<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by gleff:
The problem is that demand is growing faster than supply. That is, more and more people are acumulating miles and via more and more channels. So you have lots of folks energized by FF programs. So there's more competition for what, in relative terms, is a scarce resource.
Truth is, with miles so easy to come by, award chart point increases are probably necessary. In fact, miles become more abundant at a fast rate than award charts increase. So if award seats don't grow, we're going to have to see more and more award chart increases over time.</font>
I think this bears directly on both the award availability and devaluation issues, but I'm less kind to the airlines about it, since no one's forcing them to issue so many non-flight miles.
It's easy to see the incentives they have for selling so many non-flight miles when it's a major source of revenue. But at what point does it become akin to selling lottery tickets, rather than something that has any certain value? (In Georgia, for one, state law differentiates between selling a product or service and operating a raffle or lottery).
The airlines probably fear a public relations hit from devaluing, especially if they do it in the most honest, straightforward way (not the "stealth" way like Continental is doing). If people wake up to miles worth half what they were, people might stop being "incented" by them and that'd hurt revenue.
Yet it's hard to see self-regulation leading to any other outcome because airlines won't stop selling so many miles to non-airline partners on their own. So the unredeemed miles will continue to grow faster than the seat availability.
Maybe the answer is government-mandated disclosure requirements, not unlike what we have with on-time performance. Getting a good metric might be tough (% of total issued miles redeemed in x year?) But then, in a near-perfect world, airlines would be competitive to have the best stats like they do with on-time, and the better ones could even use the stats in advertising.
If airlines can't be counted on to stop the erosion, then shining more light on it might slow it down.
[This message has been edited by RustyC (edited 08-30-2003).]
[This message has been edited by RustyC (edited 08-30-2003).]