How much are your travel points worth now?

Jesse Hirsh

easyDNS is pleased to sponsor Jesse Hirsh‘s “Future Fibre / Future Tools” segments of his new email list, Metaviews

Is loyalty marketing heading towards a crisis?

A cornerstone of our surveillance society is the use of loyalty marketing programs to obtain people’s consent for sophisticated profiling, data collection, and sharing. Although that consent is arguably meaningless, as the vast majority of consumers who collect “points” have no understanding of why those points are being given to them.

This is part of the oxymoron of the phrase “loyalty marketing” as consumers are told that the program exists to encourage their loyalty to a brand, however the broader purpose of such systems is to collect, analyze, and share data about the consumer.

A more accurate way to look at the transaction is that in exchange for your data (and the rights to do with it as they see fit) the retailer (and their partners) offer consumers points, or payment in a contained (and limited) digital currency.

This is why I tend to refuse to participate in such programs, partly to protect my privacy, but mostly because I don’t feel I’m getting appropriate value in exchange for the data they wish to harvest from me. Although I also think these loyalty based currency systems are neither fair nor accountable, which I’ll elaborate on in a moment.

The only points system I’ve sort of participated in, are travel points, as I used to have to travel a lot for work. Thankfully, I’m not having to travel now, and this has caused me to reassess which credit cards I have and use. Earlier this week I started shopping around for a new credit card, and was amazed at how many are still rooted in the pre-pandemic world where travel was relatively accessible and affordable. That world is gone, and yet the loyalty marketing milieux has not adapted, and instead assumes that everything is as it was before, or at least assumes that it will revert to that sometime soon.

The article above offers some insights into how that world is adapting, although to a certain extent, it isn’t. Card holders are able to negotiate some bonus points if they threaten to quit, and some card providers are adapting how people can spend the points they’ve accumulated.

Yet all of this avoids the threat that this pandemic holds for the airline industry.

The article above sort of addresses it, although it focuses on one of the primary perks of airline and hotel points systems, which is the pursuit of special status, that enables perks like upgrades or advance boarding (or check-in). Most airlines and hotels have extended their member’s current status into 2021, removing requirements that people spend or travel certain amounts this year, given that it will not be possible.

However what these articles don’t seem to address is the value of the points people have collected. Which is why as digital currencies, their value and integrity is flawed.

On the one hand, they have a measurable value, even if that value is difficult to measure. Unlike other currencies, there’s no clear exchange with other programs, nor regulatory oversight, that would give people a sense of how much their collected points are worth. Yet people still regard these points systems as rudimentary currencies, and project their own value, given their desires to travel or spend their points.

A national currency can be quickly devalued if the holders of that currency lose confidence. A “run on the banks” for example can cause a national economy to fail. But what about loyalty points? Are they susceptible to similar loss of consumer confidence?


Although in the face of this loss of confidence, some consumers are finding ways in which they can exchange their points into other forms of value.

There are concerns that airlines will tap into their loyalty currencies as a source of funds in desperate times:

Although the airlines have already received a substantial infusion of cash from governments, as the airline industry remains one of the primary beneficiaries of state funding, whether bailouts or subsidies.

However those bailouts may not be enough to sustain the airline industry as we know it. This twitter thread provides a great overview and analysis of the challenges the industry will face in the months and years to come:

Similarly this post below makes a widely held argument that when the air industry does return it will be focused on business and luxury markets, while ending discount and affordable air travel.

Although maybe that’s a good thing? Especially for environmental concerns?

Although as the Twitter thread cited above argues, this will have a ripple effect on other economic sectors, namely tourism, but just like the automotive sector, airlines and aerospace in general have huge ecosystems of support companies that will be devastated by this configuration.

This seismic shift in the airline industry is arguably unavoidable. The issue is not whether it will happen, but how, and who will benefit and who will not. While the ultimate outcome is uncertain, I think a safe assertion to make, is that airline points, and therefore loyalty marketing, will change.

The article above suggests that due to alliances in the airline industry, most people could transfer points from a defunct airline to one that remains in business. However I think that’s an overly optimistic view of what might happen.

Instead I anticipate a radical devaluation of the points that people currently have. There’s just no way for the industry to be able to honour them at their current value. Some people will be able to spend them on non-travel, however their value has always rested on their premium application, which is overwhelming air fares.

The hints of this impending devaluation can be seen in the current conflict over flights and travel that had been booked pre-pandemic, and were cancelled as a result of the near global lock down.

It is understandable that in this moment of extended uncertainty, people want a refund, in their national currency, and not in the form of points or credit.

However a sign of how bad things are, and will get, is when the federal regulator refuses to stand up for the needs of consumers o/k/a citizens.

While I do believe that loyalty marketing as we know it is headed for a crisis, it is certainly not going away. Rather its dependence upon travel will be discarded, and will instead pivot in a new direction.

The rise of digital currencies and points systems is reaching a maturity point, where the leadership in the loyalty marketing industry will shift from airlines, to social media platforms.


This is obvious given how social media platforms have conquered advertising and marketing in general, but loyalty was one of the last hold outs.

The real issue moving forward is the governance and interoperability of these systems. Will we start treating loyalty marketing programs as the currency systems they functionally are? In doing so can we provide the users of these systems greater protections and transparency?

Are you worried about the value of the points you’ve collected? Have you started spending them in anticipation of a crash? Are you re-evaluating your credit cards to focus on say a lower interest rate rather than travel points?

Your fellow travelers in the #metaviews intelligence network want to know. 🙂

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I don’t agree with Andy Luten, but his post below does offer some stunning photography documenting the current state of air travel in North America.

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