I’m a big fan of Hyatt’s points and cash model, whereby you can reduce the cost of your stay by using some part points, and a pre-determined co-pay.
The higher category the property, the more points and the more cash co-pay required. For properties that traditionally have expensive cash room rates, using a combination of cash and points is a no-brainer. For example, the Park Hyatt Paris Vendome, which is a Category 7 hotel, traditionally has regular rooms pricing in around $1,000 USD.
So, what if the airlines developed a similar points and cash model? Would it work?
There’s a reason they haven’t – and it’s quite obvious. Airline pricing is complex.
The best available room rate at the Hyatt Dulles, for example, is going to change over-time, but it’s going to change all at once. In other words, for a stay on March 5, the price may be $100 now, but will gradually change proportionally with supply and demand. So, even if you check in at 3p or 10p, you pay the room rate for that day.
Airline pricing is an entirely different ball game. From DCA to MIA there’s about 9 non-stop departures a day in either direction, not including ones with connections. If the 6:00am flight is full, the price is going to be higher than the 5p flight which may be well under-sold. Alternatively, because the 6a flight is so early, AA may try to entice passengers to book it by reducing the fare over the 5p flight which is at a much more desirable hour. Flight prices change drastically minute by minute, and because there’s so many flights, there’s no one set price for the day, or the time. Co-pays would also have to change more regularly than Hyatt changes theirs, due to rising fuel costs.
So, airlines wouldn’t be able to directly copy Hyatt’s model. Besides, they’d have to categorize cities and times to come up with categories and an associated pricing structure. Is the JFK to LHR flight a Category 7, while the Wichita to Dallas flight is a Category 1? It’s too complicated a system to employ a true points and cash model.
Delta already has a points and cash model in place, though there’s is different. They determine what a set amount of points is worth, and then deduct that cash portion off of your fare. This, is the likely direction for any future airline points and cash models.
Jamie Larounis is an avid traveler, blogger and miles/points educator. Traveling well over 100,000 miles a year and staying in hotels for over 100 nights, he leverages miles, points and other deals to fly in first class cabins, and stay in 5-star hotels. The Forward Cabin shares his experiences, musings, reviews, tips, tricks, resources and industry news with you, the fellow traveler.
Delta’s new Miles and Cash option is pretty much already like that. For a trip that is 25K, it costs 15K and $190. That is independent of the cost of the ticket and is based solely on the tier of the award.
Alaska Airlines does this already. Sometimes it is a great deal (and you earn miles on the flight too), other times it doesn’t make sense to spend the miles plus cash.
Avianca LifeMiles offers cash and points (you buy a portion of miles needed at a discount at the time of redemption).
BA offers miles purchase at time of redemption at a reasonable rate as a form of cash and points.
bmi Diamond Club used to offer straight-up cash and points awards. You’d pay half the miles plus a cash co-pay.
What airlines don’t have is a separate more restrictive inventory bucket for these awards the way that Hyatt and Starwood do. Of course that’s not the only model for hotel cash and points awards, IHG Rewards Club offers cash and points where you’re just buying points at a discount at time of redemption as well.
FYI – somehow this comment ended up in spam, so I apologize for the late reply. Had to fix it and resurrect it. All excellent points, I didn’t think of! When I first thought of this idea, it was more of a direct comparison to the Hyatt cash and points award chart itself, but I neglected to cover the others as well. Thanks for the info, Gary!