Remember Aug 28, 2013
I don't want to say that Wednesday, August 28th, 2013 was an equivalent of an apocalypse in a miles and points world, but it was pretty close. It was reported that American Airlines had decided to impose a fuel surcharge (known as YQ) on all international redemptions, even their own. Up until then, they were only charging YQ on British Airways and Iberia. If one airline does it, the others will follow, guaranteed.
Adding fuel surcharges is a sneaky way for airlines to make money on something which is supposed to be free. Hmm, I didn't realize that fuel is required to fly planes. I try to discover work-arounds, like in the case of Avios, to avoid paying fuel surcharges whenever possible. For example, while you will pay YQ to fly from USA to London, you can redeem Avios for flights within the USA on American Airlines, a partner, and only pay regular tax.
Fuel surcharges can add up to $700 or more on a roundtrip ticket and on occasion, cost more than a paid revenue ticket. Once, I saw a flight from LAX to London for $610, or you could redeem 50,000 British Airways miles and pay $640 in taxes. They wanted a customer to pay $30 for the privilege of taking his 50,000 miles. How generous!
Fortunately, this whole thing in August was a misunderstanding and the fuel surcharge was only to be applied to regular, not award tickets.
So here is my takeaway from all of this:
1) Hoarding miles and points is not advisable. Potential devaluation like this can bring a lot of stress to someone who has a big stash of miles. And life is full of stress already. Why complicate things?
2) It most likely does not make sense for an average family to accumulate miles past the minimum spending requirements. There is always the possibility of any airline adding fuel surcharges. They don't even have to provide any notice.
Imagine you just got a gallon of milk today for $3.50. Tomorrow it goes up to $7. That's exactly what it's like when you redeem for international economy tickets and fuel surcharge is added.
3) If you do decide to focus on earning miles through regular spending, try to put it into flexible points instead. Either Ultimate Rewards (through Chase) or SPG or Membership Rewards points (through American Express). Since they transfer to a variety of programs, you have a measure of protection in case one airline devalues its currency significantly.
So what is the conclusion? Remember, when you talk miles and points, you are dealing with "funny money." You can't use them to pay doctor's bills, fix your car and so on. So next time you pull out your mileage earning credit card for non-bonus spending, ask yourself something. Are you ready to buy those miles at 2 cents each, knowing what can potentially happen tomorrow? Because that is exactly what you are paying since you could be using Amex Fidelity card instead, which earns 2 percent on everything. Remember August 28th, 2013!