Does Alaska Airlines Now Have The Best Frequent Flier Program?

by Josh Lew
Last updated: 5:30 PM ET, Tue March 15, 2016

Photo courtesy of Port of Seattle

Frequent flier programs are changing, as more and more airlines are adopting the type of program that has long been a favorite of low-cost carriers. In these programs, passengers earn points (or miles) much like they would with a rewards credit card - every dollar that they spend on airline tickets or other airline-related purchases is worth a certain number of points.

This is different from the "classic" frequent flier model, in which the amount of points/miles depends on the distance flown. There is one major advantage to this kind of program: you can score a cheap flight, but still get the full compliment of rewards points.

For example, fliers can buy a promotional fare on Alaska Airlines, from Seattle to New York for $100. Even though the ticket is cheap, they will still get a huge amount of miles because of the long distance of the flight. Because most loyalty programs used to be based on miles flown instead of amount spent, many travelers became very adept at collecting miles while only buying promotional fares.

This kind of "miles hustle" is no longer possible on most airlines. Delta and United have already switched to the spending-based model, and other carriers are about to follow suit. This means that all rewards will be based on the amount of money that a loyalty program member spends, not how many miles they fly. To use the example of the $100 Seattle-New York flight again: in a spending-based program, the frequent flier would only be rewarded for the $100 spent, not for the miles flown.

Before frequent fliers start lamenting the end of an era for miles collecting, they should know that one airline is still planning on using the "classic" miles-based model. Alaska Airlines has said that it will continue to stick with this type of program, at least for the time being.

Alaska CFO Brandon Pedersen was asked if his airline would follow all of the other American carriers and change its program to spending-based rewards while he was at the JPMorgan Aviation, Transportation & Industrials Conference. His response: "We're sticking with the traditional model. It gives us an opportunity to look at how we perform versus how others perform. And we wouldn't say that we would never go to that, certainly."

Alaska could use its classic frequent flier program as a selling point in the same way that JetBlue uses its free Wi-Fi and Southwest uses its free checked baggage. Serious miles-collectors will certainly place value on having access to a miles-based rewards program, especially because there will soon be no other options (once the last holdout, American Airlines, switches to spending-based rewards later this year).

As long as Alaska stays profitable and its investors stay happy, there is really no reason for it to change its program. They will probably eventually follow the other airlines and start a spending-based rewards program, but for now, the Seattle-based carrier is the last hope for savvy miles-collectors.

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