With flight prices so high, is now the time to get a rewards credit card?

If you’re thinking of ditching the Australian winter blues for an overseas holiday you may have noticed that the price of flights has skyrocketed. So, how can you still nab a flight without incurring these higher costs?

When plane tickets are more expensive, it may be worth considering if a rewards card could get you to the skies faster (and with additional travel perks). Let’s explore what’s driving up the cost of flights and how a rewards credit card may take some of the sting out of the cost of your next trip.

Why are flight prices so high at the moment?

The airline industry is currently experiencing a sharp increase in demand after two years of travel restrictions and lockdowns during the pandemic.

Unfortunately, during this time airlines, like Qantas, had to make major adjustments to survive financially. Whether this meant idling staff or full layoffs, airlines are struggling with staff shortages. Following the relaxation of mask rules, those staff still operating are at a higher risk of catching COVID-19, or other illnesses. All these factors have resulted in flight cancellations and rescheduling, putting more pressure on supply.

Meanwhile, rising inflation, due to factors like supply chain issues and the Russian war in Ukraine, means the cost of goods and services in general are increasing. And this includes plane tickets.

It’s not just everyday Australians paying more at the bowser, but airlines too. Margins for refinery products, like jet fuel, are much higher today due to these factors. For example, Shell reported its refinery margins were double the rate in Q2 2022 than Q1. 2022. Airlines will factor these rising expenses into their pricing when setting the cost of flights.

How could a rewards credit cards help?

The airlines are facing greater demand for flights in a time when skilled workers are scarce, and overheads are higher. This creates a perfect storm for your wallet when it comes time to book plane tickets.

However, a rewards credit card may be able to help some customers in higher-cost environments.

• Free flights with frequent flyer points

Many rewards cards are connected to frequent flyer points programs, such as Qantas Frequent Flyer. These rewards cards typically allow you to earn frequent flyer points per dollar (or more) spent, which can be exchanged for plane tickets. Building up enough frequent flyer points to exchange for plane tickets can take a little time, so it’s also worth comparing rewards credit cards with bulk points on sign up.

At the time of writing, the Qantas Premier Titanium credit card offers customers 150,000 points on sign up. This is enough to nab you return flights to Los Angeles or even London and Rome. This is the largest frequent flyer sign up points bonus for a rewards credit card on the RateCity database.

• Complimentary insurance

Rewards cards typically offer customers complimentary travel insurance, including domestic and international insurance. While the level of coverage an insurer will provide is based on risk, it’s still a competitive benefit of a rewards card.

There is a risk that your flight may be cancelled or delayed, which could cost you in terms of rebooking or pushing back accommodation and rental car bookings. Complimentary travel insurance may help to cover these costs while setting you up in accommodation if stranded.

Staff shortages and frequent flight cancellations means you’re at risk of losing more than money when travelling in 2022. With some calling the current period the ‘summer of lost luggage’ there’s been a significant increase in incidents of lost luggage. Replacing lost, stolen, or damaged luggage can cost hundreds, if not thousands of dollars, but credit card insurance can help cover some of these costs. You may also be eligible for funds from the insurer to purchase what you need (clothes, toiletries) while on holiday, so you’re not stuck wearing what you flew in.

And while restrictions have eased globally, the threat of catching COVID-19 is not over. Complimentary travel insurance may help to cover things like medical costs, cancelled flights, extended accommodation due to isolation, and more.

• Hotel upgrades and rental cars

Rewards credit cards don’t just protect you in case of the worst through insurance but can also offer you generous travel perks through rewards programs. This includes complimentary hotel stays, accommodation upgrades, rental car bookings and insurance and more. It’s worth comparing what benefits your rewards program offers you while travelling and if it’s a preferred hotel chain before signing up.

• Access to airport lounges

You may also gain discounted or free access or passes to airport lounges through a rewards credit card. This can come in the form of free (or discounted) passes to airport lounges just for signing up, or free airport lounge access, saving you hundreds of dollars in annual membership fees.

Airport lounges are a must-have experience for many travellers, especially premium credit card customers. And in a time when avoiding crowds is a priority, having access to airport lounges can be a competitive benefit of a rewards credit card.

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