Would Your Miles Become Worthless After COVID?

It has been a full 6 months since Travel had ground to a full halt since the COVID-19 virus.

My Last Trip in 2020?

In Feburary 2020, I took a short Bali trip via a short-haul SQ Business Class flight which was 100% redeemed using our hard-earned Miles.

This was literally weeks before the global lockdown happened. Then it got real.

Pictured above: Sipping a cocktail at Potato Head Beach Club Seminyak, Bali in better times...

This prompted me to re-think how the miles-chasing experience would evovle down the road.

And most importantly whether it would continually be worth it or not. Especially against Cashback.

Pictured above: Traffic of Singapore Airlines Website since March 2020.

Would My Miles Become Worthless?

Probably if you've been on the miles game long enough, you would be asking this same question to yourself when you open up your SQ Krisflyer app or credit card rewards points.

It's the same for all of us, but let me give you a little bit of assurance.

I actually just booked a one-way flight last week, using 38,000 Miles to Paris, France for a family member who went over for studies.

TL;DR: The Value Of a Mile Is Unlikely To Decrease, But Redemption Could Be Harder

1. Miles are incredibly profitable business to the various airlines (think of it as pre-paid vouchers or credits)

2. Ticket prices are unlikely to change in the short to mid term even when travel resumes again (e.g Economy, Business, Suites)

3. In the event they do change the value of the mile, I'm sure that the Airline would recieve even more severe backlash and a PR nightmare beyond imagine (as per what Grab has done with the GrabRewards conversions some time back)

4. However, it could be harder to redeem due to lesser flights operating when travel resumes and also less seats reserved for redemption, thus maybe more wait-listing for seats

Again these are just my opinions after doing more research about this space, and occasionally chatting up Milelion and reading his stuff on his blog as well.

And attending his "Advanced miles-hacking and redemption" workshop which is sadly information which I store in my useless part of my brain now (thanks Aaron).

Further Reading Below

Here are more details on why I feel that the value of a mile would not be reduced further after this pandemic when travel soon resumes.

Reason 1: Miles Are An Incredibly Profitable Business Model

Honestly, any business selling pre-paid credit is a sure-way business model to keep earning 'Unearned revenue' from users. Let me explain more...

• Every time you buy a GRAB $10 voucher, its money on the books and in the bank account of GRAB

• It is only earned fully when you spend it on your ride or food.

It's exactly the same goes for the booming points industry, who earn from a huge chunk of wastage of points which does not get spent. (and thus expired)

With Miles, it's same same but different, with the only spend outlet with the airlines (eg Krisflyer miles with Singapore Airlines).

• Your credit card provider, eg AMEX or DBS or OCBC or UOB buy the Miles in bulk at a slight discount from Singapore Airlines

• It costs millions of dollars to continue funding their spend and reward programs.

So logically, if you think about it, this is only one of the remaining few business models that could work with the promise of future travel. (which I am sure will resume)

Especially with so many planes grounded and flights running at 8% of normal operations.

Reason 2: Ticket Prices Are Unlikely To Change

You can watch this 15 minute video here to get a sense of why.

But let me summarise the key learning lesson learnt which is that when travel slowly starts to recover, past data is essentially useless now. Thus rendering all the pricing models and algorithms useless.

“Travel airline ticket Pricing will become more of an art than a science.”

The only logical step for the pricing teams would be to stick to the old prices which basically has no semblance of how demand would react but tweak it slowly to adjust it, either downwards or upwards.

Essentially the airline industry would soon start to build up a whole new data set on user travel demand.

But in the short to mid term, I'm relatively certain that the prices of Economy, Business and Suites would not change much as status quo would remain.

Reason 3: It Could Be a PR Nightmare For Singapore Airlines

Beyond the current layoffs of almost 2,400 employees, if the national carrier of Singapore loses the trust of the local populace, it could spell the end of the carrier which I am sure that is not ideal.

I personally know of individuals who have millions in their Krisflyer accounts and if devalued, could be a Public Relations (PR) nightmare that I believe SQ could never recover from.

If you take a look at the time when COVID first hit, they actually extended the program miles validity by 6 months, which already shows early signs that they see value in continuing the program and keeping the users (ie us) interested in continue earning miles.

Massive Caveat - Lesser Operational Flights Could Result in Less Redemption Seats

Assuming the following:

• Less Flights because demand is will pick up very slowly

• Employees like pilots, flight attendants need to be re-trained again

• Prices of tickets do not change much

As a revenue optimising team in Singapore Airline, I would basically limit the number of seats which are for redemption.

Because every seat which is not sold in cash, I am earning revenue which I would already have made from the sale of miles.

Thus, there is a strong possibility that it could be harder to redeem due to lesser flights operating when travel resumes and also less seats reserved for redemption, thus a longer waiting list for redeemed seats.

Conclusion: Hold On To Your Miles!

I am still spending using my trusty miles cards in my daily life, because I do believe that one day, Singapore Airlines will be a great way to fly again.

Okay, I just took that from Lee Hsien Loong's speech.

I'm still an avid believer in travel, and if you are too, then I do think that there's nothing to be overly worried about.

Maybe, except for the fear that SQ will forever shut its doors as a national carrier. Rendering all your Krisflyer miles useless.

But I digress, that is for another day.