percysmith

//360k miles after few bookings for family is a lot of miles, so let's assume OP stared with 500k miles.

I accumulate that much in one iPhone7 trading season (my worries are with banks using AML to pick me off, not AM). But then I turn around and issue two OW Zone 14 J redemptions (actually, due to changes in circumstances, these maybe tricky to fly...)

percysmith

They don't. In some cases they may but in a lot of cases they're definitely guessing.

The beauty of miles programs for them is access to miles is with them. Possesssion is nine-tenths of the law. Brutal.

Well, unless sellers go empty AM balances on close-in redemptions like BA that AM can't audit quickly enough.

Finkface

In addition to the answer above (scouring online ads for miles-sellers, posing as buyers or having sold once to a broker who was recently caught, if you read some of the other threads, airport agents will see a mileage redemption from a different account and will ask the traveller how much they paid for their tickets. An innocent-seeming answer such as "oh, nothing but I bought him x in return" or "I traded him for x" or "only $xx - It was such a bargain, more than half the price of buying a regular ticket". That's all it takes.

brunos

Am a bit surprised by the one-sided reactions here.

Personally I am against the practice of selling/buying miles as that reduces availability. But my opinion is of no importance. Airlines have made it crystal clear and for decades that they regards this bartering as unacceptable and will fight it (the no sale rule is a precise contractual obligation). Nevertheless this trade is extensive since credit card miles have become a major source of mile earnings, especially in some countries where cc competition dictate that they offer all kind of miles promotions.

In Europe and US major airlines are fighting this practice. Following BA, AF has been very active lately. The typical flagged account is one where a Flying Blue account is just opened before a credit card transfer and tickets immediately booked under someone else's name. That usually starts an investigation and a freeze. If the account holder can prove that the beneficiary is some legit close relation, the account will be honored. If not, it will be tough for the holder. Actually, the airline might like publicity. The action is undertaken to deter miles bartering, and publicity will show to others that the practice is risky and therefore reduces its attraction.

moondog

That strikes me as way over the top unless the terms and conditions clearly state that people can only book tickets for certain other people.

d00t

A typical scenario may look like this: Let's pretend Amex paid $0.01/mile.

$0.006 - considered a marketing and branding component, and is banked instantly as revenue.

$0.004 is deferred revenue, essentially placed as incremental cost liability (calculated using a variety of factors based on historical performance, breakage and future forecasts), and amortized as passenger revenue by the airline being redeemed on and represents the cost of transport.

In the cases of many loyalty programs - the marketing component is greater than the estimated future cost of transportation.

Short term, sure. Sophisticated FFPs know the users propensity to engage in future earning opportunities. This is why we see more programs offering users ways to re-engage their miles earning through challenges, re-purchasing miles etc. Look at Air Miles in Candada - just last year announced miles will never expire!

I would also be interested to see the balances of expiring accounts. Would users let 500K points expire, or is it 1K and 2K balances which are most affected.

Data science is your friend here. K-NN and Cluster Coefficiency networks often show the most influential people in a network are not the ones who spend the most, but rather those who have strong weighting to highly engaged users.

For example, say you own a business and generate 100M credit card miles/pa, but you never fly. You might dish out these points to family, or senior execs who do fly a lot as gifts. In pure revenue terms, you may be worth more than a DM, yet hold zero status.

If an award seat is available - it suggests the airline wants to sell the seat fast, and they are making a conscious bet on the award-system rather than a revenue ticket being purchased. CX is in a unique position because they release seats religiously close to departure, to which some revenue managers might consider this a failed revenue strategy.

Furthermore, there are partners to CX who don't have restrictions on being related to the miles account holder. One could argue it's lost revenue if the choice was between AM and another program's currency being used to buy the ticket.

In any case, there it's a simple case of running the query to understand if a pax would have considered a cash fare. Assuming, of course, AM cared. As you say - AM and CX are different organisations.

If AM made miles accessible as a normal cash purchase they'd be cannibalising their cash fares and reduce their ability to practice price discrimination. In my ex-EU example, they only want the £3 passenger to be able to access the fare thru miles. [/quote]

Let's take a quick look at what the most profitable loyalty programs in the world do.... they either have a monopoly or sell miles on a regular basis to consumers. This suggests it has the opposite effect. Furthermore, award flights come with restrictions, are not always available, and business travellers tend to want to retain their status, especially if someone else is paying for the ticket.

I believe there are more effective solutions than terminating an account, which should always be last resort. Back in my previous life I headed up a large rewards social network, we found that turning an inactive member into an active member had a greater effect on revenue from points earning than the opposite expiring points revenue clawback from breakage.

While I won't go into all the potentials, AM could:-

- Sell Miles, perhaps even if bundled with NDC offers.
- Allow nominated names (similar to SQ)
- Increase redemption buckets beyond a 3x option, and restrict self-awards to the cheapest.
- Actively manage award seat releasing, instead of auto-release at X/days if Y seats available.
- Create a business unit which allows for miles to be used in businesses.

Overall, I think it's a missed revenue opportunity for Asia Miles.

percysmith

Wow I didn't think of that one --> perhaps because I am not a travel industry insider, I never really thought of marketing component can be that high.

And I suppose it is open for CX to argue once a member credits miles to AM, a marketing obligation is complete. The member cannot back out at this stage - only a fulfilment obligation remains (if member selects a travel reward, the obligation is fulfilled by payment of a fare. If non-travel, by the delivery of the selected service/good).

If would be analogous to a fund manager who markets but then subcontracts the fund management work to another fund manager http://www.ey.com/Publication/vwLUAs...15.pdf#page=11

percysmith

This would be like QRC3288. The intent is to restrict the miles "currency" to individuals. And in cases like QRC3288, owner-operators.

Not executives who are not owners <-- this plays on agency problem.

percysmith

In my £7/£5/£3 model the airline in the slot-restricted route tries to flog £7 and £5 tickets by availability and make the £3 wait and/or jump through hoops (such as hidden city ticketing or making the ticket available thru miles only) so to fill the seat but not cannibalise the £7/£5 pax (demand leakage).

[I don't think the miles model will work on hyper-competitive routes like HKG-BKK or HKG-KIX - in those cases CX will be pressured to offer the best cash fare and stop attempting price-differentiation]

They did this with such consistency we become Pavlov's dogs - we're rejecting the £5 cash fare because we are aware the £3 miles fare will be available close-in.

I think they're aware of this, and are reducing the consistency - not so much as letting seats fly empty but selling them for a pittance, but cash.

There's some anger in this board that partners' currencies are comparably favourable to use close-in (AA, AS)

In my model they don't want to sell the £3 fare for cash because they are worried the £7/£5 pax will wait to buy in at £3.

In CX's case AM is wholly-owned by CX so their interests are aligned. I am aware this is not the case overseas.

ermen

Lol that is a lot of miles. Pray tell me even how to get half of it

kaka

lots of hard work, queuing and bartering

JonNYC

There's really no chance of that, you can bet they have substantial evidence. Could they be mistaken? Sure. But "guessing"? No.

percysmith

By guessing I mean circumstantial evidence but no actual proof of the sale.

JonNYC

Still would take that bet any day of the week.

Often1

Look at the threads relating similar experiences for other OW carriers which have adopted software apparently originally launched by AA.

While it may initially be circumstantial, the other carriers do not seem to act until they have concrete direct evidence of fraud in violation of the program rules which are well known and have not changed for years.

Tickets are expensive, have value and front line agents ask a lot of questions which may sound innocent but which may result in answers which lead to direct evidence.

Paying cash for an award ticket from a broker is the easy one. But, barter is the one which seemingly chatty conversations may wind up quite easily generating direct evidence. "Oh, my cousin is sending me on this trip with a free ticket, but I am going to paint his house in return."