flying blue – Seat 31B

A Contrarian View On Speculative Transfers

May 15, 2022May 15, 2022 TProphet4 Comments

Hi! It has certainly been awhile since I posted last. I’ll be posting more about how my life has evolved since 2019, but suffice it to say that two years of pandemic (which is still grinding on) has led to some major changes. I’m starting to travel again, though, because the world is opening back up again and this is a part of my life that I missed a lot. And more importantly, I’m starting to book more travel (both for myself and for AwardCat clients), which means that I’m working with frequent flier programs a lot more. These have also changed a lot in the past two years, but I have a pretty good idea of which programs I’ll be using and where they are most likely to come in handy.

*Incredible award program sweet spots still exist, such as flights from Spain to Morocco using Avios*

The conventional wisdom you’ll read on other blogs is to never make speculative transfers from banks into airline programs. Instead, blogs encourage leaving your miles in a bank program (such as Amex, Chase, Capital One or Citi) until you want to redeem an award. This advice is usually on point, and it’s what I will generally advise AwardCat clients to follow. After all, you don’t have to worry about your points expiring in a bank program (as long as you keep at least one card active in the program), and as quickly as airlines are devaluing points in frequent flier programs, banks are adding greater value to their own programs. After all, banks want you engaged with them, not the airlines.

Occasionally, however, an offer will come along that–for me–is worth breaking the usual rules. Two such offers are available, and expiring today: Chase is offering a 25% transfer bonus to Flying Blue, and American Express is offering a 40% transfer bonus to Avios. Last night, I cleaned out my entire Chase account to transfer points to Flying Blue, and I transferred about 100k Amex points with the 40% bonus to Avios. I’ll explain why I did it, and how bucking the conventional wisdom might be a good idea if you have specific future redemptions in mind.

Flying Blue + Westjet

One of the recent changes I made in my life was moving to the greater Vancouver area, which now makes YVR my home airport. Vancouver has the second largest airport on the West Coast with nonstop flights all over the world, but if you’re traveling within North America, the two major Canadian airlines (Air Canada and Westjet) are top dog. They have the most nonstop flights from Vancouver to both US and Canadian destinations.

This presents a really amazing sweet spot for me, because Westjet partners with the Flying Blue frequent flier program, and Westjet also has extremely generous award availability at low redemption rates. For example, you can book economy class travel anywhere in North America for 14,500 points, or 17,500 points each way to the Carribbean. Unlike in the Delta program, the price doesn’t go up the closer you get to departure, either. And there are no fuel surcharges or booking fees; you only pay actual taxes.

I had 28,000 Chase Ultimate Rewards points, after spending most of my points on the Dubai Hyatt Jumeirah for a forced 10 day quarantine (that’s another story I’ll write about later). Transferring these to Flying Blue got me 35,000 points, which is enough for a nice holiday in the Caribbean this winter. Does this make sense? Of course it does, even though I don’t know exactly what I want to book right now. What’s more, I have pretty much completely drained my Chase account, so I can close the Chase Sapphire Preferred when the annual fee comes due and overall stop engaging with the Chase program (which has lost competitiveness).

Avios + Iberia, Qatar, Sri Lankan and “Royal” Partners

The Avios program has been a mixed bag since 2019. They have gone through multiple rounds of devaluations (including stealth devaluations), often with no prior notice. For example, redemption rates within Asia were previously a sweet spot, but JAL and Cathay Pacific award tickets became more expensive last year. The prices even went up last year for travel on British Airways. In the meantime, although theoretical sweet spots remain on the award chart for award tickets on American and Alaska Airlines, the practical reality is much different. Both airlines have gotten much harder to book using Avios, because fewer seats are being given away to partners (this impacts not only Avios, but also programs such as Cathay Pacific Asia Miles). Wide-open availability between, say, Seattle and Los Angeles or San Francisco and Hawaii is a thing of the past. Keep this in mind when you read mainstream blog articles breathlessly espousing the large signup bonuses for Avios co-branded cards, and touting the award chart as if that equates in any way to actual availability.

Given such a recent history of bad behavior by both the Avios program and partners in the ecosystem, you might be surprised that I’d move a pretty substantial chunk of American Express points into this program. Why? Where one door closes another opens, and Avios has two new partners in the ecosystem: Royal Air Maroc and Qatar Airways. Additionally, I think Iberia, Royal Jordanian and Sri Lankan are underappreciated partners given the very low redemption rates that are often possible with these airlines.

This isn’t an article about the Avios program as a whole. I’ll write one of those going into the sweet spots in detail, so I’ll just talk about some of my personal favorites as a representative example.

Long Haul Premium Cabin Flights On Qatar

The conventional wisdom for redeeming Avios is that they’re good for short to mid haul flights in economy class, on airlines without fuel surcharges. However, they’re super expensive to use for long haul flights in premium cabins, especially on airlines like British Airways with fuel surcharges.

This is now out the window when flying Qatar Airways and using Avios. Qatar recently adopted Avios as its frequent flier currency, and the award chart is much different for flights on Qatar, likely because Qatar is so focused on long haul flights. Additionally, fuel surcharges have been dramatically reduced. Given the new redemption rates, I was able to redeem 85,000 Qatar Qpoints (which transferred in 1:1 from British Airways Avios) plus $224 in cash for Qsuites on an Almaty-Doha-Los Angeles itinerary (yes, I know this is Seat 31B, but this is also almost as far as you can travel in the world. For me, paying about double the points to do it in business class was totally worth it on this route). With the transfer bonus, it cost only 61,000 Amex points which is almost totally unheard of when using Avios for this length of flight. Assuming you can find availability, it’d cost 75k points with American AAdvantage points, or a minimum of 90k points with Asia Miles.

Flights Within Africa On Royal Air Maroc

The conventional wisdom used to be to base yourself for a few months in Hong Kong and then hop around Asia using cheap Avios redemptions on Cathay Pacific, using absurdly low numbers of points for flights that would otherwise be super expensive. This was already on the way out before the pandemic (Cathay Pacific pulled partner availability inside of 14 days), and if Hong Kong and Japan ever open again, flights with Avios are now a lot more expensive.

However, where one door closes, another opens, and that door is in Africa now. Royal Air Maroc flies a ton of places in Africa, and these flights would normally (like many things in Africa) be insanely expensive. Take Casablanca to Lome, Togo. This flight costs 11,000 Avios, plus $29 in tax. It would cost 30,000 AAdvantage points for the same flight, or a whopping $582 in cash! That’s a solid 5 cents per point (or 7 cents per Amex point if you got your Avios with a transfer bonus) in value for an economy class flight–and this is real value, not theoretical value based on a premium cabin seat you’d never otherwise buy.

Is this the only sweet spot with Royal Air Maroc? Nope! There are plenty of others. Casablanca is a low tax airport and Royal Air Maroc doesn’t have fuel surcharges. You can base yourself in Casablanca and hop all over Europe and Africa with extremely generous award availability and very little cash out of pocket for each flight. Now, this isn’t the fanciest airline with the best inflight service, but who cares when it’s this cheap?

Royal Jordanian and Sri Lankan

Royal Jordanian doesn’t get a ton of attention, apart from their high fuel surcharges and apparent willingness to fly through storms that would result in a cancelled flight at other airlines (that being said, their pilots are mostly former Air Force and the airline hasn’t had a major incident in over 35 years). So what makes them interesting? They fly some highly unusual routes. I’m flying them from Tel Aviv to Amman, which is one of the shortest mainline commercial routes in the world. The flight would normally cost about $300 all-in, but I paid 6,000 Avios plus around $100 in taxes and fuel surcharges. It’s not cheap to use Avios on Royal Jordanian, but you can get very good value for your points, particularly if you’re getting the points with a transfer bonus.

Take Amman to Erbil, for example (Erbil is in the Kurdish-controlled part of Iraq, and is relatively safe to visit compared to other parts of Iraq). On a few dates I checked, Royal Jordanian is selling this short flight for $287. Alternatively, you can pay 6,000 Avios plus $135, which is a solid 2.5 cents per point–or 3.5 cents per Amex point if you got your Avios with a 40% transfer bonus.

Sri Lankan is a similar niche airline that is widely ignored due to laughably high fuel surcharges, but with good value Avios redemption pricing to otherwise expensive destinations. You really have to crunch the numbers though because they can have cash fares that are better value than paying with points. Take, for example, one route I have flown, from Colombo to The Seychelles. I picked a random October date and the flight costs 194,113 Sri Lankan rupees (which at today’s exchange rates is $539.61). If you pay with points, it costs 11,000 Avios plus $255. That works out to almost 2.6 cents per point, or 3.6 cents per Amex point if you got your Avios with a 40% transfer bonus.

Iberia

Iberia gets a lot of attention for the low redemption rates, with relatively low fuel surcharges, on East Coast to Madrid routes in premium cabins. This requires moving your points into Iberia’s own program and finding availability, which is super hard. Other blogs have documented this extensively (usually while hard selling Avios credit cards) and it’s fine to use Iberia Avios this way, but I’d personally sit in economy class for one of these routes. It’s only 7 hours from New York to Madrid. I’m willing to spend more points to sit up front on a 16 hour flight, but for a 7 hour flight, premium cabins seem like a waste of money to me.

However, how about an 13 hour flight for 51,000 Avios (that’s just 37,000 Amex points with the 40% transfer bonus) in business class, or 25,500 Avios (19,000 Amex points with the 40% transfer bonus) in economy class? That’s what it costs to fly Iberia from Madrid to Montevideo, which is a very nice flight to be on in November when it gets cold in Europe. Ordinarily this would be an over $800 economy class flight. Accounting for taxes and fuel surcharges, you’re getting 2.9 cents per point in value, or 4.2 cents per Amex point in value if you got your Avios with a 40% transfer bonus.

When To Speculatively Transfer

Both of these transfer bonuses expire in a few hours, so if you want to hop on either of them, you should do it right now. However, the most important question is whether you plan to use the points before they will expire, and whether you think the sweet spots you’re after will still be there when you want to take advantage of them. I think that the award flights I’m targeting are in obscure enough partnerships, and in dusty enough corners of award charts, that they’re likely to stick around for awhile. I’m also obsessive to a perhaps unhealthy degree about this stuff (to a point where I help other people book their award travel through AwardCat) so I’m very much on top of my points balances and what is happening in award programs. I feel confident with speculative transfers to both of these programs because I use both of them regularly, and plan to redeem my points before they expire (and hopefully before they devalue).

However, I am going into this with a pretty solid idea of how I’ll use the points. I wouldn’t make a speculative transfer to, say, Asia Miles (since I think Cathay Pacific is likely to declare bankruptcy and may even go out of business entirely), or to Avianca LifeMiles (which has very little credibility as a program given that they block most partner inventory, and don’t even offer much on Avianca). Speculative transfers are, as a general rule, not a great idea–but when done strategically, they can yield incredible value.

Near Disaster: Chase Ultimate Rewards And Flying Blue

June 3, 2018 TProphet5 Comments

I needed to take a last-minute business trip to Kiev. Cash fares were hovering over $900 one way for one-stop itineraries, so I started looking for opportunities to use points. When I book my own award travel, I optimize for the most efficient use of points and the stand-out value was 25,000 Ultimate Rewards points for an Air France flight. There was a long layover in Paris, but I really like Paris so the 9 hour layover was fine. It’s enough time to visit the Louvre and enjoy a coffee in a sidewalk cafe.

Unlike most airlines, Air France touts their economy class cabin. We’ll see if it lives up to the hype!

Unfortunately, the Flying Blue program is an absolute disaster right now. Air France/KLM just switched the chart from a fixed value redemption chart to variable redemptions (which, based on my analysis, is one of the biggest airline devaluations in history–most awards are up a minimum 30% and some are up 500%). It was a total fluke that the flight I wanted still cost 25,000 points, yielding 3.2 cents per point in value all-in (net of taxes/fees I had to pay out of pocket). This is very good redemption value on a ticket for which I would have paid real money. However, the devaluation comes on top of another negative change, removing the award calendar, which has driven call center volumes through the roof (because the only way to search for availability over a range of dates is to call now). Because of this, it can now take 2 hours to get through to an Air France representative.

Of course, my worst nightmare happened. Rather than posting immediately, after I transferred my Chase points, the points didn’t show up. I called Chase, who said that they transferred the points and it was Flying Blue’s fault. I called Flying Blue, and they said they hadn’t received the points so it was Chase’s fault. Both suggested I just wait. So I waited, and waited, and waited. I called to put the seats on hold so they wouldn’t disappear while I was waiting. Eventually I gave up and went to bed.

The following morning, the points still weren’t there. 4 hours before the flight, they still weren’t, so I called Flying Blue again. Fortunately, the friendly representative in the Mexico-based call center had a solution: “We are aware of this issue so we will advance you the points and your account will have a negative balance. When the points post from Chase, your balance will go back to zero.” She put me on hold, then came back a few minutes later to collect my credit card number. And just like that, I had a ticket to Kiev! I didn’t really believe that I did until I went to check in, and the computer spat out boarding passes.

So, certainly a stressful beginning to a trip, but a happy ending. I have no status with Flying Blue. I have never booked a ticket in their program. They don’t know I write this blog. They just thought on their feet and solved the problem by taking a risk (I could have been lying about transferring the points). And so instead of stranding me, which is totally what I expected, I’m now on the way to Kiev.

Summary

Chase is now reading a new telephone script when you call: “It can take from 1-7 days for your points to post after they are transferred.” After slowing down transfers to Korean Air and now Flying Blue, it appears Chase is trying to make Ultimate Rewards less valuable by making it impossible to redeem them for last-minute flights. This doesn’t appear to be a technical glitch; based on the policy change being communicated by their telephone agents, it seems to be deliberate. Also, there is nothing in writing on Chase’s Web sites to communicate the change, so people are going into this process with no idea that points transfers are no longer instantaneous.

Generally speaking, I like the Chase Ultimate Rewards program better than American Express Membership Rewards. However, the ability to have immediate use of transferred points is key. Award travel inventory is dynamic (a seat that is available now likely won’t be in a couple of days, particularly to a popular destination) and most of the value in keeping your points with a bank program instead of an airline program comes from the immediate ability to transfer and redeem points. There are fewer reasons to collect bank points instead of airline points if you aren’t able to easily redeem them for awards.

Airline points programs are rapidly losing credibility so it would be bad for consumers if banks to go the same direction and make points harder to redeem.

Understanding Loyalty Fraud In 2018

January 24, 2018January 26, 2018 TProphet5 Comments

Loyalty fraud is a massive problem in the airline industry. It is estimated to cause billions of dollars in losses annually. Most of these losses used to only be “on paper” representing lost revenue; since airlines give away the seats they don’t think they’ll sell, a fraudulent redemption really only cost them a few dollars in overhead and catering. So, in the event that someone’s account was compromised and the points used, the airline would just restore the points and change the password (and optionally try to go after the fraudulent passenger, although this was usually more trouble than it was worth).

I’m sure this guy’s ID was legit. (Photo credit 419eater.com)

These days, it’s a much bigger deal when your miles and points get stolen because they can be redeemed for things other than airline tickets–items such as gift cards and online shopping purchases that cost the airlines real money. Naturally, given the increased risk exposure most airlines have implemented loyalty fraud programs. These look for unusual patterns in accounts and flag suspicious activity. Unfortunately, a lot of legitimate activity can look fraudulent, particularly when the algorithms aren’t updated along with changes in the way that people earn and redeem points.

I have helped people in a number of instances lately in which a frequent flier member’s account was flagged for fraud. Fortunately no tickets were outright cancelled but additional verification and security procedures had to be followed, up to even going to the airport on the day of travel with the credit card used to pay the taxes on an award ticket. However, this is happening less frequently lately and there are some identifiable patterns I will share to help you avoid being caught up by a fraud algorithm.

Now, if you’re here because you got involved with mileage brokers in the buying and selling of points and you just got caught, none of this will help you. That’s something you actually did, and if the airline is talking to you at all, you can assume they have you dead to rights. This post will only help you avoid being flagged if you’re actually innocent.

Fewer False Alarms

One thing that used to be incredibly suspicious in award programs was suddenly earning a large number of points, and then using them immediately for an expensive award redemption. And at one point, this made sense. Back when people earned most of their miles from flying, there was an upper limit to how much flying a person could reasonably do.

These days, this is a completely normal pattern. Many people have started earning points in transferable programs such as those operated by American Express, Chase, and Citi. So, they’ll earn the number of miles needed for a ticket, check for award availability across a number of different airline programs, and then transfer the miles to the program for redemption. And on the part of consumers, this is perfectly rational; airlines have devalued their own loyalty programs so much and so often that it’s better for most people to keep their options open.

The good news is that the horror stories of previous years, in which tickets were cancelled without notice or people were forced to drive to the airport to get award tickets issued, appear to have gone by the wayside in most of the programs that work with bank loyalty programs–provided that your redemption meets the new definition of “normal.” The biggest offender was Flying Blue but this wasn’t the only program that created difficulties.

Understanding Fraud Algorithms

If you book a normal award redemption these days, it’s unlikely to cause you any issues regardless of the loyalty program you’re using (with the possible exception of programs that are new to working with bank loyalty programs; these include Turkish Miles and Smiles and Avianca LifeMiles).

What’s a normal award redemption? It’s one that doesn’t trip the algorithm. To understand this, you just need to think like a computer. Algorithms like these are designed to either add or subtract points on a transaction depending on criteria that raise suspicion. So, for example, suppose that you start with 100 points, and the threshold is 50 points or below. An algorithm might work like this:

Subtract points (less suspicious):

You earned the points through flying or partners, or you transferred them in from your own credit card.
You are traveling on the itinerary (you won’t get flagged because you bought a ticket for your significant other, as long as you’re both traveling together).
The person traveling is someone for whom you have previously purchased a revenue ticket.
The person traveling is an immediate relative.
The person traveling has an established frequent flier account with the airline and a significant points balance.
You’re paying for the taxes with your own personal credit card.
You are traveling 3 or more days in the future.
The person traveling is going to a low fraud risk destination (such as Canada).

Add points (more suspicious):

The points you are redeeming were recently purchased with a credit card.
You aren’t traveling on the itinerary.
The person traveling is someone with whom you have no obvious relationship.
You’re paying for the taxes with someone else’s credit card. Bonus points if it’s a foreign credit card and you have never used one of those before, and even more bonus points if it isn’t a card associated with the person traveling.
The ticket is for an immediate departure. Right now, today.
The passenger is traveling to a high fraud risk destination (such as Nigeria).

How many points are assigned for what specific criteria? And are these the only criteria used? Well, that’s proprietary, and (for very good reasons) loyalty programs aren’t going to tell you. Some programs are more relaxed and others (such as Flying Blue) are less so. Nevertheless, when you look at the criteria that adds points, it’s pretty obvious why it is there.

Manual Review

Keep in mind that one or two things that add points probably won’t trip you up as long as there are enough things that subtract points. After all, this stuff can totally reflect normal life. Your best friend just rage quit her job and you’re buying her a ticket to Costa Rica right now. With the points you coincidentally bought yesterday because there was an incredible mileage sale. You’ll join her this weekend but plan to fly another airline. And you’re using up the crappy gift card you got this Christmas to pay the taxes before the thing starts charging you fees. I mean, nothing about that scenario is suspicious once someone has a conversation with you, but it totally looks suspicious otherwise.

Loyalty programs that over-rely on dumb algorithms will just automatically cancel a ticket, or it won’t go through in the first place. That’s why many loyalty programs implement manual review for suspicious transactions. Most commonly, a transaction that is too suspicious can’t be completed online and the member will be instructed to call the loyalty program. At this point, extensive validation is done when the ticket is being purchased.

There can also be a “soft review.” When this happens, the loyalty program will call the member at the telephone number on file to inquire about the transaction. Of course, if the member doesn’t recognize the transaction, they’ll immediately unwind it. And sometimes, additional validation is required. Most commonly, the airline will require that the credit card used to pay the taxes be presented at the airport (this is becoming a requirement even for transactions that aren’t suspicious, and some programs go even farther by requiring that the loyalty program member’s credit card always be used). The airline may also interview the traveler to determine the legitimacy of their relationship to the loyalty program member.

Wrap-Up

Every verification that I have needed to do in order to satisfy a loyalty fraud investigation was necessary because the activity objectively looked shady:

An intra-Africa flight from Nigeria booked on short notice using an organization’s credit card, using the loyalty account of a member who had never been to Africa (this pattern matches either fraud or a church mission–it was the latter).
A last-minute one-way ticket to Nicaragua for a foreign national who wasn’t related, taxes paid with cash equivalent (his new girlfriend had to attend a funeral, and the taxes were paid with a gift card).
A business class trip to Asia for an apparently unrelated person on a top-tier carrier leaving the following day with points that were just purchased (his cousin’s employer reimbursed the economy class fare, and the member purchased miles to buy her a business class flight for the same amount of money).

In every case, the passenger was able to travel. It did take a little bit of extra work to explain to the airline what was going on, and in the case of the ticket from Nigeria, the airline wanted to see the physical credit card (emailing in a photo of both sides was fine). However, in every case the airline was satisfied with the explanation. No loyalty accounts were frozen, and no tickets were cancelled. The system worked.

Don’t avoid loyalty programs because of potential security problems. If you’re doing something that looks suspicious to, say, Flying Blue, it’s virtually guaranteed to also look suspicious to Mileage Plus. Airlines may react differently and have different tolerance thresholds for suspicious activity, but they’re getting a lot better at this stuff and false alarms are a lot less common these days.