Smart Travel: Upgrade Your Getaways
The New Rules of Travel Rewards: Spend More or Lose Out
09 Apr 2025
Chapter 1: Why are flight cancellations and delays increasing?
Everyone has their own air travel horror stories. Sally, I am still shook by how you had two flights canceled in a row.
I'm the one weirdo on earth who actually thought that was fun because I got a bonus vacation day in Denver, an extra free meal. You know, I got my $45 in Starbucks gift cards. I basically made money off of this canceled flight.
But what if I told you there are economic forces at play that are making delays and cancellations more prevalent?
Are you trying to tell me that the economy is what messed with my airplane's brakes?
Kinda. I'm bringing in an expert to break it down. Welcome to Smart Travel, a deep dive into the tips, tools, and tactics to maximize your travel dollars. I'm Sally French. And I'm Megan Coyle. And we are the travel nerds ready to help you plan your next big trip.
Today, we brought on professor and author Ganesh Sitaraman to help you understand how the airline experience went from five-course meals and piano bars in the sky to a sad 28 inches of seat pitch and not an inch more.
This is really a great introduction to how the airline industry works, the big business of airline frequent flyer programs, and if you know all that, you'll have a better understanding of how to work the system. But first, some news out of the travel industry. We just received some interesting data from Bank of America about the latest in travel spending trends.
Their latest report found that, sure, domestic travel in the U.S. is still rolling, but it's definitely tapping the brakes. Bank of America data shows that spending on lodging and tourism from January 1st through March 22nd, 2025, is down about 2.5% compared to the same period in 2024. Airline spending is down even more, about 6%.
But their analysis suggested that slowdown could be weather-related. Cold snaps hit places like Texas and New York hard this winter, and Easter is really late this year, which might just be delaying some spring break plans.
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Chapter 2: What are the latest travel spending trends in 2025?
The one character that I found really interesting was a guy named Robert Crandall. And Crandall ran American Airlines. for a long time, really legendary head of American. In the 1970s, when deregulation was being debated, he, like really almost all the major airline executives, were against deregulation. And that might be surprising. Usually industry is for deregulating.
But he and others said, you know, this is not a good thing because our industry works because of the system of regulation. Otherwise, you're going to end up with a lot of things that we've seen, really cutthroat competition, airlines going bankrupt, the need for public subsidies, loss of service.
I mean, all of these kinds of things he and others understood were likely to be a problem if you didn't have a system of regulation. And he's there at Congress and there are these hearings going on. And afterwards, he says to one of the people in the hearing, you academic, and there's an expletive, are going to ruin this industry. You don't understand it.
But then when deregulation happens and he becomes head of American, I would say he is one of the most aggressive players in navigating through that environment, trying to win that Hunger Games. He was going to play by the rules of the game and was a cutthroat shark like everyone else.
And I'm glad you mentioned American Airlines because they actually started a lot of the things that are so relevant today. One of them being super saver fares, these very cheap fares that people could buy last minute. And then also loyalty programs. I believe American Airlines started their first loyalty program. So can you tell us how those features came about?
Yeah, so it actually comes out of deregulation. After deregulation, when there's this need to compete really ferociously with all these other airlines... the airlines start thinking about what they can do to keep people with them as opposed to going to some competitor.
So Crandall and American come up with this idea of the frequent flyer program to give their frequent flyers additional benefits so that they'll stay with American and not go to others. Now, obviously, the purpose of this is to keep the travelers with your airline. And people at the time in the 80s thought of frequent flyer programs as anti-competitive. That itself is kind of interesting.
But then they've changed so much over time. And I think the changes are pretty interesting, too. So early on, the programs were pretty simple. I mean, you can think of them almost like the punch card at your airport. favorite coffee shop or something where, you know, buy 10, get the 11th one free kind of thing. The first big change, I think at least, was really American again.
And they partnered with Citibank to offer a credit card that would be branded and, you know, the points would be redeemable for flights on the airline. The second big change is really diffuse, occurs across all the airlines. But in the 90s, what the airlines did was they really proliferated the number of fare classes.
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