The best airline rewards program is a bit of a surprise

(NerdWallet) – Airline rewards programs offer a simple proposition: If you fly multiple times with our airline, you’ll be reimbursed in the form of miles or points that can be used for future travel. Yet understanding how many miles you’ll earn and how much those miles are worth can be anything but simple.

These rewards programs drive much of the airline business. For example, American Airlines AAdvantage members spent an average of $1,220 on flights in 2019, compared to $408 for non-members, according to a Securities and Exchange Commission filing. Airlines therefore have a strong incentive to retain frequent flyers with high-value rewards.

Yet for customers, analyzing the many variables that go into that value proposition is not easy. For many, this can be downright intimidating.

A December 2021 and January 2022 survey of 2,150 US consumers by Arrivia, a travel technology company, found that 45% of Americans say they don’t know if they are getting the most from their travel rewards.

Luckily, you don’t have to figure it out on your own. NerdWallet collected hundreds of data points from airline rewards programs to determine which offers the highest overall value. And in 2023, that loyalty program is: Frontier Miles by Frontier Airlines.

Yes, an airline best known for low fares and high fees has beaten much bigger competitors like American and Delta Air Lines.

So how did Frontier become the most valuable airline rewards program this year?

Miles traveled, not dollars spent

To determine the most valuable airline rewards program, NerdWallet conducted an in-depth analysis of the two most important variables:

• How many miles you earn with a program.
• How much are those miles worth.

With these, we have determined a “rewards rate” for each airline program, which is roughly similar to a cash back rate.

Basically, for every $100 you spend on airfare, you can expect to get about $10.10 back from the top airline rewards program, Frontier Airlines, and $3.40 from the bottom performer, Spirit. Airlines. Alaska and Hawaiian Airlines are also doing well, while the “big three” of American, Delta and United are clustered near the bottom.

You might be wondering, “What’s going on here?” Both Frontier and Spirit Airlines are budget carriers that offer no-frills fares and lots of additional fees. Why does one offer more than double the return on spend than the other?

In our analysis, it was not just about the value of the miles for these programs. We price Frontier miles at 0.8 cents each. What mattered was how those miles were earned: either by distance traveled or by ticket price.

Airlines that award miles based on distance flown, such as Alaska and Frontier, have performed much better than those that award miles based on money spent. Distance-based programs simply distribute more miles per dollar spent on airfare.

Is Frontier really the best? Good …

Frontier’s ultra-low fares are part of its success in this analysis, because it means travelers earn even more miles per dollar spent. If a traveler spends $200 on a 2,000 mile flight with Frontier, they will earn 10 miles per dollar. The same traveler spending $300 on a flight to Alaska would earn 6.7 miles per dollar.

And this is where things get a little complicated. Frontier charges far more fees than Alaska, on everything from baggage to seat selection, and those fees don’t earn miles on any of those airlines.

So a Frontier flyer only gets a better deal if they’re willing to give up some basic amenities, like carry-on luggage and an assigned seat. Any money spent on fees with these distance-based carriers is essentially wasted, in terms of mileage earning, reducing the number of miles earned per dollar spent.

Frontier also has a much worse elite status program overall than Alaska and most other airlines, and other big downsides, such as miles expiring after just six months of inactivity (yikes – because many do not expire at all).

So yes, on paper Frontier offers the best gross return value in miles on dollars spent. But in practice, full-service airlines like Alaska, Hawaiian, and JetBlue — positions 2, 3, and 4 in our analysis — are still probably better bets. This is especially true for frequent flyers looking to enjoy elite status and credit card perks, or those who will be spending money on incidentals when traveling with Frontier.

What else to consider

It’s clear that distance-based programs beat airfare-based programs in terms of the value of miles earned per dollar spent. But American, Delta and United, which make up a huge slice of the airline pie, all have expense-based programs.

What is a frequent flyer trying to choose between these airline rewards programs?

Just as Costco probably offers the best value for many items, but isn’t practical or feasible for many food shoppers (who needs that much cinnamon?), there’s more to consider than pure value. Ask yourself:

• Which airline offers the best routes from my home airport?
• What about operational reliability (ahem, Southwest, ahem)?
• What is the best partner airline for international destinations?

The list goes on, but the fact is that no one variable determines the “best” airline for you. But if all these other factors are random, go for the one that offers better rewards rate based on NerdWallet analysis.