Premise
The sad demise of Virgin America is coming as it “merges” with Alaska Airlines. In reality, Alaska acquired Virgin, which is bad news for Virgin customers. First to go was the ability to transfer points from Starwood to Virgin America, at the favored 20,000 SPG for 25,000 VX rate, and now there is a “devaluation” incoming. They definitely did not handle it as well as the Starwood & Marriott “merger”. Read on for more!
Virgin & Alaska Details
Not strictly a devaluation – but rather Virgin intends to convert fully to the Alaska Airlines system. That means, you can earn and redeem Elevate points until the end of this year (12/31/17), after which the remaining Elevate points will automatically be converted to Alaska Mileage Plan Miles.
If you convert now, though, you get a 30% bonus on the conversion. That means that 1 Elevate point equals 1.3 Alaska Miles.
Cost Comparison
I did some basic cost comparisons, for a LAX to SFO flight that I needed, just to see the differences.
For the same day and time of day, the Alaska converted price was significantly more.
For example, the 7:55am Flight cost 7,500 Alaska miles, or $74. Alternatively, you could get it on Virgin for 2,882 points, for a 2.60 A/VX conversion. This is twice the rate that Alaska is currently giving (1.3 A to 1 VX).
For a later flight, the 10:07am is 12,500 Alaska miles, or 6,154 Elevate points, for 2.03 A/VX. Again, this is much higher than the official conversion rate of 1.3 Alaska to 1 Virgin America.
Rationale
Alaska has to expect that Virgin America customers, at least some of them, will do their due diligence on point valuation. I am displeased at the shoddy conversion rate offered to Virgin America customers, which definitely will turn me off from Alaska flights. I understand their business model of fixed pricing (7.5K, 12.5K, 25K, etc.) like United, AA, and others, as compared to the variable pricing model of assigning a rough cents per point valuation, like Virgin America and Southwest Airlines. Regardless, some parties would be upset, and because Alaska acquired Virgin, and not the other way around, Virgin will have to convert to the Alaskan business model.
What Does This Mean For Me?
I was one of those fronting a large amount of SPG to Elevate miles before the conversion stopped, and this further change means I’m on the clock. I want to spend my points balance by the end of the year, to avoid this forced transfer of Elevate points to Alaska, and the resulting devaluation.
Currently on Virgin America, I am picking up about 2.6cpp for my Starwood points, and would hate to see that cut to 1 or 1.3 or 1.5 cpp in Alaska miles. Frankly, that’s just a poor use of points, and I could do better even with a 2% cash back card.
Note: A reader pointed out these comparisons apply to domestic travel, and may not hold true for international travel.
Conclusion
Use up those Virgin America points by end of 2017! Don’t let them go to waste in Alaska’s program, especially as those flights will cost more comparatively using Alaska miles versus Elevate points. Thankfully, I can spend my points on my friends or family, and should have little to no balance by the end of the year.
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You may be right on many flights and overall value when comparing Virgin to Alaska but the new company offers many more routes as well. I’m sure if I was a Virgin loyalist I wouldn’t be that happy about the merger in general but at least they are giving a long warning period.
Absolutely – you get plenty of warning, and opens up many new options. But – I’m not particular to any airline, so I’m shopping on price at this point, rather than loyalty, and I haven’t seen Alaska compare for pricing (according to google flights for the ones I look for). Who knows, maybe that will change!
Try looking at a last minute JFK-LAX flight and report back. I think you will find the values are opposite. Fixed mileage programs are always good at relatively expensive flights and fixed value programs are good at cheap flights. You just picked cheap flights as your example.
Even so -> I tried for a mid-may SFO-JFK/EWR that I actually already booked. I quoted the price (just now, to get more accuracy) at 40K Alaska, but 23.3K Virgin, which converts to about 30K Alaska. I could see how last minute ones are better, but I think those who focus on points book them earlier. You are right that last minute bookings were better – tried out a flight for this weekend, and came to the same 40K Alaska, but 41K+ Virgin. I think that’s only because they (Alaska) can’t charge more than 20K, as i see 25K as… Read more »
Wednesday May 3rd, LAX-EWR one way:
$444 cash
12.5k AS miles + $6 = 3.5c per mile
21k VX points + $6 = 2.1c per mile
Every program has sweet spots. This is one of the better ones right now. The VX/AS merger is a rare case where we can compare two programs and choose the best option. I did one of these a few weeks ago. UA, AA and DL did not have availability but VX did via AS. VX also doesn’t charge the junk $75 fee that UA and AA charge.
Wednesday May 3rd, LAX-EWR one way:
$444 cash
12.5k AS miles + $6 = 3.5c per mile
21k VX points + $6 = 2.1c per mile
Every program has sweet spots. This is one of the better ones right now. The VX/AS merger is a rare case where we can compare two programs and choose the best option. I did one of these a few weeks ago. UA, AA and DL did not have availability but VX did via AS. VX also doesn’t charge the junk $75 fee for last minute bookings that UA and AA charge.
This assumes a domestic redemption. I (and I think most of those using the Alaska program) find the value in the international partner redemptions. I just used 45k to book a flight to SCL in biz on LAN. I would have to pay AA 57.5k for the same flight.
Certainly – because VX only has primarily domestic redemptions, that was all I was comparing – VX to similar Alaska flights. I did not look at international at all (only saw Cabo, which doesn’t really count). Thanks for your comment! I will add the note accordingly.
[…] Alert: Virgin America Point Devaluation Incoming! – As usual, don’t bank points for the future… use them now or else they’ll be worth less in the future. Worst case, convert them manually to get the 30% bonus vs. having them automatically transfer and only get a 1:1 transfer. […]