George Kamel - How Gen Z Is Outsmarting Airlines

Starting point is 00:00:05 If you're Gen Z, there's a good chance you don't give a flying flip about airline points. And airlines are low-key worry because they make more money from the rewards programs than from ticket sales. Big yikes! They told me that was still in. Or am I cringe? Is that in? Just, no. So why is Gen Z not down with the points? And how will this affect everyone else?

Starting point is 00:00:26 We'll talk about it in today's episode, and I'll also share how you can save money on flights without worrying about points and miles. But before we take off, make sure you're trying to try to. tables and seatbacks for a locked in the upright position, and please turn off all cellular devices, unless you're watching this on your cellular device, in which case, leave it on and tap those like and subscribe buttons, like you tap the flight attendant call button when you need a refill on your ginger rail. Why does gingerail hit different on flights? Science will never know. Okay, so according to a recent study from the official airline guide or OAG if you're nasty, Gen Z and millennials are less likely to enroll in airline loyalty programs than older generations.

Starting point is 00:01:02 Here's the breakdown in case you're a nerd. Eighty-nine percent of boomers, are loyalty program members, but that drops to 80% for Gen X, 70% for Millennials, and down to just 65% for Gen Z. So what does that mean for all you points fanatics out there? Well, according to the report, the data implies traditional loyalty programs will, quote, slowly fade as younger consumers make up a larger share of the traveling population. What that means is don't get too attached to your precious sky miles. Before we talk about how your airline rewards could change, let's talk about why Gen Z is not on board. You see what I did there? The OAG actually provided the top four barriers to Gen Z joining these programs,

Starting point is 00:01:38 so here they are in reverse order, you know, to build some M-night-Sharmelon-level suspense. Reason number four? They prefer rewards specific to personal travel preferences and booking patterns. In other words, if you know I frequently travel from Nashville to Orlando every fall, don't tell me I can only redeem my points for a rental car in Santa Fe in March. Reason number three, they don't want airlines to have access to their data. And I get this one. But also, you gave your data to every other.

Starting point is 00:02:03 app on your phone, I don't see a big difference about Delta knowing your birthday. Reason number two. It takes too long to redeem the rewards. You need so many points to get a free flight that people are deciding it's not even worth the trouble. So basically, Gen Z is smarter than a fifth grader and did some basic math. These programs suck and they're only getting suckier. More on that in a bit. And coming in at number one, a lack of consistent travel with a single carrier or brand. Basically, Gen Z is price shopping, which is great. That's what you should be doing. Because guess what? It's going to be the same mediocre experience on any airline. Not enough leg room, not enough airflow, and not enough gluten-free snacks.

Starting point is 00:02:38 Enough with the pretzels and the crackers, okay? Give me some mango gummies or something. And my name is Nicholas and it says Richard's delicious. And props to Gen Z for focusing on the thing that actually matters, the ticket price, the actual cost of the flight. Why spend more for the same flight on another airline just because they'll give you some imaginary points that you can use to buy a cup with their logo on it. But I do think there's something else at play here, and it's something they didn't mention, and that is credit cards. Here's what I mean. Younger generations are moving away from debt, and that includes credit cards. According to one analysis, only about 40% of Gen Z indicated that they used a credit card within the last 90 days, much less than other generations.

Starting point is 00:03:17 So good on you, Gen Z, proud millennial dad moment. But not so good for the airlines, because co-branded credit cards are a huge part of their rewards programs. You see, over the years, the airlines have continually made changes to the rewards programs to increase their revenue. They used to be known as frequent flyer miles. But now your miles, aka points, are usually not even tied to the number of miles you fly. It's just based on transactions. So it's really only about how much you spend using their co-branded credit card. And they make money when you swipe, so it's a huge source of revenue for them.

Starting point is 00:03:50 The four biggest U.S. Airlines generated more than $20 billion in combined revenue in 2023 just from their rewards programs. And here comes Gen Z with their lack of credit cards, no trust for corporations, and their uncanny ability to see through marketing BS, and now the airlines are going to have to pivot their strategy. Look at you, Gen Z, making a difference out there. Be the change you want a Z in the world. And fun fact, not a real Gandhi quote. Chapel Rhone.

Starting point is 00:04:13 I'm just as shocked as you. So, like, of course I had to say it. Younger generations are seeing through this overcomplicated cluster that is airline rewards programs and realizing the whole system is set up to benefit the airlines way more than them. And it's not just you, me, and Gen Z who noticed this. It's the Skibbitty Feds.

Starting point is 00:04:29 Not sure I used that right, but we're going to go with it. In September of 2024, the U.S. Department of Transportation launched an inquiry into the rewards programs of the country's four major airlines, America, Delta, United, and Southwest, in an effort to protect customers from, quote, potential unfair, deceptive, or anti-competitive practices. According to the press release,

Starting point is 00:04:48 DOT's probe is focused on the ways consumers participating in airline rewards programs are impacted by the devaluation of earned rewards, hidden or dynamic pricing, extra fees, and reduced competition and choice. End quote. So it looks like everyone's finally wising up to their shady tactics. you, me, Gen Z, and Pete B at the DOT. But how will this change impact airline rewards programs? Before we talk about that, let me shift your attention from earning airline points to earning

Starting point is 00:05:12 some sweet interest on your savings, which is way easier. If you're stacking cash for a car, a vacation, or a down payment on a home, that is a hefty chunk of change that should not just be sitting in a checking account or a dumb old savings account. It should be working for you. And for that, I recommend a high-yield savings account like the one offered by Laurel Road, one of the sponsors of today's video. Right now, your account balance will earn over 4% APY, plus there's no minimum

Starting point is 00:05:33 balance required to open an account, your deposits are FDIC insured, and there's no hidden fees. Learn more by going to laurel road.com slash george or by clicking the link in the description below. And speaking of saving, you might be able to save some money on your phone plan by switching to Tello, another sponsor of today's video. They've got plans as affordable as five bucks, and the Unlimited Everything plan is just 25 bucks. There's no contracts, no sneaky fees, and you can upgrade or change plans whenever you want. My family uses Tello, and if it's good enough for the camels, it's plenty good for you. What, you think you're better than me? I don't know why I got defensive there.

Starting point is 00:06:05 They've also got cheap international roaming. So you're covered for your next flight to, you guessed it, Barcelona. Go to tello.com slash George and you'll get an extra five bucks off the unlimited data plan for your first month of service. Or click the link in the description below. So back to our question. How will this change airline rewards programs? Will airlines actually listen to their customers and give them more of what they want and less of what they don't? Will they stop devaluing points whenever they feel like it?

Starting point is 00:06:27 Will the government force them to be more transparent about what is essentially their own imaginary currency? see, well, that's still up in the air. But one thing you can count on, airlines finding a way to target you, and if you're not careful, getting your money. The credit card companies they partner with run thousands of experiments on consumers every year to discover ways to get them to chase rewards through more spending. I mean, how American Express is that? That one was a stretch, I'll admit.

Starting point is 00:06:53 And these guys are experts in consumer behavior. They know you more than you know you. They know exactly what levers they can pull to get you to spend more money so they can take more money. And I got the dirty deeds from an ex-capital one manager who basically told me these rewards programs are intentionally created to not bless you, but to screw you over and get you addicted to the measly rewards. You think you're winning because you have 100,000 points, but they can devalue it at any time. So your, quote, loyalty to these airlines might end up being rewarded with something more like a $25 gift card to rainforest cafe.

Starting point is 00:07:22 No, thank you. I mean, the tsunami cake is good. Don't get me wrong, but I'm trying to cut back on natural disaster-themed desserts this year. It's not good for the environment of my body. My body, telling me, yeah. So I rarely say this, but I think we should all be a little more like Gen Z. Now, I'm not saying we should wear giant pants and avoid phone calls like the plague. I'm just saying don't mess with frequent flyer miles or any kind of airline rewards programs.

Starting point is 00:07:43 They're kind of like vaping. You might feel good doing it, but it screams, look at me, I make bad decisions. Pineapple mango flavored bad decisions. I mean, why play a game that's designed to make you lose? The house always wins, especially when they make up the rules and they can change them mid-game. So here's what you do instead. Pay attention to airline sales, use travel apps, and do some research before you book your flights and hotels. That way, you can find even better deals and pay cash without ever being tethered to a certain airline or a points goal or worse, a credit card.

Starting point is 00:08:12 And if you want to know some ways to save on flights and hotels without chasing the points, check out this video for my top money-saving travel hacks or click the link in the description below. Thanks for watching. We'll see you next time.

George Kamel - How Gen Z Is Outsmarting Airlines

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