On a similar note...
On a similar note...
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Travel has been hit hard by the COVID-19 pandemic. In May 2019, as many as 2.7 million U.S. passengers might have boarded planes in a single day, according to TSA checkpoint numbers. A year later, daily passenger counts have just recently crept back above 250,000 — a whopping 90% decrease.
But the skies will open up again, and those of us with travel rewards to burn may be wondering about the best ways and times to use them in this fluctuating economy.
Book now for travel in the future
You may not know exactly when you’ll be able to vacation responsibly again, but booking now for the future is a great way to find award deals. Airfares are expected to plummet 35% through 2021, according to a Dollar Flight Club study on the impact of COVID-19 on the travel industry. These low costs will most likely translate to deals on miles redemptions as airlines look to boost traveler confidence and fill seats.
Keep an eye on airline policies for any award tickets you book now. American Airlines, for example, recently announced that award tickets purchased after June 1, 2020, will incur a fee of up to $150 if canceled within 60 days of travel. If you book after June 1 and a resurgence of COVID-19 this fall or winter forces you to reschedule, you could get hit with penalties.
» Learn more: The complete guide to redeeming American Airlines miles
Think through how you value your points as well. Over the longer term, airfares will rise, with the Dollar Flight Club study projecting a 27% increase on average through 2025. You might want to spend cash now for your vacation and save your miles to get a better value per point when airfares increase.
Just remember, there’s a strong relationship between air capacity and award availability. As the availability of flights decreases, which is likely with an anticipated 30% reduction in domestic routes between 2020 and 2025, award tickets on those routes may be harder to find once travel demand returns to more normal levels. Flight awards may be less available as overall capacity decreases and airlines reserve seats for those paying cash.
Consolidations could impact your miles
No one can guarantee what changes will come to the travel industry post-COVID-19. Dollar Flight Club’s recent study anticipates the merger of at least two big carriers in the next six years, as well as the potential failure of low-cost carriers like Frontier and Spirit. When carriers merge, they combine their loyalty programs, which could be good or bad news for those with large point balances.
When Starwood and Marriott merged and Marriott introduced the combined loyalty program Bonvoy, former SPG loyalists saw their points devalued. Plus, there were technical glitches and major headaches for members merging their accounts and points.
The good news is you don’t have to worry about using your travel rewards immediately, since airlines have been extending point and travel credit expiration as well as elite status. But with potential consolidations in the next few years, it may be a good practice for frequent flyers to spend points as soon as they have enough for a reward, minimizing the chance that award restructuring or mergers will lower their value.
Use miles to go farther away
Domestic travel should bounce back first. About 40% of survey respondents said they don’t feel comfortable traveling internationally through the rest of the year due to the COVID-19 outbreak. That could mean deals and plenty of available award seats on international flights. Personally, when looking for my late fall vacation, I found incredible premium economy deals for flights to Japan for fewer miles than the current welcome bonus on the AAdvantage® Aviator® Red World Elite Mastercard®.
» Learn more: NerdWallet’s best airline credit cards
Deciding when to spend your travel rewards in this uncertain economy is largely about determining your risk tolerance and staying informed about airline rules and public health concerns. The most important thing is to stay safe and stay home until travel opens up again.
As you await, research shows that anticipating your vacation can be half the fun. So shake off those social-isolation blues and start planning how to use your travel rewards.
How to Maximize Your Rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2020, including those best for:
Airline miles and a large bonus: Chase Sapphire Preferred® Card
No annual fee: Wells Fargo Propel American Express® card
Flat-rate rewards with no annual fee: Bank of America® Travel Rewards credit card
Premium travel rewards: Chase Sapphire Reserve®
Luxury perks: The Platinum Card® from American Express
Business travelers: Ink Business Preferred® Credit Card