Should Miles Enthusiasts be Worried about “Big Data”?

The New York Times recently published an article entitled, “Why the Airline Industry Needs Another Data Revolution”. In the article, there’s a brief outline of how the airline industry used to be at the forefront of technology, pioneering things like computerized reservation systems and revenue management, but now, airlines seem to be stuck with archaic systems.

One airline cited as using data in a new way is British Airways. British Airways has licensed a technology to create a program called Know Me that offers personalized service and offers to customers. Examples include offering an upgrade on a future flight to make up for past grievances or suggesting tailored offers at check-in. But is a coming resurgence in data good for miles and points enthusiasts?

In general, I’d have to say no. A large part of playing the miles and points game is taking advantage of inefficiencies in the system. In the past, it was more obvious things like booking mistake fares (which are mostly gone now, thanks to data checking and validation on the part of airlines), but now it’s more like a form of arbitrage where we can essentially derive much more value out of the current systems and points currencies than most customers.

If airlines (and banks) become much more fluent in data and create well-targeted behavioral algorithms, then miles and points enthusiasts should lose because there won’t be inefficiencies for us to exploit. Each customer could hypothetically receive different offers and variable pricing (both for buying and for redemption) depending on their past behavior, and it’s not too hard to imagine that certain behaviors that are rampant in the mileage community (e.g. credit card churning, mileage runs) won’t be rewarded.

As someone who works with “big data” as a profession, I don’t foresee all of these changes happening imminently (or more specifically, the hyper-targeted offers that articles love to cite), but moves like tying elite qualification to minimum annual spending are steps that airlines are taking to eliminate inefficiencies and use data to become more profitable by rewarding their most profitable customers.

For me, the takeaway is that I should continue to earn and burn miles when I can. There’s not too much of a point on sitting on a pile of miles that can be devalued at any time, and I think increasing usage of data can only accelerate this devaluation.