Frequent Miler on the Air - Alaska's fascinating premium card (Coming Summer 2025) | Coffee Break Ep37 | 12-17-24

Episode Date: December 17, 2024

Alaska has announced that a premium card is coming in the Summer of 2025. They've given us just little bits of information so far, but in this episode, we'll talk about what those details are. (01:03) - Pre-register by 12/31/24. Get 500 miles now, 5K extra miles later if/when you sign up for card. (01:44) - Basic details...annual fee of $395 and earn Global Companion Award Certificates (05:20) - Receive waived award ticket fees ($12.50 partner award fee, not surcharges) (05:42) - Earn 3x miles on eligible foreign purchases Visit https://frequentmiler.com/subscribe to get updated on in-depth points and miles content like this, and don’t forget to like and follow us on social media. Music Credit – Beach Walk by Unicorn Heads

Here we go. This is not your typical Frequent Miler on the Air episode. This is a standalone segment we're calling Coffee Break. Each Coffee Break segment will cover a single topic related to miles and points. And each Coffee Break is limited to 20 minutes or your money back. Enjoy. Today's coffee break, Alaska's fascinating premium card. Alaska has announced that a premium card is coming in the summer of 2025. And they've just sprinkled like some bits of information about what's coming. And I find it really intriguing.

So we're going to talk about the details of that and maybe discuss a little bit, is this exciting or not? Yeah, I think they've done a good job of sprinkling out some details that would create some speculation and conversation, because certainly there are aspects of it that sound quite interesting. So let's go over some of the basic stuff. First of all, if you haven't done it yet, you want to pre-register for, to be able to apply for the card, so to speak. You want to pre-register to get information about it by December 31st. And the reason for that is you're going to get 500 Alaska miles now for joining the list and you don't have to apply for it. You're not obligating yourself. You're just joining the email list, essentially. So it's 500 free and easy miles.

So you probably want to do that whether you think you want the card or not. And then if you do decide that you want the card, if you've registered by December 31st, then you're going to get 5,000 extra miles later on when the card comes out. So, you know, you get a slightly better welcome bonus and some extra miles now. So you may as well sign up. Some basic details, $395 annual fee on the card. You're going to have the ability to earn global companion award certificates. And initially we didn't have much information about that, but View from the Wing published some details from a conversation they had with Brett Katelyn,

Alaska's vice president of loyalty alliances and sales. Brett is very knowledgeable. I got a chance to meet him a couple of months ago. Very knowledgeable, very aware of the frequent flyer world and the things that we like and dislike and want. And so unsurprisingly, these companion certificates sound like they might be interesting. You can use them on any Alaska Airlines redemption. And so that's kind of cool. You can use them for partner awards and in any class of service. So we'll talk more about the details of these certificates in a second,

but you can use them even if you're booking a business or first class on partners, though there are some limitations. One certificate you're going to get each year for having the card, and then you'll have the chance to earn another certificate based on spend. Both certificates will have mileage caps. So you're going to have an up to, you'll be able to use it up to a certain number of points, very similar to how hotel free night certificates work. And I think it is not at all an accident

that it is that way, that they're capped at a certain number of points. And then you'll have the ability to top up using additional Alaska miles, which again, no coincidence there. It works very much like hotel free night certificates. I think Alaska must have looked at that and said, oh, we can do something with that. And it also incentivizes people to collect more Alaska miles so they can top up those certificates. So that seemed like an interesting move to me. A comment came in

though, right? On View From The Wing that gave some detail, some context. Yeah. I mean, I have no know if this is based on anything real but someone named will wrote in uh to view from the wings post about this and said that that an insider memo said that the annual you know companion certificate the one that you get automatically just by having the card will be kept at 25 000 miles so i think assuming the top-up procedure really is is uncapped like so if it's more like ihg and less like marriott where marriott you know limits the the topping up if it's that way then i think you can probably look at this i hope it'll be that you can book any award flight and basically

get a 25,000 mile discount as a way to think about it as long as you're flying with a companion. But we'll see. We don't know that it'll work that way, but that's kind of my hope. This Will person also said that the Insider Memo said that the one you get from spend will require $60,000 spend, but it'll be worth up to 100,000 miles. So that's obviously much more valuable. like a 100,000 mile discount, and you would have been booking awards, you know, that are this expensive anyway, then, you know, I did a little math. And you could think of it as like, if you spent 60k on the card, you're getting an extra 1.67 miles per dollar of your spend in a way because of that 100k of savings that you get each year. Yeah. And so that's, I think both of these are somewhat interesting.

We'll talk more about them and what they're worth probably in a couple of minutes. But I did get the sense, I don't know if this was incorrect, but I did get the sense that you would be able to top up with an unlimited number of miles. So hopefully they are going to work that way. We'll see. One of the other benefits on the card is that you'll receive waived award ticket fees. But this is just the Alaska Airlines award ticket fee. So you're talking $12.50 on partner awards.

You're not going to get waived surcharges. So it's not like you'll be able to save on the British Airways surcharges, for instance. It's just the $12.50 partner award fee. But still, that's nice if you're booking a lot of partner awards with your Alaska miles. And you'll earn three miles per dollar on all eligible foreign purchases. So that might perk up some mirrors for people who spend a lot overseas. And 3X on all eligible dining purchases. I think that's worldwide.

And you'll receive Alaska lounge pass. Well, I guess it has to be because you'll get 3X on all foreign purchases. So, of course, it's worldwide, I suppose, on the dining. You'll receive Alaska lounge passes and Wi-Fi vouchers. I don't think we have much detail as to what those will be yet. Same day confirmed fee waivers. So if you want to do a same day change, you'll get the fee for that waived and earn elite status on an accelerated basis. We don't know exactly what that's going to look like yet. But again, you'd be able to spend towards elite status and get there a little bit faster with this card than with the base Alaska Airlines cards that are

$95-ish a year. Yeah. Let me talk a little bit about that 3% on foreign purchases. That really intrigues me for a few reasons. One, people who are like expats that can get can still get credit cards in the u.s but live mostly overseas or actually internationally anywhere right it could be canada or mexico as well then you know getting three percent back for like all your spend is ridiculously good but it's also this assumes there's no foreign transaction fee which which I think is a safe assumption. I mean airline cards these days, if they have a fee, they don't have foreign transaction fees. And if Alaska put one in here, it would look really bad. I just can't see that happening.

So three miles per dollar in all spend. Here's why I find that so hard to believe is that a lot of countries cap the interchange fees that the banks can charge credit cards when you use a credit card. So on a lot of these purchases, Alaska and Bank of America, who'd be issuing the card, are not going to be earning hardly anything on the transaction, but they're going to be paying out three miles per dollar. I don't know how that's going to work in practice. So I assumed when I first heard this that there's going to be some kind of cap on it. But in that interview that View from the Wing reported, Caitlin said, I'm most excited about the 3x on all foreign, on all foreign spend. Like, I don't think he would have said on all foreign spend if there was a cap, right? So, I don't know what's going on there. Like, do they really think they could sustain that? Yeah, I don't, that seems really strange. You're right. And at the beginning,

at the outset here, I think you said 3% back would be really good. And that would be, but you know, this is three miles per dollar, which is potentially even more valuable to people who- Definitely. I misspoke if I said 3%. Yeah. Yeah. Yeah. And so, you know, I think like you said, that's unsustainable, particularly because this will be the expat card to have for anybody who is able to get, like you said, US cards and lives overseas. Like this would be the card that everybody to have for anybody who is able to get, like you said, U.S. cards and lives overseas. Like this would be the card that everybody would want for just about everything. Also, it seems to me like if that's the 3X on foreign purchases thing is there, I imagine

there'll be some people, some small business type people that will want to have this and buy inventory from somewhere overseas and get 3X on. And they're able to you know work that out for a price that makes sense there just seems to be too many ways for that to not go well that if there isn't a cap when it begins when it launches there probably will be eventually so enjoy it a lot less good point good point all right so so one of the things i also find really interesting about this card is that, you know, I think this continues what Alaska seems to be doing, which is trying to make their program, their rewards program, compelling for people who don't necessarily even fly Alaska Airlines.

Yeah. Yeah. Yeah. That's really interesting. Right. Yeah. So they keep doing things to incentivize or to make, to make, um, using their miles more rewarding. Right. So they announced that next year. Uh, so we're recording this in 2024. So starting in 2025, when you redeem miles, even for partner awards, you're going to earn elite qualifying miles from those flights. So depending on how far you fly from having redeemed Alaska miles, you'll earn those qualifying miles. So you could get status. And you might say, well, what good is status if you're not flying Alaska much? Well, it will also give you one world status. And that'll mean you can have access to some really nice lounges when traveling internationally and so on.

So there are benefits even if you don't fly Alaska, and I find that really interesting. I feel like this is all like another piece of that, of trying to make their program attractive to everyone who's into this game, really, regardless of whether they fly Alaska. Yeah, you know, and that makes me wonder about the economics of this, how this is all working, because, you know, for instance, the 25,000 mile companion certificate, if that's what it ends up being, 25K companion certificate, I look at that and I say, well, at a base level, a few value miles at one mile per dollar, and you would travel with a companion and book an award, that's like $250 back on the annual fee. Right. And that's simple math and valuing miles pretty low. But, of course, Alaska, the cost of that is even less for Alaska Bank of America.

Presumably the cost might be more than that, though, because typically airlines will sell miles to the banks at more than a penny each, I think. And of course, this is a certificate, so I don't know what the economics of that are going to look like. But I do wonder if Alaska is driving some of the incentives here because they want people to spend on the card. They want to sell more miles to the bank. And so by making the card interesting in some of those other ways, it potentially drives revenue for them in a way that's not incredibly expensive since the use of miles. We know that airlines don't pay a ton on those partner redemptions. I mean, obviously, it costs them something, but not nearly what we would value it at. Until this card came out, you had no good category bonus options with the Alaska cards.

But with this, now you have like this kind of weird ones. So you have dining, which is a very common one in travel cards, but 3x dining, but 3x international purchases is just fascinating. It seems like they're trying to attract people who travel a lot. And they're saying, you know, come to us and we'll offer you really good rewards for your spend. There might be something to that strategy, right? Because people who spend enough internationally for 3X to matter, right, to be a draw for them, probably spend more than the average customer in general, right? Because if they're traveling enough and spending enough money overseas, they probably have a lot of disposable income. And so they probably have a lot of other purchases.

So maybe they're just counting on the fact that that's an affluent clientele that is going to spend a lot of money and earn them a lot overall if they can get them used to using the card a lot. Because of course, if they're using the card while they're traveling, hopefully it's going to stay in the wallet when they get back home. And so I don't know. I think it seems like a gamble, but an interesting gamble. And like you said, one that makes sense since they don't have some of the draw that other programs do in the transferable currency sense. You know, as things stand out right now, I mean, they have, I think, they have a very competitive award chart, not necessarily best for all things, but it's competitive. Plus they've got the free stopovers.

Plus they've got, they will in 2025 make moves anyway towards allowing mixed partner awards. And all those things are going to make this program really attractive. And so to the extent that you want more of those miles, this card is, it's very interesting. Whether or not you want the card and plan to spend on it, you have to admit it's an interesting whether or not you want the card and and plan to spend on it you have to admit it's an interesting product it is and i think actually what this might encourage me to do is i've talked a lot about how i kind of want to transfer a bunch of amex membership rewards points to hawaiian so i can move them to alaska before you know that loophole or whatever you want to call it and and this makes me slightly more likely to do that because if my wife and I both got this card, like one trip to Europe, the annual 25 K certificate could come in

handy for several years. Cause we would essentially be turning, uh, uh, uh, the cheapest one ways to Europe and business class into 20 K awards, right? Cause we'd get this 25 K discount. And if we each had one, we get the kids. So traveling as a family of four, it would obviously save us those miles every year and make that a really affordable trip to Europe. So I could see us both getting the card for that benefit for the savings on that. And if I transfer in enough miles now, then I'm probably pretty likely at least for the next few years to use a lot of Alaska miles. So I could see this card definitely being valuable for me for a couple of years. Now, am I going to spend $60,000 a year on it

for that other companion certificate? I don't know. That's a bit of a stretch for me. I don't know as though I'll do that. I'm going to question your starting point there with $395 a year to save 25,000 miles a year. Well, that does seem like a lot. You're right.

Maybe that's a poor decision. Maybe I shouldn't do that. Maybe I'll change my my mind but i'm going to join the wait list and give myself a chance to decide i mean i'm not necessarily saying this card is is not a good choice because there are other perks i just don't think that perk alone is enough to justify the annual fee no you're right it wouldn't be the welcome bonus would essentially justify the annual fee in year one should i pay it again for year two? That's a great question. Yeah, I don't know. Maybe you're right that we shouldn't keep it up after that. But we'll see. We'll see where it goes and how that 3x plays out on foreign spend.

So I'll be curious to see how this all works out. Me too.