MilesBuzz! - AA Devaluation: Why is This Legal?

As many of you know, in May of 2003, American will be charging 25% more mniles for certain award tickets.

I know the mice print says we can change anything at any time, even make YOU pay US for the miles, take your firstborn, blah blah blah. I also know that just 'cause it's in writing don't make it enforceable. Call me naive, but how can they get away with this?

If memory serves, the last time they tried this they ran headlong into a massive class action lawsuit that eventually prevented them from devaluing existing miles. Why is this time different?

Before all you In-A-Free-Market-Businesses-Are-Free-To-Stay-Up-Late-Nights-Thinking-Up-Newly-Creative-Ways-To-Screw-You types jump in, answer this: What if these were not airline miles, but instead something like groceries? So instead of having 500,000 airline miles (originally) worth $10,000, I had 500,000 Grocery Points redeemable for $10,000 in produce, eggs, and milk? And what if I had spent a lot of money getting those Grocery Points because of advertising encouraging me to acquire them because of what they could be redeemed for? And then one day, Ralph's or whoever is running the promotion says Sorry, we've decided they're only good for dried turnips? Do you think people would just go, "Oh well, F me. Better luck next time?" Or do you think they're be Ralph's execs hanging from the nearest lamppost? Do you think that would be legal?

As a Californian familiar with our state consumer protection laws, I can answer unequivocally: No. It wouldn't be. In my state, it's not even legal for gift cards to expire -- EVER -- even though it clearly states that they're no good after a certain date.

Does this mean that I think companies should have to honor their commitments even when they're stock is in the toilet, they're hemorraging money, and they find out they were way too generous in the first place?

If we're talking about previously earned benefits, yes. That's exactly what I think.

When they changed the program 14 years ago it was big changes so they granfathered the old miles a great deal for us. Then they decided to just change five to ten a year and then they can just do it without to much complaining. In ten years they will have changed it through annual changes.

Funny you mentioned Ralphs! Were you signed up for Webmiles with them? Went bust in the night with no notice?

Seriously, IMO Bidkat raised valid arguments here.

Under my sense of justice it's also very questionable to give points against paid services under a certain condition of the worth of them and later change the worth drastically.

And that especially becomes true if you earned the miles on a mileage run. Or if you bought certain products mainly because you could earn miles on them.

For another view think about the business-partners of a mileage programm: They buy miles for a certain amount of money and the airline just decides to raise award levels. That is even more a point where a lawsuit would be in order.

I would guess (but don't know for sure) that in the old days of S&H green stamps, the catalog of premiums was revised on a regular basis, and the number of stamps needed for a particular item likely to change at least occasionally. But this is just a guess. Over time, that would probably have had to happen - since the number of stamps correlated to dollars spent.

In the case of flyer miles, the inflationary factor would be automatically compensated since the premium is for miles flown rather than dollars spent.

Interesting topic, which by the way, is not AA limited, so please don't move it!

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Bidkat:
Before all you In-A-Free-Market-Businesses-Are-Free-To-Stay-Up-Late-Nights-Thinking-Up-Newly-Creative-Ways-To-Screw-You types jump in, answer this: What if these were not airline miles, but instead something like groceries? So instead of having 500,000 airline miles (originally) worth $10,000, I had 500,000 Grocery Points redeemable for $10,000 in produce, eggs, and milk? And what if I had spent a lot of money getting those Grocery Points because of advertising encouraging me to acquire them because of what they could be redeemed for? And then one day, Ralph's or whoever is running the promotion says Sorry, we've decided they're only good for dried turnips? Do you think people would just go, "Oh well, F me. Better luck next time?" Or do you think they're be Ralph's execs hanging from the nearest lamppost? Do you think that would be legal?</font>
Funny that you would ask a question and then tell anyone that could answer it for you that you don't want to hear from them. I bet you think that raising the minimum wage to $10 would give everyone who is working at an entry level job at least a living wage. My question to all that think this is a true statement is why don't we raise the minimum wage to $100 an hour and then everyone will be wealthy. Well at least those that still have a job. BTW you answered your own question when you stated that "So instead of having 500,000 airline miles (originally) worth $10,000, I had 500,000 Grocery Points redeemable for $10,000 in produce, eggs, and milk?" If you had this situation when the cost of eggs went up you would get fewer eggs. Sorry but the economic law of supply and demand still applies and it really doesn't matter that we may not want it to.


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"A day without Points is like a day without SUNSHINE"

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Bidkat:
Call me naive, but how can they get away with this?</font>

OK, you're naive. The terms said that they can change the program at any time - this is what you agreed to when you signed up for their (not "they're") FF program. What is so difficult to understand? All you have is a gripe, not a valid complaint.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Superd1:
Sorry but the economic law of supply and demand still applies and it really doesn't matter that we may not want it to.
[/B]</font>

One airline's policy does not equal "supply and demand". Right now, American can unilaterally set new award levels any way they want, and for any reason they want -- which may or may not include "supply and demand". And they can do it with impunity.

My Ralph's example was flawed -- I should have given the hypothetical Grocery Points a fixed reward value -- 5000 cartons of eggs, say. That would more closely parallel an airline FF program, which promises a specific benefit productrather than a dollar value to be used against a list of awards. FF miles aren't like that because their value is defined only by the airline's redemption schedule. If, instead of miles, they gave you scrip in dollars usable against actual market-set ticket prices, that might be another story. As Watchful points out, any argument that airlines need to raise the cost of awards periodically due to inflation is specious: it's already accounted for because awards are earned for miles flown, not dollars spent.

Price increases are always occuring. If a product is in greater demand, as award seats are on many routes, then why should these not rise after several years too? We never hear complaints about all the bonus miles given out, or increased means of earning miles. Only when the award charts change upward. I think airlines and hotels have ruined their programs by permitting miles/points to be earned with credit cards and by other non-travel related means. This inflates the number of miles in circulation, and to maintain a relative value to awards, forces them up.

I think HiltonHonors has been the bigggest offender this past year, giving out its 50K/4 stays bonus as well as Gold status willy nilly. No wonder it is raising its prime VIP awards.

I suppose for those of us who lived through the period of high inflation in the 70s and early 80s, this means a lot less to those who have experienced little of this, even in the booming 90s.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Bidkat:
My Ralph's example was flawed -- I should have given the hypothetical Grocery Points a fixed reward value -- 5000 cartons of eggs, say. That would more closely parallel an airline FF program, which promises a specific benefit productrather than a dollar value to be used against a list of awards. FF miles aren't like that because their value is defined only by the airline's redemption schedule. If, instead of miles, they gave you scrip in dollars usable against actual market-set ticket prices, that might be another story. As Watchful points out, any argument that airlines need to raise the cost of awards periodically due to inflation is specious: it's already accounted for because awards are earned for miles flown, not dollars spent. </font>

Glad you responded because I had already thought that you would have had to use the 5,000 cartons of eggs to more accurately parallel the point you were trying to make. Actually your first example is more accurate. The airlines and others are offering to give you points for purchases and/or certain actions. one thing they are NOT doing is quarantying the purchasing power of those points. This would be much like your employeer giving you a paycheck for $100 and telling you that no matter how long you keep it he will make sure you can buy 100 dozen eggs with it. This situation is definitely a supply and demand situation. There are many more miles/points earning opportunites today than there were 5 or 10 years ago. Let me ask you another question. Have you ever used a code that was provided on this or any other internet site to get more benefits? For example did you call Hilton and ask to have your card changed to a Gold Card? The internet has created little communities like ours that share information and help each other get ever more points. Most of these codes are targeted that means for the origional recipient only. Yet frequently the offeror honors all comers. More (Supply), now all of us that have earned these points want to cash in. (Demand)If no allownace were made for the effects of inflation and such soon the offeror would go broke and we will have strangled the Goose hoping to get one more free flight or one more nights stay.... Sorry, you haven't convinced me that the airline is evil. If they are then logically so are we.
For myself I'll not spend any time complaining but instead invest that time in seeking other point earning opportunites so that I can continue to enjoy things like the 6 free nights and free round trip first class air to Kona that I will be enjoying in September.
Thank You, Hilton and Alaska Air!!!

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"A day without Points is like a day without SUNSHINE"

[This message has been edited by Superd1 (edited 12-28-2002).]

Duh! You buy a gift certificate to a store, intending to purchase a product that costs $X. In between the time you buy the gift certificate and the time you purchase, the price goes up to $X + 10%. Has consumer fraud been committed? Of course not. Anytime you hold on to currency of any kind, what you can get for that currency can change. FF miles are currency. Prices change. Get over it.

All of the programs now include the "right to make changes at any time" language noted above. However, much to everyone's benefit, some years ago a task force of state attorneys general negotiated with the major airlines (after some consumers expressed dissatisfaction with changes many years ago) and got the majors to agree that they would give 6 months notice of future changes. That's what American has done here. I see nothing wrong with anything they have done.

Djlawman

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Superd1:
Sorry, you haven't convinced me that the airline is evil.</font>

I never said American was evil. I don't blame them. What they're doing is apparently legal. I just don't see why it should be.

Society deserves the results of its own legislation. We decide on public policy, then pass laws to further it. When two people make a contract, we burden each side with the responsibility of finding out what they're agreeing to ("due diligence"). We do that because it's good for the rest of us to have as few legal disputes as possible -- it saves us all money (court costs). I don't see how public policy is served by allowing companies to make up their own currencies, effectively sell those currencies for exclusive use only at their "store front", while retaining the right to devalue them at any time to any degree. Clearly, it will always be in their interest to deflate their value. And that's exactly what has always happened.

Business is neither evil nor good. It is just business. When we fail to do a good job setting the rules, we pay. That's why there are thousands who used to have a job and a pension at Enron and WorldCom.

I think we have failed here, and we should fix it.

I'm not sure what your proposed solution is. It appears that it should be that award levels can never, ever be changed once they are established. Do you think this is reasonable?

I think that providing 6 months' notice is reasonable, especially since you can book travel up to 11 months in advance. That gives you 6 months to plan, and 17 months to travel, before you're affected by the new redemption levels.

If this is not enough time, then I suppose that no amount of time would be enough. After all, if you earned 1000 miles a year, it could take you 25 years to get a standard domestic award. Presumably someone, somewhere could be unduly affected even if they were given 20 years' notice of a change.

Of course, this line of reasoning could be taken to extremes:

- I fly to Australia each year, and am saving up for a First Class award on Qantas. Before I'm able to redeem, Qantas drops out of oneworld, and is removed from AAdvantage. After I earn even 1 mile, is American responsible to provide continuing availability on Qantas?

- I fly to London often, and am saving up for a first class award. AA, because of changing market conditions, decides to reconfigure their international service to a two-cabin service, offering coach and enhanced business class. I will only fly first class, and was counting on being able to redeem for this award.

- I fly from San Diego to DFW each year for Thanksgiving. I plan to use an AAnytime award to book the 7pm departure on the day before Thanksgiving, so that I can make it to DFW in time for Thanksgiving. I have to leave that late because I can't get the day off of work. AA decides to eliminate the 7pm departure.

In each of the above hypothetical cases, a change in AAdvantage or AA service could throw off the plans of someone that's been saving miles for a few years in anticipation of a particular award.

So, I think we need to accept that there will be program changes from time to time, as long as there is reasonable advance notice.

And, under a system where no changes could ever be made, I think that the benefits they'd give out would be far less than they are now.

I think it is indeed naive to say AA cannot "devalue" their miles. AA and every airline have devalued (i.e. raised the mileage price for awards) in the past, and they all continue to do so. Some airlines have just raised their domestic award by eliminating an " off peak" 20k award, and by raising some internaitonal awards. If even the United States government cannot keep the dollar from losing its purchasing power over the years, how can we expect an airline to do so with its miles ? Is it realistic to expect an airline to maintain the same award structure for ever ? If it is, I will choose the 1980s when Northwest gave me a week's hotel and a week's car rental with my awards.

I think I could make the case for a class action against the government for inflation.

After that, I'll file a case against the entire practice of currency trading because the value of my dollar bills are being devalued by some currency trader somewhere.

While we're at it, shouldn't sales be illegal? If it's illegal to raise the cost, why isn't it illegal to lower costs. We should go the German route and prohibit stores from having sales which discount things below cost. That means all those web fares are illegal.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Bidkat:
I think we have failed here, and we should fix it.</font>

Nothings broke so there's nothing to fix.


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"A day without Points is like a day without SUNSHINE"

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Steve M:
I'm not sure what your proposed solution is. It appears that it should be that award levels can never, ever be changed once they are established. Do you think this is reasonable?

I think that providing 6 months' notice is reasonable, especially since you can book travel up to 11 months in advance. That gives you 6 months to plan, and 17 months to travel, before you're affected by the new redemption levels.

If this is not enough time, then I suppose that no amount of time would be enough. &lt;snip&gt;</font>

Might I suggest a solution - one that seems to have worked reasonably well in the past?

Certainly we can't require the airlines to never raise the "price" of the award travel (although a good case could be made for tying any "price" increase for awards to actual fare increases or actual cost increases - haven't quite figured out the details on how that would work, though). However, I'm not sure the "six-months notice of increases" is sufficient protection for the consumer.

Remember, unlike with "real" currency (that you can take to a store down the street if you don't like the prices in the store you happen to be in), the airline itself is the only game in town. They not only are determining the price, they're also determining availability of the awards.

If your experiences are anything like mine, you will have discovered that finding award availability is not always easy. One time trying to get an award ticket the reservations lady and I went through a six-month period and didn't find *one* award seat available on a particular itinerary during the entire period! (Not an unusual itinerary, either.)

So, I can't agree with you that "If this is not enough time, then I suppose that no amount of time would be enough."

TWA, and other airlines, used to "grandfather" the existing miles when they made a changeover, and allow the holder to use those miles against the "old" award structure. That usually lasted 5 years or so (by which time most of the miles would have been used), although I seem to recall TWA allowing the FFB miles to be used against the old award structure until about a year before they finally were bought by AA.

That seems a fair result to me - grandfather the existing miles and allow those (and only those) to also be used against the old award structure for a significant period of time. I'd say five years should do, but that's a detail that can be worked out.

I agree it is inequitable to the consumer when the folks printing the currency can devalue it willy-nilly. That's a third-world trait.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Counsellor:
I agree it is inequitable to the consumer when the folks printing the currency can devalue it willy-nilly. That's a third-world trait.</font>

and the airlines are run like??????

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"A day without Points is like a day without SUNSHINE"

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Counsellor:
I agree it is inequitable to the consumer when the folks printing the currency can devalue it willy-nilly. That's a third-world trait.</font>

Airlines bleed money, require government aid, has lots of unionized worker they pay starvation wages to (and then appease with benefits like free travel), and old airlines die to be replaced by new airlines doing the exact same thing.

Seems like many airlines share similar characteristics as third world nations.

Is there anywhere a link that to see the new award requirements? Thanks in advance.

Oops found it....

[This message has been edited by dudman (edited 12-29-2002).]

Look, guys, you may not like it. I don't. But they can do whatever the heck they want with their program. If they want to, they can kill the program, without giving any notice. So there's nothing we can do about it. We can either decide that we want to continue to use the program, with all its rules and policies, or we can decide we don't want to. That's our choice.

A class action lawsuit? For what? Doing exactly what they said they could do in the terms and conditions of the program? Some tort lawyer will make a lot of money off it, because AMR will likely settle to rid themselves of the lawsuit, but you and I won't see squat.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Counsellor:
Might I suggest a solution -... "grandfather" the existing miles ... and allow the holder to use those miles against the "old" award structure </font>

I agree.

Previously-earned points or miles should not be subject to devaluation, any more than a gift card for a department store. Ever. (In CA and other states, it is illegal for such a card to expire, no matter what it says.) Anything less just legalizes the sale of pigs in pokes.

If a particular award is no longer available as in Steve M's examples, the company should be required to substitute one of comparable value. This is not just common sense, it's the law in other areas of commerce (as when a retail store runs out of an advertised sale item).

The trouble is that legislators have not quite gotten around to the idea that points and miles are valuable things deserving many of the same protections afforded to real money. But they will.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Bidkat:
The trouble is that legislators have not quite gotten around to the idea that points and miles are valuable things deserving many of the same protections afforded to real money.</font>

Say hello to taxable events.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Bidkat:

Previously-earned points or miles should not be subject to devaluation, any more than a gift card for a department store.</font>

Exactly right. And a department store can raise its prices so that the gift card buys less than what you might have expected it to buy when you purchased it a year ago.

You are arguing against yourself! http://www.flyertalk.com/forum/wink.gif

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Vasant

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Bidkat:
Previously-earned points or miles should not be subject to devaluation, any more than a gift card for a department store. Ever. (In CA and other states, it is illegal for such a card to expire, no matter what it says.) Anything less just legalizes the sale of pigs in pokes.</font>

You're points are not expiring or being taken away their purchasing power is being eroded just like the $1 bill in your wallet. Why is this so hard to understand when month after month you continue to accept paper money, for pay and payment, that is backed by nothing but the promise of politicians?

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"A day without Points is like a day without SUNSHINE"

I agree with those who argue that the airlines not only have the right to devalue miles, but can be expected to do so in an environment of huge losses and gazallions of $$$ worth of liability in terms of miles on the books. Looking back to the beginning of FF programs with American Advantage, non-expiring miles are the greatest innovation ever for travelers, IMHO. It's also what has given rise to discussions like this.

Like money or stock, if you want to redeem your miles for what you consider to be today's full value, then you need to redeem TODAY. If you want to carry a large balance, then you will continue to be exposed to the liability of changes in the program until you redeem for an award at the price in effect at the time you take action. You can't have your cake and eat it, too.

My own response is to try not to carry a balance of miles in my FF account that would be greater than I would require to purchase two r/t tickets to anywhere in the world at a moment's notice without worrying about capacity controls (around 200,000 miles). Others have to decide what works for them, but the writing seems to be on the wall in terms of devaluation, doesn't it?

They could have pulled a CO style http://www.flyertalk.com/forum/starsmilie.gifenhancement http://www.flyertalk.com/forum/starsmilie.gif, kept the mileage requirement, but have made it d@mn near impossible to get a standard reward due to "capacity control" http://www.flyertalk.com/forum/rolleyes.gif

[This message has been edited by snake (edited 12-29-2002).]

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Bidkat:
If a particular award is no longer available as in Steve M's examples, the company should be required to substitute one of comparable value.</font>

What do you mean by "comparable value?" In my example of FC travel to Australia on QF, what's comparable? Would it be an international award to somewhere in FC whose full fare is around $13,000+ for 135,000 miles? Or, would it be specifically a FC award to Australia?

If the latter, how would this work in practice? Unless AA and QF had an agreement which allowed AA to purchase QF award inventory at whatever their internal oneworld pricing was indefiniately in the future, even if oneworld falls apart, I don't see how AA could do this. Even such an agreement from QF wouldn't be a total proctection from a situation such as QF discontinuing service to the US.

Certainly you don't expect them to be in a position to actually buy a $13,000+ ticket from some other airline in return for 135,000 miles? Or, would other airlines forced to accept an alliance contracted FF rate from a non-partner? Such a law would indeed provide great protection to the consumer. The problem is that no airline would offer the award in the first place if it meant taking on such a huge future potential liability.

Don't get me wrong: I do think the airlines have at least a moral obligation to us to not make sweeping changes with no notice. In fact, I think that many airlines' programs have in their own rules that they must provide notice of a certain amount before changes such as this are implemented, and I think that's a good thing.

One of the points I was trying to make is that for a lot of us, the mileage redemption levels are secondary to the route maps and especially the partner airlines. Using myself as an example, I accumulate most of my credit card miles on AA and not my usual carrier because of the wonderful selection of AAdvantage partner airlines, including oneworld. If that were to go away, my accumulated AAdvantage miles would be devalued around 75% in their worth to me. This would be much more serious to me than a minor increase in redemption requirements.

In fact, OZ is leaving AAdvantage as of Dec 31, and that was one of the carriers I was planning on getting an award on someday. I just don't see how AA could be forced to grandfather me into the all the existing AAdvantage awards in the face of such a change. I wish it were otherwise, but it's not.

[This message has been edited by Steve M (edited 12-29-2002).]

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Plato90s:
Airlines bleed money, require government aid, has lots of unionized worker they pay starvation wages to (and then appease with benefits like free travel), and old airlines die to be replaced by new airlines doing the exact same thing.

</font>

Just reading an article in today's paper (Knight Ridder/Tribune News Service) arguing that the laws governing airlines ought to be re-considered.

In the article, the authors claim that the workers have the airlines by the short and curlies - in 1990, average compensation was $47,384; in 2002 it's in excess of $80,000. 40 percent of total operating expenses.

This doesn't mean that ramp rats are getting 80K a year, but the salaries, along with flight bennies, hardly seem like starvation wages.

Quoting BidCat:
The trouble is that legislators have not quite gotten around to the idea that points and miles are valuable things deserving many of the same protections afforded to real money. But they will.

Oh great, yet another thing for the government to get involved with, just what we need. Then we can have them decide the value, and then we'll have to pay tax at an inflated value that the government will levy. I'm sure the value of an award ticket would be the highest coach ticket the airline sells. Sorry that is an "enhancement" I can live without.

I'm not crazy about the awards requiring more miles, but that is just like many thing in life, not always fair. At least the airlines take a step toward being fair, giving some notice before a change takes effect, and six months enough time to figure out when you might want to take a trip, as you can book a trip up to 12 months in advance. I would rather see mileage inflation rather than limiting even more award seats, which can be done with a whole lot less fanfare than raising the miles required.

My DSL provider just went out of business and although I'm not happy about it, at least they will keep their network operational for 30 days so I can find a new provider. Do I think the government should force them to give me 60, 90 or more? I would love longer notice, but they are going out of business, losing money every day they stay in business, and at least they give me 30 days notice, that is more than be expected by most people.

Now let us not forget when the airlines started cutting mileage requirements. I can remember when domestic award tickets were 30,000 or 40,000 miles instead of the current 25,000. Did anyone complain, or did anyone suggest the government should step in when the requirement was lowered? Using your grocery store argument, years ago I was flying and saving up points for domestic coach tickets at 40,000 miles, so the airline should not be "allowed" to change it to 25,000 any more than they should be "allowed" to change it to 50,000. Or do we only ask for government intervention when something is determental?

Frequent flyer programs change, not always for the better, but I much prefer the free market to dictate, such as was the case when all the airlines lowered mileage requirements for tickets after one program did it. As long as there is competition the system can police itself. Look at how the airlines dropped the $100 standby fee when United dropped theirs. If one Frequent Flyer program gets out of kilter with the others they face defection, and usually change the disliked policy. Free enterprise has a better track record than government intervention, and there are more pressing issues that the government should be concerning themselves with instead of if American can charge 5,000 more miles for an award.

As far as how I value my FF miles, I don't think of them as money in the bank, but more as a rebate for my business. With limited inventory for award seats it is hard to put a real value on the seats. Yes a First Class ticket to London can cost $6,000, it's hard to consider an award ticket to be worth $6,000 as the airline isn't going to give you as an award ticket the last seat that they could have sold for $6,000.

My guess is the inventory of award tickets comes from their lowest cost fare bucket. That would be the logical way to handle award travel. I wish the airlines would be more up front about this, and even say that award travel can be booked whenever L class, K class or N class inventory is available. Southwest is the most honest with their program, having very few blackout dates and if there is a seat on the plane someone can get it with a Rapid Rewards certificate.

As far as grandfathering the miles, for existing award levels that would be a classy move by the airlines, but I don't expect to see it, and really the 6 month notice gives you some protection. Delta still lets Medalion members claim awards under the old system using their old frequent flyer miles. Their 25,000 mile first class domestic award can still be obtained, and that award went away when it became "SkyMiles" which must have been at least 10 years ago. My American account still shows miles that never expire even though they changed their policy (again because of the competition) allowing miles not to expire as long as you fly every 3 years.

So as much as I hate to defend the frequent flyer programs I have to agree that they have the right to change the terms of the program. I don't always like them, but there are a lot of things in life I don't like but learn to live with. There are also examples where the airlines changed something and then realized, or were forced to realize that the change wasn't good and they changed it back. I for one would rather have this system than having the some governmental agency decide if a frequent flyer program could raise or lower the cost of an award by a few thousand miles. At least with free enterprise if I don't like one of the "enhancements" to the program I can vote with my feet and credit card and give my business to the airline that gives me the perks that I like.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by mdtony:
Look, guys, you may not like it. I don't. But they can do whatever the heck they want with their program. If they want to, they can kill the program, without giving any notice. So there's nothing we can do about it. We can either decide that we want to continue to use the program, with all its rules and policies, or we can decide we don't want to. That's our choice.

A class action lawsuit? For what? Doing exactly what they said they could do in the terms and conditions of the program? Some tort lawyer will make a lot of money off it, because AMR will likely settle to rid themselves of the lawsuit, but you and I won't see squat.</font>

they can do whatever the heck they want with their program. Well, from a practical point, mdtony is close, but not right on:

Airlines can make arbitrary changes in the rules, but they have to consider the effects of the changes on the loyalty of their passenger base and the possibility, remote but real, that they may have a lawsuit.

If a court determines that the contract terms are contrary to public policy, they can, and have, adjusted terms - like requiring a six month redemption period.

And, if we are to judge by comments on these FT fora, FTers change FF programmes on an average of about five times a year.

My guess is that the possibility of loss of passengers is a much greater factor in airline decisions about changing FF rules than concern about potential law suits, and that any changes are only made after careful consideration of what other airlines are doing, and might do.

Bruce

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Bidkat:
I know the mice print says we can change anything at any time, even make YOU pay US for the miles, take your firstborn, blah blah blah. I also know that just 'cause it's in writing don't make it enforceable. Call me naive, but how can they get away with this?</font>

It's strangely comforting to know that this sort of lilly-livered whingeing is not exclusively the domain of Australians.

Unless I'm very much mistaken, YOU freely chose to join the AA programme, and YOU were given adequate notice of the terms and conditions of that programme - including AA's right to alter or cancel at any time.

So what, precisely, is the nature of your complaint?

I've really had a gutfull of this sort of girly crying about everything that doesn't turn out exactly as expected. In case you hadn't noticed, there's just a touch of the "dynamic" when it comes to the nature of the world we live in.

Strongly but effectively put, shillard! Although our female members might justifiably take offense at the phrase "girly crying". The men here seem to whine a lot more than the women! http://www.flyertalk.com/forum/wink.gif

------------------
Vasant

[Edited to add clarification]

[This message has been edited by vasantn (edited 12-30-2002).]

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by shillard:
It's strangely comforting to know that this sort of lilly-livered whingeing is not exclusively the domain of Australians.

Unless I'm very much mistaken, YOU freely chose to join the AA programme, and YOU were given adequate notice of the terms and conditions of that programme - including AA's right to alter or cancel at any time.

So what, precisely, is the nature of your complaint?

I've really had a gutfull of this sort of girly crying about everything that doesn't turn out exactly as expected. In case you hadn't noticed, there's just a touch of the "dynamic" when it comes to the nature of the world we live in.

</font>

Dear g-d I actually agree with you... NOOOOOOOOOOOoooooooo! http://www.flyertalk.com/forum/wink.gif Also, in case you haven't noticed, the US in particular seems to be moving towards the idea that we need to be 'protected' from everything. Life happens, and some things there's just no protection from. In the grand scheme of things, this one's really really REALLY minor.

[This message has been edited by kanebear (edited 12-30-2002).]

Could someone please post the site that details the new award mileage requirements? Thank you in advance.

Bidkat, your gift card analogy is a bad one. A $20 gift card was paid for with 20 US dollars. It was not handed out free from the department store.

AA miles, on the other hand, are given out for free when you buy an AA airline ticket. It is possible to buy miles with dollars, but that would only make sense if you are one day away from getting an award, so future changes are not an issue.

A better analogy would be coupons. Coupons, like AA miles, are given away for free.

Does California law prohibit coupons from ever expiring? If not, does California law prohibit price increases on an item that has an unexpired coupon in circulation?

Bidkat, the answer to your question is complicated.

Contractually, the fine print entitles them to do this. However, there may be provisions of consumer protection law that override this result. Also, that interpretation of the contract assumes that those provisions are part of the contract. A court might ignore them if they are unconscionable (vastly unfair) of if a pax did not agree to them--not everything in the fine print is legit or is binding on you. Finally, even if they are entitled under contract and consumer protection laws, the act of changing the terms of the miles might amount to a bait and switch or other deceptive trade practice.

One caveat is that federal law preempts state law, and there may be specific legislation authorizing this as there is with the unreasonably low baggage loss limitations.

Here is an analogy that you might be interested in. Go into a store like Best Buy or Radio Shak that asks for personal information when you make a purchase. Tell them you'll give them that info for $99.95. Have them agree to this on tape. Then walk out of the store with your purchase less than $99.95 without otherwise paying and tell them to keep the change. Arguably you paid for the goods by providing your personal info. If that doesn't hold up, then neither should the fine print in the airlines' contracts.

But first you have to find a store that would actually pay $99.95 for one person's information. Good luck.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by LemonThrower:
Contractually, the fine print entitles them to do this. However, there may be provisions of consumer protection law that override this result. Also, that interpretation of the contract assumes that those provisions are part of the contract. A court might ignore them if they are unconscionable (vastly unfair) of if a pax did not agree to them--not everything in the fine print is legit or is binding on you.</font>

Your entire argument goes right out the window because it says in the terms and conditions that if you participate in the program, you are agreeing to all the terms and conditions of the program. End of discussion.

You've got a contract. Both parties agreed to it. One of the provisions of the contract is that the airline can change any of the conditions of the program at any time, and they can kill the program entirely without any notice. What possible legal grounds could you have for a lawsuit? Granted, there are some idiotic lawsuits out there, such as jokers claiming that they're entitled to damages because they didn't know smoking was bad for them even though it's only been on every pack of cigarettes for 40 years, but I wouldn't stake anything on getting an idiotic jury that would agree with you.

mdtony,

you are probably right in most cases. However, not every piece of fine print is binding because most people don't read it and a lot of it is unconscionable (extremely unfair). Its the law in most places that a court does not have to honor the fine print in either case. Its particularly likely to be the case with an air carrier that is supposed to serve the public and which via licensing and gate assignments has a quasi-monoply, or where bargaining power is not equal and the contract is a take it or leave it basis.

I mostly agree with you but its not an absolute thing.

I had an argument with our dear, DEAR friends at MCI last year. I was looking through my statements (which I did only a few times each year) and discovered that they had increased my per-minute rate for domestic calls from .07/min to .10/min. There was nothing in the statements preceeding the one in question that indicated my rate would be going up, only a note on the statement in which the rate increased (in tiny print, of course, buried where it wasn't easily spotted).

I called to complain and they said they had the right to raise rates at any time without notification, and that they did "notify" me, even if it was after the fact. I objected (loudly) and said I had a right to know what I was being charged for a call, before I made it. They said they didn't owe that to me, under the conditions of my contract with them. But, I explained, what is to stop you from arbitrarily raising your rates to $10/min without informing me. They said "oh, we would never raise your rates that high."

What's to stop AA from increasing the price of a domestic coach ticket from 25,000 to 100,000 miles? Their justification would be the same: They have the right to modify the program, even if it's after you've earned whatever miles are in your account.

Ultimately, they wouldn't make such a move because it would be bad PR. We would all pack our bags and take our business elsewhere immediately. But what, or rather how many miles, defines the line between bad PR and squeezing loyal customers just a little more? At what point do we do more than whine?

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by roti:
What's to stop AA from increasing the price of a domestic coach ticket from 25,000 to 100,000 miles? Their justification would be the same: They have the right to modify the program, even if it's after you've earned whatever miles are in your account.
</font>

That's why I feel absolutely no remorse in selling travel awards. If I don't get something for it they will probably just take it away from me anyway...

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by LemonThrower:
However, not every piece of fine print is binding because most people don't read it and a lot of it is unconscionable (extremely unfair).</font>

They make it binding by saying that if you use their program -- whether it's a credit card, mileage program, or computer software -- you are explicitly agreeing to the terms and conditions that are in the fine print.

And saying, well, I didn't read the fine print ain't gonna get you very far in a court of law. Of course, the fine print can't violate the law. But as long as it is legal, they can enforce it and you have zero recourse.

That is why it is so important to read the fine print!

mdtony, I'm not sure why you believe that the wording of contracts is legally binding in all cases. It is certainly not, for many reasons. For instance, terms that violate laws are not binding.

A contract written by one party and implicitly agreed to is called a "contract of adhesion." Courts are not reluctant to overturn any terms in such contracts that they deem unreasonable.

QL

AA did lose a class action suit on this issue many years ago. What is the legal distinction between that situation and this one.

I don't think that we are debating all of the terms of these contracts, only the one that states "we can unilaterally change this program to our advantage at any time."

I'd love to see what would happen if auto companies put that line in their warranties, and then "revised" the terms at a later date. They would be crushed by the ensuing legal mob.

Starting to head off topic, I've seen a number of (non-travel) products that are including a clause stating that it "may not be resold" after you buy it. This flies in the face of most property rights and perhaps one day it, like the ban on sale of travel awards, will be gunned down.

If you want to call these agreements "contracts" between parties, then both parties should be bound to honor the terms in effect at the time of contract. If that means that 2002 miles have a higher value than 2003 miles, then so be it. But changing the value after the fact (like lowering the $20 gift certificate to $15) is a slimy tactic.

Bidkat-

Worldcom and Enron broke existing rules. The same would be true if car makers changed warranties after the sale.

On the other hand, AA did not break existing rules.

Think about it. Breaking rules, not breaking rules.

Big difference.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by QuietLion:
mdtony, I'm not sure why you believe that the wording of contracts is legally binding in all cases. It is certainly not, for many reasons. For instance, terms that violate laws are not binding.</font>

What part of "can't violate the law" wasn't clear enough? I will try harder to make it crystal clear in the future.

lets fight fire with fire. Lets send revised terms to the airlines with our payment that states "acceptance of this payment constitutes Airline's acceptance of these terms." The new terms could be something like 10,000 miles for an F award.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by mdtony:
What part of "can't violate the law" wasn't clear enough? I will try harder to make it crystal clear in the future.</font>

and also replying to your earlier:

They make it binding by saying that if you use their program -- whether it's a credit card, mileage program, or computer software -- you are explicitly agreeing to the terms and conditions that are in the fine print.

And saying, well, I didn't read the fine print ain't gonna get you very far in a court of law. Of course, the fine print can't violate the law. But as long as it is legal, they can enforce it and you have zero recourse.

That is why it is so important to read the fine print!

No, that is why it is so important to know what is legal and enforceable and what is not!

The point several have been trying to make is that whether it is written in fine print or bold letters, for a lot of reasons, much of what is written in FF programmes is NOT legal and NOT enforceable.

What is useful is to discuss just what parts are reasonably enforceable, and what parts may reasonably be challenged. We can make a best guess, but most of the time we won't know with certainty until there has been a challenge and a court ruling. The wording in question that the FF programmes can change any of the rules and conditions at any time has been challenged and held unenforeable in the past by courts.

What airlines, and lots of others who include similar wording in contracts, hope for is that those reading such wording will believe that it is binding and effective, and even if they don't agree, will find the cost and hassle of challenge too great.

Bruce

I know we all feel good about saying that we will sue if the airlines don't give us what we want, but I agree with the side of this issue that says AA isn't doing anything wrong. People - you are getting something for nothing! You agreed to pay $400 for your ticket from LAX-LGA or LAX-LHR-SIN-LGA for $200. The fact that we get anything else is a bonus. I didn't see this much venom when some airlines discounted miles for deeply discounted fares. (or maybe I was watching football) They give six months notice; plan your travel. I'm planning a trip during the summer for my family to the EU. If UA said that the intl awards were going up, I would book that trip very VERY quickly. If I couldn't get a single seat in the next six months, that would be another story. If AA said that they would discontinue the program completely and all points were null, then there could be some legal ramifications regardless of what they put in the T&C's. Yes, there is unenforceable clauses, but that's a topic for a Saturday seminar.

Wake up people, we are in a different world now. DO we really want to go back to a regulated (gasp!!) airline travel environment? As soon as you say "the government should step in" that what it's getting to. I don't think so. I'd like to still be able to get a free domestic 25K mile ticket for one trip to Asia, but it look like that won't happen.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by brucemcal:
No, that is why it is so important to know what is legal and enforceable and what is not!

The point several have been trying to make is that whether it is written in fine print or bold letters, for a lot of reasons, much of what is written in FF programmes is NOT legal and NOT enforceable.</font>

Are you an attorney? Where did you get your law degree? What state bar do you belong to?

I just checked with someone who is one, and he just laughed when I told him that folks thought they could sue AMR if they changed the requirements for awards. As for the class action lawsuit, AMR settled it to avoid litigation. The lawyer who filed it got a ton of money, and the folks who were part of the class probably got 1,000 miles or something like that.

If you really think that you can sue AMR when they do something that is clearly within their power to do -- and which DOES NOT violate any laws -- then I want some of what you are smoking.

If you believe that AMR's terms and conditions violate the law, please cite specific laws that it violates.

Yes it does say that AA can change the rules at anytime. However, it seems these changes should affect the FUTURE, not the past.

We all earned the miles knowing and expecting that 25,000 miles = one coach award for example. I could say that I would not have flown or charged on my CC if that number would have been 50,000, for example.

By these changes they have taken something of value away from us, and somehow it seems like we are entiteled to compesnation for our PAST miles.

What Changes? Or rather more specially is the 25000 mile coach award going to change?

They should not give you one thing and then change it after you've earned it -- as it applies to previously earned miles under an indicated scheme. Period.

They told you you earned an award ticket for x miles, and they should honor that reward.

They have every right to change the program and redemption schedule going forward for new miles.

The airlines themselves have acknowledged this by historically grandfathering old miles.

I doubt this would stand up to a class action, for the reasons cited above. While I am not recommending one, this is the purpose of class action law: to protect the little guy from the big guy.

[This message has been edited by nologic (edited 01-04-2003).]

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by redbeard911:
People - you are getting something for nothing! You agreed to pay $400 for your ticket from LAX-LGA or LAX-LHR-SIN-LGA for $200. The fact that we get anything else is a bonus. </font>

I don't agree, I think you bought your ticket plus "x" miles for $200 or $400.

I beleive you paid for the miles and paid for the award schedule indicated at the time...IMO, to change the award schedule for earned miles is taking money/value out of your pocket after you've earned it.

Ooops, duplicate post.

[This message has been edited by nologic (edited 01-04-2003).]

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by AAaLot:
Yes it does say that AA can change the rules at anytime. However, it seems these changes should affect the FUTURE, not the past.

We all earned the miles knowing and expecting that 25,000 miles = one coach award for example. I could say that I would not have flown or charged on my CC if that number would have been 50,000, for example.

By these changes they have taken something of value away from us, and somehow it seems like we are entiteled to compesnation for our PAST miles.</font>

May 2003 is in the future, not the past.

If you want to claim awards under the old structure, claim your awards now.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by JS:
May 2003 is in the future, not the past.
If you want to claim awards under the old structure, claim your awards now.</font>

These awards expire w/i 1 year vs. miles which do not...it's not the same.

Yes, I meant to claim an award and actually use it. To expect AA to retain an old pricing structure forever is unreasonable.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by nologic:
They should not give you one thing and then change it after you've earned it -- as it applies to previously earned miles under an indicated scheme. Period.</font>

Then I suppose you ought to file a class action lawsuit against the US government. Why? Because the dollar has been devalued as a result of inflation. A dollar won't buy you what it bought you in 1950, so sue the government.

Your "logic" is the same here.

Go on, file that class action lawsuit. The lawyer that files it for you will get millions, and you'll get a coupon. AMR will settle without admitting any wrongdoing, paying off the sleazeball that took your case in the process, while you get NOTHING!!!!!!

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by mdtony:
Go on, file that class action lawsuit. The lawyer that files it for you will get millions, and you'll get a coupon. AMR will settle without admitting any wrongdoing, paying off the sleazeball that took your case in the process, while you get NOTHING!!!!!!</font>

Why so vehement, mdtony? I've noticed a number of places on the board where you've posted emotional comments of this nature. Did you once lose a lawsuit or something?

If you have an opinion, why not just state it rather than resorting to paralogisms and calling people names?

The fact remains that fundamental fairness and consumer protection is still a consideration, and in the past complaints (and yes, even class action lawsuits) have altered proposed actions by airlines and others to suddenly change the value of points/miles already earned. Could it in this case? Who knows, but to some it may be worth trying.

You may think it won't work (we've gleaned that); now let's move on to something that hasn't already been said.

I have to say that I too find the idea that the airlines can change the rules whenever the want to be very disturbing. And, recent developments, and the reports of others I have read on FlyerTalk have made it seem moreso.

As some posters suggest, I find it a common practice for contracts to contain patently illegal language, put there in hopes that the other party will not question it. Here, in San Francisco, many Rental Agreements have clauses that violate the Rent Ordinance, and I am certain that many people have been harmed by that.

But, let's be clear about some things:

Whatever language lurks in the fine print, the airlines by the design of their programs intend that I consider the value of their programs in choosing to deal with their airline. I mean, what purpose do these miles serve if they don't cause me to believe that they add value to my use of their service.

There is no reason I should feel guilty for buying a product at the price that they have sold it to me for, and then expecting them to honor the promise they intended me to believe they were making.

By constantly adding to the ways that I can earn miles, the airlines demonstrate that they consider these programs to be an effective way to promote their products -- until the time comes for them to make good on the commitment.

After enticing the public with promises of free travel, and upgrades, suddenly there are capacity controls, and when the economy shifts and people start wanting to use their miles, suddenly the price goes up.

I'm not even questioning the legality of this, but ask yourself, did they intend that you believe that when the time came you would actually be able to use the miles the way they "sold" them to you?

How are you supposed to feel when a "loyalty" program promises you one thing, and then delivers something of lesser value?

And, then, let's say you have been flying so much that you have built up say a million miles, and the realities of your travel cause you to behave in a manner that the airlines decide, unilaterally, with themselves defined as the only arbiter, that your behavior has, inadvertently, without your knowledge, violated some rule of their program, and in one capricious moment they wipe out years of your "investment?" (Sounds crazy? Right? Has it happened? Possibly! Is it likely to happen to someone? Probably!)

Sobering thought -- I know I won't be building up more miles that I need. Nor deluding myself to feel that any thoughts of "loyalty" I might have will be reciprocated.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by mdtony:
Then I suppose you ought to file a class action lawsuit against the US government. Why? Because the dollar has been devalued as a result of inflation. A dollar won't buy you what it bought you in 1950, so sue the government.

Your "logic" is the same here.
</font>

I disagree. Miles are not subject to inflation like money is. While a Big Mac might cost more today then it did ten years ago, the number of miles to travel from Los Angeles to New York did not (ruling out plate tectonics).

When FF programs first started, you could fly coast to coast four times RT and get a free ticket (20000 miles for a domstic reward). A few years ago they changed it so that you now have to fly five times for a free ticket (25000 miles for a domestic reward); inflation had nothing to do with it. We are talking about an unabashed devaluation.

devaluation = inflation

They are one and the same.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by anthonyanthony:
When FF programs first started, you could fly coast to coast four times RT and get a free ticket (20000 miles for a domstic reward). A few years ago they changed it so that you now have to fly five times for a free ticket (25000 miles for a domestic reward); inflation had nothing to do with it. We are talking about an unabashed devaluation.</font>

That also sounds like the textbook definition of inflation to me. http://www.flyertalk.com/forum/wink.gif

Mike

I knew I should I have left in that last paragraph I wrote, which was something like this:

I know that inflation is a type of devaluation, but for the purposes of my argument I am differentiating the two in that devaluation is a more bare-assed unabashed gouge vis-a-vis inflation being a slow, gradual, uncontrollable devaluation.

(I left that paragraph out since I thought it went without saying. ah well)

Devaluation: Reduction in value of a currency or of a standard monetary unit.

Inflation: An overall rise in prices which results in a decline in the real value of a monetary unit

So its not the same thing exactly; rather one leads to the other.

Now, just as an aside, how about deflation: less miles and less flights http://www.flyertalk.com/forum/wink.gif

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Counsellor:
Why so vehement, mdtony? I've noticed a number of places on the board where you've posted emotional comments of this nature. Did you once lose a lawsuit or something?</font>

No, I'm just sick of sleazeball lawyers who pretend to be suing on my behalf getting millions while I get a coupon worth ten bucks or something similar. And I'm disgusted with people who encourage such behavior.

I just got my notice that I was entitled to one commission free trade due to something that one of my former brokers was alleged to have done. They settled the case without admitting wrongdoing -- just like AMR did -- and the scumbags that filed the lawsuit walked away with tens of millions of dollars. Me? I get one free $19.95 trade.

There's another case where the sleazeball lawyers who filed a class action case against H&R Block will walk away with tens of millions of dollars, while the people who they are supposed to represent get coupons for tax prep software. Hello? The reason they went to H&R Block in the first place is because they don't do their own taxes!

You ought to be as adamently opposed to these lawsuits as anyone, because they make members of your profession look like shysters who all work for the law firm of Dewey, Cheatum, and Howe.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by anthonyanthony:
When FF programs first started, you could fly coast to coast four times RT and get a free ticket (20000 miles for a domstic reward). A few years ago they changed it so that you now have to fly five times for a free ticket (25000 miles for a domestic reward); inflation had nothing to do with it. We are talking about an unabashed devaluation.</font>

If you believe in the free market, you should believe that companies can set the price of their product at whatever rate they want. You are, of course, free to not participate in AMR's program if you don't like the new terms. But in a free market economy, companies can set the price for their product as they see fit. The price can be expressed in dollars, miles, kumquats, or whatever else AMR decides to take in exchange for their tickets.

My opinion on this is that AA has done nothing wrong. When they post an award schedule they're saying "right now, you can get these awards for this many miles." They're not saying you'll be able to indefinitely into the future. Some of us have made that assumption, and are now ticked off at AA because our unjustified assumption was wrong. I don't see why that's AA's fault. Six months notice of a change, during which you can get a ticket for yet another 11 months out, is more notice than anyone else gives of price changes.

The analogy of a department store raising the price of a coffee maker to $22, five months after you got a $20 gift certificate with the intention of buying that coffee maker, is apt here. For how long does anyone expect them to hold prices steady in case someone wants to use an old gift certificate? And, while I think grandfathering old miles to use an old award schedule is nice, does anyone expect a store to say "if your certificate was issued during 2002, you can pay our 2002 price for anything you use it on?"

Another point (unless I missed it) hasn't been made. AA does not run AAdvantage, nor does any other airline run its FF program, for our benefit. AA runs it because it generates more profit through customer loyalty than it costs. The business balancing act is to maximize the difference between those two. That's a fine-tuning process. If they make it too generous, the added costs are higher than the benefits of the increased loyalty. If they take too much away, losses due to decreased loyalty outweigh the cost savings. They have to keep adjusting to find the optimum, keeping in mind that this year's is not the same as last year's - and without yanking things around so much that the number of changes becomes a source of customer dissatisfaction independently of what those changes are.

So, if they decide that too-generous awards are costing them too much and feel they won't lose much loyalty by cutting back, they will. If they're right, they'll come out ahead. If they're not, customers will defect. That's what free choice and a free market are all about.

Efrem is entirely right that the ASSUMPTION that you will be able to get awards at the same level as were in effect when you earned the awards is UNJUSTIFIED. Certainly you cannot blame AA for that assumption. From the AAdvantage terms and conditions:

"American Airlines may, in its discretion, change the AAdvantage program rules, regulations, travel awards, and special offers at any time with or without notice. This means that the accumulation of mileage credit does not entitle members to any vested rights with respect to such mileage credits, awards or program benefits. In accumulating mileage or awards, members may not rely upon the continued availability of any award or award level, and members may not be able to obtain all offered awards for all destinations or on all flights. Any award may be withdrawn or subject to increased mileage requirements or new restrictions at any time.

American Airlines may, among other things, (i) withdraw, limit, modify, or cancel any award; (ii) change program benefits, mileage levels, participant affiliations, conditions of participation, rules for earning, redeeming, retaining or forfeiting mileage credit, or rules for the use of travel awards; or (iii) add travel embargo dates, limit the number of seats available for award travel (including, but not limited to, allocating no seats on certain flights) or otherwise restrict the continued availability of travel awards or special offers. American Airlines may make any one or more of these changes at any time even though such changes may affect your ability to use the mileage credit or awards that you have already accumulated. "

Thus, if anyone believes they are entitled to "vest" in a current award structure, it is not an expectation which AA has created, but rather wishful thinking on their part.

Djlawman

[This message has been edited by Djlawman (edited 01-06-2003).]

Another illustration to show the difference between inflation and the devaluation of AA miles:

With inflation, you can expect that your pay/salary will keep pace with the rate of inflation. But with airline mileage, the amount of miles you earn when you fly from point A to point B will not change to keep pace with the amount you need to get an award!

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by NorthernAtlanticRacer:
Devaluation: Reduction in value of a currency or of a standard monetary unit.</font>

Exactly: inflation &lt;&gt; devaluation

When comparing dollars (or euro's or whatever) to miles with respect to inflation, devaluation or anything similar, there is a major difference between money and miles. When you have money in your bank account you can take action to protect it against inflation by trying to earn interest on it or by investing it.
When you have miles in an FFP account there is nothing you can do to protect them from inflation, except spending them.
Also the "powers" that cause miles inflation and dollar inflation are totally different. Especially miles inflation seems to be very unpredictable, whereas dollar inflation is more or less predictable, at least within certain ranges, giving you a way to estimate your exposure which may lead to taking appropriate action.

Anyway, my point is that comparing miles with dollars is like comparing apples with oranges




[This message has been edited by ql2112 (edited 01-06-2003).]

I think seeking government involvement over changed FF rules is rather silly. There is, however, a resource which I believe can and should do more.

That resource in Inside Flyer and Randy's organization. They do a delicate balance of working with both customers and airlines and when one of the airlines just ups the costs of an important award, Randy should make sure they aren't let off the hook easily. I was suprised that there wasn't a bigger uproar when UA raised overseas upgrades by 50% last fall. CO's move in the mid-90s which took above coach overseas travel virtually out of reach of most non-Golds wasn't emphasized enough, in my view.

Earning miles is important but Inside Flyer needs to get going on measuring, comparing and holding programs accountable on the award side, and especially on true availability (try getting overseas on a CO Saver Award). Articles on who gives an extra 100 miles with a car rental are fine. But like a lot of people, I've got a big bucket of miles and I'd like information on who is keeping their word and who is using "change at any time" escape clauses, so I can give my future business to companies that deliver what they promise.

[This message has been edited by Mountain Trader (edited 01-06-2003).]

[This message has been edited by Mountain Trader (edited 01-06-2003).]

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Mountain Trader:
I'd like information on who is keeping their word and who is using "change at any time" escape clauses, so I can give my future business to companies that deliver what they promise.</font>

Well, let me ask you a question. It used to be 20K miles for a ticket. Now it's 25K. So they ALL changed their requirements.

Looks like you'll have slim pickings for people who keep things they way they were way back when.

Maybe Southwest -- I don't think they'd changed their rewards system yet.

Let's try this one:

If a 5000 mile trip* used to cost $1000, and you needed 20K miles for a free award, then you had to take 4 trips and spend $4000 for an award.

If that same trip is now regularly $750, and the award is 25K miles, now you have to take 5 trips, but only have to spend $3750 for an award.

Where's the inflation? (or devaluation?)

Analogy for those living in the South: If you used to get 3 pancakes for a dollar at Waffle House...

* your mileage may vary

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by redbeard911:
If that same trip is now regularly $750, and the award is 25K miles, now you have to take 5 trips, but only have to spend $3750 for an award.

Where's the inflation? (or devaluation?)
</font>

You are assuming in your example that tickets are cheaper today than they were last year. Does a ticket that used to cost $1000 really only cost $750 now? I'm not so sure that, on average, tickets are cheaper today than they used to be. For example, I've been watching the price of HNL-West Coast and HNL-Asia fares for over ten years now. On average, I would say that the ticket prices have gradually been going up.

If you fly the same amount this year as you did last year, and spend about the same amount of money for those tickets (possibly more due to true inflation), but are now reaping fewer rewards for that same amount of flying, then the miles have been devalued.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by anthonyanthony:
On average, I would say that the ticket prices have gradually been going up.</font>

You are incorrect, sir. Airfares have gone DOWN since deregulation and the invention of frequent flier programs. There was something on the Savvy Traveler about that and I believe the Wall Street Journal covered that as well.

aa allowed and still allows old miles with a seperate award schedule. why then and not in May?

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by mdtony:
Well, let me ask you a question. It used to be 20K miles for a ticket. Now it's 25K. So they ALL changed their requirements.

Maybe Southwest -- I don't think they'd changed their rewards system yet.</font>

No Southwest hasn't, plus their Companion Pass still gets you two-for-one awards.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by mdtony:
You are incorrect, sir. Airfares have gone DOWN since deregulation and the invention of frequent flier programs. There was something on the Savvy Traveler about that and I believe the Wall Street Journal covered that as well.</font>

I agree that fares have gone down since deregulation and the invention of FF programs in the early 80s. But I was referring to fares of the last few to several years, since that is the timeframe that I think would be applicable to the latest devaluation of miles.

I imagine that most of the deflation in fares occurred in the years following deregulation, ie the eighties. From the 90s to today, there has been a small upward trend in the fares that I have been watching.

I don't think you can blame the recent devaluation of miles on the overall trend of fares reaching all the way back to deregulation, way way before even the 20K to 25K domestic award hike.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by anthonyanthony:
I don't think you can blame the recent devaluation of miles on the overall trend of fares reaching all the way back to deregulation, way way before even the 20K to 25K domestic award hike.</font>

I really don't care about WHY the airlines are hiking their reward requirements. I only care about the result and what that means to me.

The result is that I have to use more miles in the future to go somewhere. I have two choices. Accept the program changes, or leave the program. Seeing how I will still continue to get something for nothing, I will accept the changes.

I don't plan on enriching Joe Sleazeball from the law firm of Dewey, Cheatum, and Howe by filing a lawsuit that I won't win.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by mdtony:
I don't plan on enriching Joe Sleazeball from the law firm of Dewey, Cheatum, and Howe by filing a lawsuit that I won't win.</font>

I agree with you there. I believe the airlines can make and change the rules as they see fit, and it's up to the consumer to decide if they want to play the game or not. All this talk of litigation is, for the most part, rubbish.

Well, as usual, I come in to an interesting discussion late, but if anyone is still awake out there, I have this thought:

Rewards are something promised in the future. But for how long must a contract for these rewards at a given price be honoured - 90 days, 90 weeks, 90 months? And when does the clock start ticking - when the first mileage allowance is posted to my FF account, the fifth mileage allowance (if for a domestic flight); the nth (for a North American/Caribbean flight); or the (n + x)th (for an international flight)? What if the passenger wants a business class ticket; then the timing would change again, if timed from the time of final mileage accumulation. There is so much variation in the 'terms' that I'm not sure it would be possible to state that we are promised delivery on explicit contractual terms for some indefinite time. Rather it seems we are promised contractual terms that vary depending on our own needs or wants, and which might only be promised, at a given price, for some period of time that is dependent on indefinite factors not always under the airlines' control.

Good Lord, I think I've just written myself into a corner. Did I make any sense at all - or should I just spread newspaper and make a dash for the door? : - )

[This message has been edited by simpleflyer (edited 01-14-2003).]

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by dudman:
Is there anywhere a link that to see the new award requirements? Thanks in advance.

Oops found it....

[This message has been edited by dudman (edited 12-29-2002).]</font>

And that link is...?