The House doesn't like to be gamed. It's no different than a casino in Vegas - if you figure out how to beat The House, they change the rules (or the direction your knees bend).
If it feels like you're getting a deal, that hole will eventually be closed.
There's a difference between making a profit and maximizing it at the expense of everything else (e.g. employee wages, public social safety nets). Wal-Mart employees utilizing $6.2 billion dollars of public assistance is an example of this.
This isn't as an egregious example as Wal-Mart but it's indicative of the same underlying force.
What?? Even if one accepts the tendentious leftist screed for the purposes of argument (which I will do here), this isn't even remotely like Wal-Mart. The traditional Wal-Mart complaints are that they don't pay employees enough or that they compete with other businesses too effectively. (Occasionally, the complaint is that they are willing to pay suppliers too little.)
This airline complaint is that customers who have been explicitly trying to game the system by doing things like purchase $500 airline tickets can't get the free trips or upgrades they want as readily as they could before. It cheapens your anti-Walmart rhetoric to put this in the same class of "oppression". Why would you do such a thing?
There's a difference between making a profit and maximizing it at the expense of everything else
They're aligning rewards for their loyalty program with the behaviors of customers not trying to game the system. And you criticize this?
Wal-Mart employees utilizing $6.2 billion dollars of public assistance is an example of this.
And exactly upon whom do you place the blame for unemployed people who use public assistance? How much credit does Wal-Mart get for the delta increase of public assistance that would be spent if they didn't employee people?
I've always been intrigued by the idea of various marketplaces of financial activity, likened to houses of gambling.
Someone well versed in stock exchanges, commodity exchanges, currency exchanges, insurance exchanges, rare metal / mineral exchanges etc. can chime in:
What is a good "house" (a marketplace for goods and/or financial instruments) that does not change the rules - or changes them very rarely - and has generally stood the test of time?
Can currency markets be gamed - by governments or other control bodies - so that a repeat of the Black Wednesday[1] is all but minimized?
I am really interested in how financial markets deal with these kinds of quandaries, where a Soros[2] like figure could potentially manipulate an event to his favor.
If they put in place too many fail-safe mechanisms, 'players' may be turned away and may want to 'gamble' at another house.
Too few, then the 'house' gets taken to the cleaners.
Air miles (along with many loyalty type programs that primarily benefit corporate travelers) exists as a form of kickback, encouraging employees to spend their employer's money prolifically, and to short circuit normal best-value evaluations, in order to earn personal miles. Some employers prohibit this, or demand that the miles go towards the company or whatever, but many more do not encouraging people to take countless unjustified or unnecessary flights and hotel stays purely to rack up personal benefits that they can use to their own benefit.
Most companies would require the use of a corporate travel planner to combat this. My most recent employers happened to both use Concur, and the UI there typically requires a written note any time you're booking something that's not the cheapest fare.
At least there's the option of booking something "more expensive". Some places require that employees book the cheapest fare no matter what. Then you get situations like an employee making 150K/yr sacrificing an entire work day traveling in order to save the $50 more it costs to fly direct or out of a closer airport. The hidden costs aren't taken into account at all, but I guess it might be easier to enforce a blanket policy.
In my experience it's rare to see a ruleset as hard as "absolute cheapest, no exceptions" - generally what I see is "must be within percentage of absolute lowest price".
Even within these restrictions loyalty programs still make sense - these are people who purchase a large amount of travel per year, if you can guarantee yourself as an exclusive supplier you still come out ahead - even with price ceilings.
This reminds me of my buddies beating a casino. It goes like this:
Play roulette, start with a low bet ($5) on black or white (50/50). If you win, you've profited the amount of the original bet. If you lose, double your bet and play again. Repeat until you win and you will have profited the amount of the original bet. Repeat.
This works so long as you have enough cash to keep doubling the bet. Hitting the maximum allowed bet on the table is not a problem, you just split it in half and keep going.
My buddies at one point had ~$60k on the table, and didn't have enough to go to ~$120k if they lost...
They did this for about two weeks straight, profiting something like $10k. One morning when they tried to enter the casino, the guards at the door said they were not welcome, and if they didn't leave immediately the police would be called. They assume they had been spotted on camera, or the table operator reported them.
For anyone interested, this strategy is called the [1]Martingale betting system. It works great if a gambler has infinite money, but no gamblers do. It can deplete your bankroll very quickly, due to the exponential nature of the betting system. Your expected profit from this game style is still slightly below zero, due to the relatively unlikely event of running out of bankroll before winning and losing a catastrophic amount of money.
The Martingale simply does not work. An infinitely wealthy gambler employing this strategy over an infinite time horizon on a fair game has a neutral expectation. For every gambler who comes out ahead, another one comes out behind. Additionally, real life gamblers aren't infinitely wealthy and casino games are negative expectation.
If it "works" for you, you're just the survivor bias.
That's only true in games where the only winnings are the bets of the players. Roulette, and blackjack, is different because your winnings on success are set and paid by the house.
He's not saying that there is literally one winner per loser, but that statistically the group of winners and group of losers will be about the same size, for a fair game.
If you profited $10K for two weeks of work, you'd be getting all kinds of free stuff to get you to stick around longer and/or come back. (You'd also probably be laughed at behind your back since that's a pretty lousy take for a hell of a lot of work and a lot of risk)
Winning $10K from a casino is background noise. It's nothing that will get you kicked out.
That's not cheating..... it's a perfectly fine, perfectely efficient way for the casino to make money.
If you are splitting your bets among players to get around table limits, they might frown on that - but that's not because you are "winning" it's because you are circumventing their table limits.
Interesting they say that casino betting limits eliminate the strategy. I don't think that's true.
Let's say you have $100k on the table, which is the maximum allowed, and you lose. All you need to is play multiple tables with the doubled bet ($200k) split up across those tables. Once you've played all of those to conclusion (maybe even splitting again...) you will have effectively "won" the line of play that they tried to stop you when you hit the $100k limit.
Betting $100,000 on two tables has a lower probability of returning $400,000 than betting $200,000 on one table. Also a lower probability of returning zero, but winning one of those bets and losing the other doesn't help. Needing to win two independent (consecutive or simultaneous) negative-EV bets to beat a losing streak of a certain length increases the probability that combination of events won't happen, and if you lose both bets at the table limit (which is slightly more probable than winning both) you'll need to spread your bets across even more tables and hope even more independent events fall in your favour.
It is pretty basic maths that will demonstrate that this system doesn't work (as in it doesn't "beat" the casino).
You say you won $10k, but how much money did you have? You said at one point you had $60k on the table so let's assume you had just that - if you put the entire 60k on something which has 7:6 odds then the odds of you winning are high but exactly what you would expect given the winnings compared with the bet.
When you play with the martingale strategy your odds of winning aren't any better, you just think they are because you don't realise your entire pot of money is actually at stake.
I may be wrong, but I don't know if that works at a lot of casinos because of the zeros and double zeros on the wheel. I think that gives the house an edge.
That's called Martingaling, and it isn't beating a casino because eventually you'll hit a losing streak and either run out of money or hit table limits.
I don't see how this betting scheme can be of advantage if each game round is independent of the previous. Plus many casinos put a maximum bet limit anyway if you could somehow make it work.
Except for limits (be it imposed by the casino or your bank account), it's a no-loss situation, even with slightly less than half winning chance (eg due to 0).
Every time you lose, you make up by increasing the potential earning: $1 lost, $2 lost ($-3 total), $4 lost ($-7 total), $8 won ($1 total)
The only problem is that these theoretical limits are really limiting in practice ;-)
In case of the GPs buddies, if they started at $15, playing at ~$60k means that they lost 12 times in a row, and if they finally won that round, they still only gained $15.
Avid mileage runner here. It does seem like the end of an era, though there are still some smaller loopholes available to be exploited for cheap status.
For example, for Star Alliance flyers, until recently (yesterday in fact) you could achieve Star Alliance Gold status (priority check in and boarding, free checked bags, first to be upgraded, last to be bumped, lounge access, etc) for cheap by registering for Aegean Airlines' loyalty program as they only required 20k miles to achieve Gold status whereas most other Star Alliance partners require 50k. You could also keep this status for 3 years as long as you logged some miles each year (other airlines require you make the 50k level every year.)
Yesterday Aegean too announced revisions to their loyalty program which pretty much put an end to this. But there are still other loopholes in other airlines' programs being rooted out by the dedicated.
The trick I've used to get Star Alliance Gold really fast is to hop up using status match challenges.
Find any non-Star-Alliance airline where you can get silver status easily; and email premiermatch@united.com. They'll probably give you gold status immediately, and you have 3 months to fly 12,500 miles to secure it through the following year.
FoundersCard right now has the benefit of instant silver status on Cathay Pacific (OneWorld), no need for any flying. (Email me if you're interesting in a referral link.)
Using this method, the only cost to getting gold status is (1) FoundersCard membership dues (easily pays for itself with other discounts), and (2) a round-trip to Europe or Asia, plus maybe a domestic flight to round up the miles earned.
They are missing a huge point when it comes to Mileage runs. The majority of people doing mileage runs are not trying to earn miles to spend, they are doing it in order to make the next level of status.
For United the benefits of 1k might be much greater than Platinum (the next level down), so if you are only 5 to 10k miles away you would do a mileage run.
The article also fails to mention that United has not changed the way you earn status. It is still miles traveled and mileage runs (assuming you have spent enough during the year) are still viable
Mileage runs for status on United have gotten more complicated, though, because you have to work towards both your mileage total and your spending total, and while partner trips count towards both, only trips on United planes or United tickets count towards the latter. This means you either have a much more restricted set of possible mileage run flights, or the average CPM of your non-mileage-run flights has to be higher.
That -- the quest for the next level of status -- is exactly what the article focuses on, so they didn't really miss it. And it explicitly mentions that the status levels now require a minimum spend in addition to a minimum of miles.
I love the example in the article of how under one special promotion, you could fly a round trip to Singapore which would be "enough for a business class round trip to Europe". If you happen to fancy going to Singapore this might seem like a very good deal, but the idea of taking a long haul flight purely for the purposes of ensuring a better seat on your next long haul flight is mind-boggling
It's ~1 year of priority boarding and automatic first class upgrades (you have to re-qualify yearly), and it's several weekends at the very least - there is no way you can hit 50K miles in a single weekend.
You're looking at spending 5-10% of all of your weekends in a plane to maintain this status.
If you're already travelling a lot for work, an occasional mileage run to push you up in to the next tier can make a lot of sense.
Being up in the next tier can earn you multipliers of the miles you actually fly and other perks, so it can be a fairly rational decision.
The only time I did an explicit mileage run (as opposed to taking a longer route to get to where I had to go anyway) I did a short hop from London to Madrid in First Class on a really cheap ticket, spent the day walking around being a tourist, and then probably paid for the ticket in the amount of booze I guzzled at the rather excellent Iberia lounge on the way back.
That was to keep good status with American. Having good status with American can making flying - gasp! - pleasurable.
It's a reasonable question, and it's one of the things about airline status that I actually value a lot, so here's an attempt to answer it.
First, if you have carry-on luggage and the flight is full, this guarantees you access to overhead space. That can be a big deal. Having to gate-check your bag can be irritating if you've got things in there that you need, and the longer the flight, the more important this is.
Second, at least on Delta, the people who board priority have a separate line. That line continues to exist even after general boarding starts. The upshot is that, even if you board with everyone else, you can cut the line and not have to stand around waiting. If you prefer sitting down to standing in a line, then this is valuable and good.
Third, and related to #2, boarding early means you're likely boarding with other frequent travelers. Those people are better to board with because they are quicker and more efficient, on average, about things like clearing out of the aisle, getting settled, etc. This means less waiting around and being jostled in the aisle.
All of this adds up to a much more pleasant experience.
isamuel explains it well - there are other benefits though. Priority boarding is usually handed out along with priority luggage, priority check-in, and sometimes priority security.
All of those are hugely valuable, especially stuff that saves you time at the airport. A huge problem with air travel is that airports are located usually far away from anything of consequence, and the requirement to arrive absurdly early (to navigate luggage, check-in, security, etc) adds huge chunks of time to a flight.
I have priority with United, but I still try to board late - I hate being stuck in a shitty tin can - but the rest of the benefits are enormously pleasant.
The whole point is to either improve the long term travel experience by getting status (earlier boarding, free first class upgrades, extra miles, etc) or get low priced miles you can redeem for expensive high end flights. It's an untaxed investment (rewards aren't taxed in the US).
That's kind of a bummer. I have read about some of these tricks before. It's not something I would personally do since sitting on a plane for an entire weekend just to get points sounds like a special kind of torture. Yet it was nice knowing that there were people out there willing to do it just to game the system.
I would love to see a study of whether it is more cost effective to be loyal to an airline and collect miles or to just always buy the cheapest flight.
I imagine that the occasional free flight on non-blackout dates doesn't make up the cost difference of always choosing the cheapest flight but I have no data to back it up.
Collecting miles isn't necessarily focused on earning free flights. The tiered statuses offered by most airlines include a variety of other perks that can make them attractive, and that couldn't readily be achieved via lowest-bidder flying: dedicated lines at airport security, advance boarding, free upgrades, free bags, waived fees, greater flexibility to change a ticket, dedicated customer support numbers, etc.
While some of these can be purchased as one-offs, the cost of doing so would probably offset the "cheapest flight" approach, and the convenience of receiving them automatically has some value on its own.
The cost/benefit might still not be there, but it's not as straightforward as the ticket savings vs. free flight savings question you put forward. You have to also bear in mind that many miles hunters are logging some (or most) of their travel on an employer's dime.
Those "benefits" basically amount to an easing up of the legacy airlines' prison-camp style. Why would one want to reward that instead of simply choosing the airlines that treat you more like a person to begin with?
Yes, I'd love to see evidence one way or the other.
I've had endless hassles converting miles to flights. It always seems that there are no seats available for mileage redemption for the routes and times I want to fly.
So I've concluded miles are worth a lot less than cash. I now buy the cheapest ticket regardless of carrier and use a cash back credit card. No more miles, no more loyalty.
If your time has value, and if you're spending your own money (not your employer's), is it worth the effort to juggle all the programs, deals, miles and terms?
When I was flying weekly as a consultant, I was loyal to United. I was only in the job for six months but in that time I racked up about 150k United miles. I redeemed them for a first-class ticket on Lufthansa from Denver to Berlin and Zurich.
I also churn credit cards for the miles and hotel points. Next month I'm flying to Tokyo, Taipei and Hong Kong on Cathay Pacific and Japan Airlines in first class and Eva Air in business, staying at the Park Hyatt Tokyo and Conrad Hong Kong.
Then in January I'm flying to Vietnam, again in first class on Cathay and JAL, with free stops in Hong Kong, Beijing and Tokyo.
If you just want to maximize travel for your dollar, it may not be cost-effective to chase miles. But a lot of people collect miles so they can enjoy perks (like hotel suites or first/business class travel) that would otherwise be completely out of reach.
It's about comfort, not cost. Mileage runs are generally done for status. Air travel is miserable, and the extra perks that come with status are almost priceless.
Also, there's another huge benefit to sticking with a single airline - you learn that airline. When I used to fly 2 weekends/month, it was very disconcerting when I had to use a non-United airline and deal with the subtly to vastly different quirks.
This is a shortsighted mistake that is costing airlines something very important: loyalty. Anyone who frequents FlyerTalk or other airline related sites knows that frequent flyers are switching away from the devalued and decoupled miles airlines because of the changes.
Cracking down on milage runs is one thing. It makes sense for airlines to price flights according to their value (including rewards value). But tying rewards to spending instead of miles is a mistake. Many people like myself will just move to airlines who still reward their travelers well.
Two things: firstly, the analysis I've seen suggests that some kinds of business travels lose and some gain, depending on the travel patterns -- in particular, frequent short-duration flyers (e.g., people who commute from DC to NYC twice a week) gain, while infrequent long-distance travelers (e.g., people racking up miles going NYC to Shanghai a few times a year) lose. So maybe the airlines think they'll one class of traveler for every one of another class that they lose?
Secondly, the overarching assumption is that American (and its alliance) will follow the other major players and switch once the merger is done, at which point there won't really be anywhere to go, at least for people mostly traveling domestically in the US. They control the market.
It does seem loyalty to an airline would decline if not rewarded. Recent changes reduce the reward and likely undermine loyalty. But how much do carriers care at this point?
Two factors likely contribute to policy decisions of the airlines. Mergers produce less competition, and secondly, it's quite noticeable over the last couple of years that every flight is packed full.
Consequently, a shortage of seats assures carrier income which makes loyalty much less relevant, in particular loyalty that's tightly linked to miles traveled.
OTOH loyalty programs connected to credit cards are probably more profitable to airlines, and in today's world more effective in maintaining loyalty too.
Hardly sounds like a "crack down", more like closing a loophole. And, frankly, it seems like a loophole that needs closing - the airlines were essentially paying people to take longer flights.
I find long-haul cheap flights so miserable that, honestly, anyone who's prepared to do this for the miles I think deserves them. I can't say I'm a big believer in money for its own sake, but if there's one thing I'd want it for it's business class. My god.
> The last point is essential. Leff told me about a mileage run he took in 2003. United ran a promotion where its elite fliers could get five-times bonus miles, instead of the double miles they were ordinarily entitled to. So he flew round-trip to Singapore for $700 and pocketed around 100,000 MileagePlus miles, then enough to redeem for a round-trip business class ticket to Europe.
Last time I looked, domestic one-way business class reward seats were going for 25,000 points on MileagePlus, and that's their "Saver" reward, which isn't available as much as their "Standard" reward, which is 50k each way for business class.
So it sounds like United is trimming your ability to accrue miles, but also requiring more miles to earn a seat.
This is great. I fly because I need to get somewhere, not because I'm trying to game the system to board ahead of the other travelers with my elite status or "earn" bonus mile tickets which just adds extra ticket costs for all of the rest of us.
I don't get it. What does an elite status really buy you? If I had to fly somewhere and had an extra $500+ for an extra "miles run" I sure as hell would find a more entertaining way to spend it than to take an entire weekend to fly around. How many of these runs would you have to do to justify it, and is it worth it?
Edit: I should ask it this way: how much do you have to pay directly to get all the perks Elite status gives you? Can you buy Elite status for $500? $1,500? This is as opposed to how much do you have to spend on extra tickets you don't need to get the upgrades? Basically, I assume that it's cheaper to buy extra tickets and fly around, than to buy the status directly (otherwise people wouldn't do it). The question is how much cheaper is it?
It depends on the airline. A few years ago, when I used to fly and average of at least one round trip per week, including many from the US to Europe it would get me:
- Free domestic upgrades to business class
- Access to showers in the airport, behind security
- Hot food and free drinks in the lounge
- Priority access for boarding and no baggage charges
- Early access to seats for reward usage (including transatlantic business class upgrade)
- Access to excellent ground agents to help adjust itineraries, including frequent waiver of change fees
- A nice quiet place behind security to wait during layovers
That was basically SA gold. If you are higher tier (e.g. LH HON Circle), then add things like free full service restaurant and private passport control to the list.
I'm elite on SouthWest and Delta. I know SouthWest gives me a free ticket for my wife every time I book a flight. So I effectively have double the ticket value now. They also have shorter lines and earlier boarding (which on SouthWest means you can choose your seat, the seat or two with a blank space in front of it being the best choice) so I don't have to go to the airport as early.
Delta, similarly, gives shorter lines, free upgrades to first class based on availability (you can always get them if you do something odd like take the first flight out of Newark before the buses are running), and free standby and same day confirmed flight changes (just book the last flight of the day, go to the airport whenever you want, and use your free change). Free standby is really handy for illegal transfers too. E.g. Fly to LA then hop a plane leaving immediately - officially you can't do it because there has to be a certain time window for you to transfer, but with free standby they'll put you on the plane as long as you are at the gate and there's a seat.
So a lot of times you get things that would cost a lot more (companion ticket, first class, etc.) and other times you just get some of your time back (shorter lines, illegal transfers).
I agree... Elite status doesn't really get you much these days, except for lounge access and the ability to cut lines. But you can just spend the $500/yr on an AMEX card and get the lounge access.
It really depends on the offer and the perks. Like the example in the article the guy got a $700 ticket to Singapore and then got enough miles from it for a business class ticket to Europe. So he easily saved money, maybe even in the low thousands.
I think the value is there, but you have to be willing to take a plane to nowhere and burn entire weekends just to get it. I certainly don't think that's worth it, but there are a lot of people that do.
I usually have to take a flight at the end of the year to lock in Diamond on Delta. What does that buy me? Upgrades to first class on just about any domestic flight I take. The exception is DTW-SFO where first class is full of the ultra-Diamonds who commute to work from Detroit to Bay Area. (not really a higher class, they just book way in advance to get best fares)
I wouldn't spend a weekend for that payoff either. Having said that, I just did a round trip from LAX to Istanbul with the outward trip in business/first and the return in economy, and I would absolutely jump through some hoops to get the more comfortable option if I was flying long-haul more often. Bed-seats and free scotch are no joke on an 18-hour trip.
Many jobs, particularly public sector, involve a lot of travel but will only pay for economy class tickets. Status gets me pretty regular upgrades to business class, which makes my long-haul flights much nicer, particularly if I need to work. Or drink cocktails.
Modern "mileage runs" require the travel to actually be completed.
In the late 1990s/early 2000s, people used to go on "baht runs", buying a cheap Thai Airways airpass that allowed many segments of intra-Thailand travel for a very low price, and earning many "qualifying segments" on TG's partner carriers, allowing people to make top-tier United status for under $1000 (by getting 100+ qualifying segments).
There were reports that some people didn't actually fly the trips (e.g. supposedly some people paid locals to board with their boarding passes).
These days, like the "pudding guy" and the "buying Treasury bonds with credit cards" and the "dollar coins", are over.
I remember reading a story where a guy was paying people in some Asian country to take flights for him so he could get miles. I recall it working out for him.
Seems like a very odd way to spend your time and money. I would argue that the same amount of effort spent trying to make more money would likely pay off better in the long term.
If it feels like you're getting a deal, that hole will eventually be closed.