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As I mentioned in Friday’s post, United is changing to dynamic award pricing. Delta already went there a few years ago, and American is rumored to be following this trend soon. As miles and points travel hackers, how can we deal with dynamic award pricing on airlines?
What’s So Bad about Dynamic Award Pricing?
When airlines throw out the standard award chart, it’s very difficult to plan and predict how many miles it will cost to book flights. Domestic one-way flights on legacy airlines used to be 12,500 miles each way. Now, they could be as low as 5000 miles or as high as 30,000 miles or more. For some of us Type-A planners, this is pure torture.
Sure, the price of some flights will go down. Off-peak economy award pricing could become a real bargain. But the most coveted flights will increase in price. Forget about getting a great price on business class for an international flight.
Unlike the award flights on Southwest that are correlated with price, these dynamic awards do not directly follow cash price fluctuations. For example, you could pay double the amount of miles for a flight that is only 20% more in cash than another flight. Ugh.
So in light of this change, what should we do?
Book AA Awards Now
If you have a stash of AA miles and you have a big trip in mind, I suggest booking that trip very soon. I’d be more surprised than not if AA doesn’t move to dynamic award pricing in the next few weeks or months.
For many of us, we are in the 11-month window to book next year’s spring break flights. I expect spring break dates to have higher pricing in a dynamic model.
Look for Partner Awards
The good news about dynamic award pricing is that so far, partner award pricing is not affected. So in the dynamic pricing model, if you have AA miles and you want to book a flight to Australia, you can potentially use fewer miles if you fly there on Qantas, an AA partner.
This is easier said than done, though. Some partner airlines don’t show up on AA.com (see this cheat sheet). And on United, partner awards may fall to the bottom of the search screen. So, booking these lower-priced partner awards requires more effort on our part.
As miles and points travel hackers, we’ve always had to be somewhat flexible with booking award flights. Rarely is the exact flight we want on the exact date available for the lowest award price. But now, we have to kick our flexibility up a notch to maximize the value of our miles.
Some of us with older kids who can’t miss school have very limited flexibility. But, we have to work with what we’ve got. For my family, that means being flexible on which day we leave at the start of spring break and which day we fly back. Maybe we can’t do the traditional Saturday to Saturday trip, but we’ll have better luck with lower award prices if we leave on a Monday or Tuesday. During peak holidays, we may have to fly out on Thanksgiving Day rather than the days leading up to the holiday.
For those without such rigid calendar restraints, flexibility might include traveling to destinations during the off-season or changing destinations based on the dynamic pricing. For example, I’m currently in the throes of booking a trip for next year’s spring break. I have two destinations in mind, and I am letting award flight availability be one of the determining factors in our final destination.
Diversify, Diversify, Diversify
Diversifying your miles and points stash is more important now than ever before. Don’t just collect one currency for a big trip, collect as many as possible. This is crucial now that airlines are doing away with award charts.
For my spring break trip next year, I’ve got AA miles, British Airways Avios (mostly transferred from my Amex Gold card) and some Chase Ultimate Rewards. I’ve also got a few points in my Capital One Venture Rewards account. I’m counting on AA miles being useful for one direction, but who knows if AA will start dynamic award pricing before I’ve booked my trip?
Having flexible points is going to be important in the future. Cards like the Barclaycard Arrival Plus, Capital One Venture Rewards and the Terps Visa could help fill in the gaps when airline miles won’t cover the entire journey.
I don’t plan to stop accumulating legacy airline miles, though. If I get another targeted Delta flyer in the mail without the once-in-a-lifetime-bonus restriction, I wouldn’t hesitate to apply. I will likely do another round of AA cards in the future when I am eligible. For families like mine who fly in coach, I’m not convinced the sky is falling with these changes to airline award flights.
How are you dealing with the news of dynamic award pricing from airlines? Has it affected your plans already?
Nancy lives near Dallas, Texas, with her husband and three kids. Her favorite vacations include the beach, cruising and everything Disney.