Bank Of America Points Will Transfer To Alaska Airlines—But Your Miles Could Be Worth Less

In addition to news about product and joint ventures, Alaska Airlines announced news announced its loyalty program today. One item is generating frequent flyer excitement – points transfers to Alaska are coming – that I’m not so sure bodes well for the value of miles already in your account. Alaska made several announcments: As they’ve previously discussed, members will be able to choose how they earn miles for flights starting October 1 – distance flown, fare paid, or segments. If you don’t select a method the default for existing members is distance, while default for new members starting Jan. 1, 2027 will be ticket price. Earning style can be changed once per calendar year. They’re expanding ‘communities’ as they’ve promised, beyond their Hawaii and Alaska-focused ones. Members will be able to choose from six, and benefits “range from free bags, exclusive flight deals, bonus-point challenges, partner offers and 20% off select Atmos Rewards Unlocked experiences to tailored perks such as award-flight discounts for children, bonus status points for international travel and expanded resident benefits for Club 49 and Huakaʻi by Hawaiian.” Refershing the Alaska small business card from Bank of America later this year “with benefits including 10x points on eligible purchases through Atmos Rewards for Business, lounge passes, free same-day confirmed flight changes and more.” A new mileage-earning debit card, following United and Southwest, Wyndham and others. Small banks that are ‘Durbin-exempt’ still are permitted to earn a profit on interchange (merchant swipe fees). It’s become possible for a program to manage a stable of smaller banks (so the bank doesn’t grow too much and become non-Durbin exempt) and manage applications centrally. Thus, rewards debit which largely went away with the ban of profiting from debit interchange included in Dodd-Frank Financial Reform legislation returns. But the news that next year more points transfers into Alaska will be coming could be the biggest item of all. It got an excited exclamation mark from One Mile at a Time. In 2027, Alaska also plans to deepen its Bank of America relationship by enabling customers with eligible Bank of America card products to transfer points into Atmos Rewards. The new capability will give Bank of America cardholders another path into Atmos Rewards while creating an additional revenue opportunity for Alaska through the sale of points. Over time, Atmos Rewards also plans to add points-transfer opportunities with other select global financial institutions, creating incremental revenue while building the program’s global relevance. Alaska Airlines has an exclusive cobrand deal with Bank of America. It presumably precludes points-transfers from Amex, Chase, Citibank and Capital One (and Wells Fargo, US Bank, etc). They have transfers from Bilt Rewards, but Bilt is not a credit card program it is a rewards program that has a credit card (like Marriott Rewards has its own credit cards, and offers points transfers to Alaska). The Bank of America Alaska Visa even earns points for a fee paying for housing through Bilt. Bank of America hasn’t had points transfers, so Alaska hasn’t earned money off of BofA’s other card portfolios. That’s apparently changing. And we’re told to expect more points transfers from other banks globally, so outside the U.S. where Bank of America would have exclusivity. Here’s the problem. Alaska sells miles at a premium. They charge more than Hawaiian Airlines used to (Hawaiian was an Amex transfer partner). Bilt is willing to pay their price for miles but note that there’s never been a Bilt points transfer bonus with Alaska, just as their hasn’t been with Hyatt which is also premium-priced. To make the economics of points transfers work it seems likely that Alaska will either need to reduce the price of points, or transfers will need to be at less than 1:1. This is doubly true in foreign markets where interchange fees aren’t as robust as in the United States. Lowering the price of points is doable – if the redemption value of points is lower. I’m not worried about transfers from an award availability standpoint. Printing a whole bunch more miles isn’t going to matter for swamping Alaska Airlines award availability. There’s very little reasonably-priced awards on Alaska to begin with. The value of Alaska miles is in redeeming for travel on partners. And transfers into Alaska seem likely to be immaterial for eating up partner award space. In most cases those awards are redeemable through British Airways, Qatar, American Airlines, etc. so adding incrementally more Alaska miles probably doesn’t change overall demand for oneworld airline award space in a noticeable way. It’s pricing of partner awards that I’m interested in. And if Alaska lowers the price they sell miles at to make the economics of transfers work, that would imply higher redemption pricing and that doesn’t excite me. Hopefully Bank of America will just be paying their premium and transfer ratios for foreign financial institutions will be unfavorable to preserve the strenght of the Atmos Rewards currency. Topics on this page