Airlines Increase Reward Seat Availability But They Could Be More Costly

Global airlines continue to increase their rewards seats and North American and European carriers account for the most reward seat availability, a new IdeaWorksCompany survey finds.

The average reward seat availability for all airlines is about 74% this year for travel June to September 2015, up from 66.1% in 2010. Southwest Airlines and Airberlin both have 100% availability on their flights, the survey found, while Virgin Australia (96.4%), Air Canada (90.7%) and Singapore Airlines (90%) follow.

Southwest and Airberlin also held the top spots last year and along with Virgin Australia have placed within the top six airlines for most availability since the first survey in 2010.

These findings come after several airlines, including Delta and United, revamped their loyalty programs during the past year, and they now base rewards accrual on the amount paid for a ticket. So while the reward seat availability average has gone up it’s likely harder for travelers to redeem points if they’re buying lower-priced fares.

Delta and United’s average rewards ticket prices are 23,214 miles and 26,607 miles, respectively, versus front-runner Southwest’s 9,457 miles.

“Airlines are trying to find the balance of reward inventory without displacing customers willing to pay cash for tickets,” said Henry Harteveldt, founder and analyst at Atmosphere Research Group.

“What’s unclear from these findings is the quality of the reward bookings. How desirable are those flights? Are they flights that operate at odd times of the day or have more stops than normal? We don’t know that. Anecdotally, I’m hearing that booking reward travel to Europe is difficult this summer for both coach and premium cabins. Booking reward travel to Hawaii is always difficult because people are willing to pay cash for those routes.”

Harteveldt echoes Jay Sorensen, president of IdeaWorksCompany, on the perspective that “miles” will eventually give way to a term making more sense to travelers.

“I think the secret to having a great program is to link accrual and redemption to cash fares,” said Sorensen. “And why not? This simply reflects the ability of miles or points to have value as a currency. The ‘miles’ phrase will become a relic of the past, as programs become more revenue-based and less tied to the silly metric of mileage.”

U.S. Reward Seat Availability

Within the U.S., United, Air Canada, Southwest, and American all made signficant changes to offer more rewards seats for departures only days or weeks away, with availability ranging from 72% to 92% for these four airlines.

“I was looking at annual redemption activity for Southwest and noted the carrier’s overall activity zoomed upward when it re-launched Rapid Rewards in 2011,” said Sorensen.

“That’s when they tied pricing to prevailing fare levels, essentially removing the capacity cap of their old credit-based system. American, and the others also have their own type of anytime rewards but the price level differential is big, from 25,000 miles to 50,000 miles. With Southwest, the increase (as the flight fills up) is gradual and more acceptable to consumers.”

Air Canada, Emirates and Singapore Airlines, three of the top seven carriers with the most availability, also made the top five list for airlines making the most availability increases on their long-haul flights.

The survey also asked consumers for their level of understanding of airlines’ ancillary offerings such as priority seating and boarding, and checked bags. The result: Only one-third of respondents, the largest percentage, said they were “a little” familiar with the ancillary fares process.