Billions of dollars worth of frequent-flier miles are going the way of many gift cards and product rebates, expiring unused by consumers or aggressively canceled by airlines.
There are an estimated 10 trillion unused frequent-flier miles in circulation now, worth some $165 billion. Most airlines won't say how many will expire without being used, but a few clues suggest a big number: 20% or more of all frequent-flier miles may never be redeemed—in part because of confusing airline policies and scant notice of approaching expirations.
Many miles will be yanked away from consumers, who sometimes believe they have a stash of hundreds of thousands of miles only to find the account canceled by an airline for lack of activity. Airlines have been tightening up expiration rules, partly in response to an accounting change last year that made it more onerous to carry these liabilities on their books. And while airlines—for a fee—will allow you to reinstate expired miles, it often doesn't make economic sense for consumers to do so.
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Quote:
Originally Posted by Tenacious
THE WALL STREET JOURNAL
OCTOBER 29, 2009
Billions of dollars worth of frequent-flier miles are going the way of many gift cards and product rebates, expiring unused by consumers or aggressively canceled by airlines.
There are an estimated 10 trillion unused frequent-flier miles in circulation now, worth some $165 billion. Most airlines won't say how many will expire without being used, but a few clues suggest a big number: 20% or more of all frequent-flier miles may never be redeemed—in part because of confusing airline policies and scant notice of approaching expirations.
Many miles will be yanked away from consumers, who sometimes believe they have a stash of hundreds of thousands of miles only to find the account canceled by an airline for lack of activity. Airlines have been tightening up expiration rules, partly in response to an accounting change last year that made it more onerous to carry these liabilities on their books. And while airlines—for a fee—will allow you to reinstate expired miles, it often doesn't make economic sense for consumers to do so.
I do no thinik I am violating Flytertalk TOS by just posting part of the article a nice chart. I also think somone should risk cross posting since this is so important....
Vanishing Miles
Airlines can close frequent-flier accounts with little warning. Here are various policies.
AIRLINE EXPIRATION POLICY REINSTATEMENT COST
Delta No activity 24 months $50
American No activity 18 months $50 for every 5,000 miles, plus 7.5% tax and $30 fee
United No activity 18 months 1.25 cents per mile plus $25 fee
Continental May cancel account after 18 months of inactivity None
Southwest Credits good for 24 months Awards extended one year for $50 fee
US Airways No activity 18 months $40 "preservation fee'' after 15-17 months of inactivity. After that, sliding scale to buy back miles.
JetBlue No activity 12 months None
Alaska No activity 24 months $75
AirTran Credits good for 12 months $29 to extend credits
The FF miles are a parallel currency whose value is arbitrarily reduced and diluted by the issuers. Rules are constantly changed to fit the needs of the issuer without regard to earlier promises. The goods the currency can buy (flights) are repriced and removed from the shelf at a whim. If the issuer has stopped serving your destination or point of origin, then it is much more difficult to be active than for those who use a hub airport of that carrier as their home base. The result is that the travelers stay with airlines whose miles can be used. As a recent example, NW World Perks assured us that miles would never expire, even if there was a lack of activity. "Never" arrived when NW was merged into Delta and all the rules went out the window. As for credit cards and other ways to get that activity, the cards are limited to the country where the airline is based.
Devaluation, expiration, and market flooding
