guv1976

Wirelessly posted (BlackBerry: BlackBerry8530/5.0.0.1030 Profile/MIDP-2.1 Configuration/CLDC-1.1 VendorID/417)

+1.

And AA even lets you put an award reservation on hold for five days, so you do not need to buy miles from AA unless and until you have found the award space you need.

cbn42

I see OP's point, but as others have said, it's part of the "game". It might be annoying, but there is nothing illegal about it.

The only potential issue I can see is if they advertise that miles have a specific value. For example, Frontier's website explicitly says that if you sign up for their credit card, you get 40,000 bonus miles, which are worth two free roundtrip domestic tickets. If they devalue their points, that might be a breach of contract. To my knowledge, the major players no longer make such claims, and likely for very good reason.

fassy

It is perfectly ok to raise prices in Germany based on supply and demand besides in some regulated spaces, e.g. medical care, electric power/gas/water utilities and public transportation (but not airlines or the German railways, only local municipality owned transportation) which need approval from the regulator for price increases, books and magazines or renting out living space (I think you are only allowed to raise the rent 20% during a 3 year period and only once in 15 months.)

For all-most all of the other things normal market-based pricing applies.

bertheike

You exactly hit the point.
FF miles are not a curency which is dealed in a market, the airline dictates the value of the miles. And as soon them sold enough ( or better said people hold enough ) them devaluate the curency.

BA Humbug

I can't say I agree with that statement. Yes, airlines dictate the value of the miles, but at the same time, they respond to market demands. If a program has a good value redemption in a certain area, it will be used and abused until it reaches equilibrium. If a certain redemption is overpriced, redemption values are also adjusted downwards (yes this happens, just not often, and usually on non-flight redemptions!)

See above, and airline miles are also dictated by economic forces -- if more points are bought, there is a larger supply in the market, giving more purchasing power to consumers. Since the other side of the equation does not have anything to balance this power out, airlines step in to adjust the "currency" to keep demand in check.

Governments, in a sense, do this all the time with their economic policy. They control their currency (see Japanese Yen, renmenbi, etc.) in response to economic market forces. They implement policies and change rates to (slowly) influence the currency over time.

If a government started mass printing a currency (=deflating the currency, equivalent to devaluating points in an airline scenario), would you demand to exchange it for other currencies at the rate before they started printing?

udontknowme

To be fair, all of the airlines and their FFP's, in the fine print, have reserved the right to cheat you. They specifically say they can do whatever they want, whenever.

KevinDTW

And as those of us who fly DL have learned again recently, they like to do it at the end of the year after most everyone has already qualified for next year's status.

DrRodneyMcKay

Well, this has been fascinating all around. I'm gonna agree with everyone here that if all of the airlines were completely transparent, points values never changed, and everything stayed the same, there'd be no hobby. It would be like getting a paycheck every time you fly and using that paycheck next time you fly. part of the hobby is trying to predict/work with these changes and take advantage of them when they happen. It's part of the game. If you don't like the game, don't play. Of course, if you fly, you should probably still put your FF number on the ticket - you'll get some miles out of that. The companies lure you in with the promise that you'll earn something, but they don't tell you what - and that's the game, trying to find the best value for what you've earned.

bertheike

That's true, and I never said it's a single Airline FFP problem.
Them all like to do that, specially when them sold to many miles and/or customers bank to many in their accounts. As already said, them have to build up huge amounts of accruals for all the miles out and the more them devaluate them, the less the accruals have to be.

By the way, LH got a problem with some customers after them devaluate their M&M program. One of these guys (a professor ) took them to court. He held a huge amount of miles, which he could not burn in the given time. I hear after aprox 2 years LH made an agreement ( deal ) with him.

Andy2

This topic come up every once in a while. I think the fallacy is in the concept that points/miles have any "value" at all. To me, they are just stackable coupons that allows someone to purchase travel at a discount (sometimes a deep discount), if the airline or hotel chooses to offer the discounted price.

The problem with directly purchasing miles/points from an airline or hotel is that it is part of the "gotcha" game. If a person has 98,000 miles (coupons) and needs 2,000 more, the price is very high but might be worth it if he needs 100,000 miles to get the discount. But the "gotcha" price does not set any value to the points/miles.

In the past few years, the ability to use the coupons has declined. Fewer unused seats and hotel rooms are available, so fewer opportunities are provided by the suppliers for discounts. Also, true deep discounting is also becoming rare, as the trend toward passing on made-up fuel and convenience fees catches on. The increase in the number of miles/points required is just a technique of lowering the discount on the coupon.

The biggest source of these coupons in the past few years has been credit card companies sharing a small portion of their profits to consumers by passing out these coupons to those who sign up for, and use, credit cards. The credit card companies pay something for these miles and points, which makes some people believe that represents "value" in the hands of the ultimate consumer. It doesn't, since the ultimate consumer has no ability to do anything with these coupons if discounting is not offered. It is not surprising that the number of miles/points passed out by the credit card companies has declined at the same time that cash-back rewards have been reduced by credit card companies. It is part of an overall deflationary environment in marketing rewards.

I guess we have the bloggers to blame for the silly proposition that miles/points have value. Buying something, such as travel, that you do not have to buy, even at a discount, does not save you money - a great concept to consider on Black Friday. You have less wealth after buying it at a discount than you did if had simply not purchased it at all.

Of course that does not mean that you should not buy it if you enjoy it. As Steve Jobs pointed out, there is no sense in trying to be the richest guy in the graveyard. But it does mean that a coupon (such as points/miles) does not have any value. Perhaps a coupon for toilet paper has value - but not these coupons.

Once you change the analysis to one in which 100,000 miles/points have $0 value, but might allow me to buy something fun for $100 in fees that would have otherwise cost me $2,000 (and I never would have bought), then it all makes sense. But if a person goes at it with the attitude that those 100,000 miles/points are worth $1,500, and he is dissatisfied because those 100,000 miles/points can't be spent like $1,500 cash, he is going to be unhappy.

Of course, that is what makes Manufactured Spending so difficult. A person may well truly spend $500 in real money to get those 100,000 miles/points, and the airlines/hotel could care less that he did. And when an account is closed, and all the reward points are lost (which really does happen), then a true economic loss occurs and it is painfully obvious that reward points have no value and are owned by the issuer until redeemed.

casualhopper

Faith in a currency (points, dollars, euros) is directly correlated with your faith in the backer of the currency. Sometimes that faith is well founded, and other times, it's not.

I honestly do believe miles, points, etc, have inherent value. But that value is somewhere above value of fiat currencies in inflation rampant countries, and a bit below the value of stable, global reserve currencies.

All of these currencies have some degree of risk. You accept that risk when you do a conversion.

Taking your example in devaluation from 2014 to 2015 of your USDMs. Here's a good way to look at it from another angle.

And look on the bright side, it's better than currencies of countries that got plain wiped out. (Think confederate dollars.)

RustyC

Yep. This discussion has come up a number of times, and many people like myself will say that it's not a good idea to hoard miles. The unredeemed miles vs. seats problem has been well-known for years, and at least when it comes to the largest U.S. carriers there's not even a credible attempt to maintain a balance. Even as they get stingy about RDMs for flying they'll still mint them like crazy via credit cards.

I've earned just under 3M RDMs lifetime but might have about 250K left between all programs, with the highest amount retained around 420K at one point.

One problem is that earning is very unevenly distributed. In workplaces you usually have people who travel for work way too much, and those who hardly do at all. Many people with hefty mileage balances from work will tell you that they only have limited chances to redeem on vacations (as those are ridiculously stingy in the U.S. compared to the rest of the developed world) and are saving the pile for retirement when they'll have more time. Because the baby boom is now retiring you have the demographic bulge, adding to demand and pressure for huge devaluations like AA's recent ones with F and J (and Y).

It's a bit like depositing drachmas in a 0.5% interest account in pre-euro Greece. You just know the currency will lose value to inflation if it's not occasionally outright devalued, and it doesn't gain anything by sitting there.

CrazyFoool

Value of points is determined by the company because there's technically no cash value for them.

TravelerMSY

Germany has widespread residential rent control. That's what he was referring to. Government price controls are unpopular in the Us and unlikely to happen except under dire circumstances.

mahasamatman

I'll go one step further and say I absolutely disagree with that statement and the entire premise of this thread. Currency (both real and imagined) fluctuations and inflation are facts of life.