Simply Better…

I am sure that this health crisis has caused many of you to reflect about your life, your relationships, your habits, etc.

I certainly have taken some time to analyse my portfolio of miles and points. My major balances all have a purpose:

• Avios for flights on Iberia to North or South America
• Alaska miles for First Class flights to Asia
• American miles for Etihad
• United miles for travel hacking fun
• Hotel points with my preferred hotel chains
• etc.

These could easily be worth more than £10,000+. I certainly didn’t spend that kind of money buying miles or points, but I definitely would prefer having £10,000 in the bank instead of tied up in miles and points. At the moment, I simply don’t care about flying to Abu Dhabi or Hong Kong in First Class and am more concerned with seeing my family again in person, safe and well…

I can’t sell my stash, but I certainly won’t be buying points any time soon.

What do you think? Are you still planning for future travel and buying miles/points when the best opportunities arise? Or are you simply waiting for this crisis to pass?