Yes, I definitely think there is an indirect correlation between supply of miles and their value. The more miles are out in the public, the more people there are chasing after any given award seat (of which there is only a limited availability).

That's exactly my point: the devaluation is connected to the total amount of miles outstanding that haven't yet been redeemed!

That's an interesting question; to the extent that Baby Boomers might all want to 'cash in' their miles at a similar point in time, that will definitely have an impact on the value of all miles outstanding. That 'what if' scenario would not be unlike having everyone simultaneously run to their bank and attempt to cash out their bank accounts ...

Not to mention the latest developments that show the airlines eager to reduce the liabilities side of their balance sheet by devaluating the value of miles by making it even harder to redeem them (adding extra hurdles, award requirements and/or limitations to their usage)

All in all, not good for the mileage valuation index!

 

I (even more now) love miles&more's 'allowance' for Senators to go (officially, written rule) 160'000 miles negativ - doing so puts the devaluation risk on the airline's shoulder (Gisela is about 100'000 negativ with them).

 

Those of us who by geography or choice are members of OnePass and use our miles for coach tickets have seen an effective devaluation of 50% due to the almost non-existent availability of standard reward tickets, forcing us to use the so-called
EasyPass ("SleasyPass" on the FlyerTalk CO board) awards.

Time will tell if this becomes an industry-wide trend.

Yet this example shows that airline miles are not a good long-term "investment" or "currency." The risks are too great, not only airline de facto devaluation, but also the fact that each and every one of us will die some day, rendering our account balances worthless.

I'm all for earning as many miles as possible, including by FT subscriptions if necessary to achieve my travel goals, but a prudent flyer will spend most of his miles fairly promptly, to avoid the twin risks of death and airline "taxes" (rule-changing award availability devaluation).

To consider miles as a "currency" or an "investment" for retirement is putting wild-eyed optimism over the plain language of the frequent flyer terms and conditions promulgated by each airline. Ignore those terms and conditions at your peril.

So long as those terms and conditions include termination on death, and remain subject to unilateral change by the airline, holding miles for the long term is like consistently betting against a casino.

Miles are best enjoyed now, while they still have (some) value.

 

I think the original core premise of FF programs was, and is, still valid. Encourage and reward loyalty, etc. Not unlike businesses in other areas (like sub shops) that use punch cards (Your tenth one's free!).

Since seats are perishable, it looks even better when airlines yield-manage the bulk of the traffic into seats that would have gone unsold anyway.

The whole system might be sustainable indefinitely with if most miles were earned by flying. Have 97% of fliers earning at 1:1 (elites, after all, are a minority for a reason) and let hotels and rental cars do points but that's basically it. The way it used to be.

What seems to be throwing it out of whack is all the miles on the GROUND that airlines are selling with credit-card companies, long distance or even directly to the public.

I don't blame those who are accumulating them at all. But with things as they are now, airlines have every incentive to sell as many miles as they can and no incentive to worry about things like ratios of outstanding miles to available seats. Take the money now, worry about consequences later.

One other trend that seems to be building: "points" based reward programs that cap the value of tickets they'll give as awards. Capital One's MilesOne 20K award is zoned (bleah!) and capped at $360. The ticket is a "paid" ticket and gets no blackout dates or FF-availability restrictions, but the cap can be a problem for many people.

My overall response this year has been to downshift and go for gold-level status rather than platinum (My travel is mostly leisure, so it's easier to do that). I'm also trying to spend as many miles as I earn, so that the balance doesn't build.

 

The big dog in FF programs, and the X factor in valuing miles, is the (apparently) legal right of the airlines to change awards at their will. You can't measure what you have saved with a mile until you've actually used it to save money you would've otherwise spent.

That's why to me the threads that suggest people incur costs of, say 2 cents a mile to earn miles because one can look over at an award chart and compute theoretical savings of 2.2 cents are nuts.

United just raised the cost of the award I use most (upgrade to Europe) from 40,000 miles per trip to 60,000. And buried in the data are the fare increases over the past 3-4 years which mean I can no longer upgrade a $700 coach fare but must now pay $1,100 to do so.

**** right those miles are worth less. And they may be worth even less tomorrow.

 

I am thinking my strategy for 2003 will be spend now, pay later.

I have miles for a number of first class tickets, plenty of hotel points and I think I might just spend 100,000s of miles and forget buying status for 2004 until the picture is clearer of what the "value" of status will be.

I have elite status for 2003 and I should have more time off in 2003 than in the last few years. I think I will spend now, and pay later when I need to build up the balances again. And rather than flying just UA for status I can just pick and choose from the best mileage earning opportunities appearing in 2003, regardless of brand.

So much for airline loyalty.