Originally Posted by
Andy2
I was being mildly sarcastic, but I do believe that if they took the devaluations too far, some court somewhere might rule for the passengers in a class action suit. The marketing and advertising certainly promises free trips and US Airways pilots and flight attendants openly hawk the credit card sign up bonuses during the flight (saying things like "that is enough miles for a free trip"). If they cancelled the programs and made the miles truly worthless, while the airline itself was profitable, lots of class action attorneys would pop up, figuring they would get a settlement without going to court on the precise program terms and conditions. A devaluation is the same - just an injury to the mile holders who acquired the miles while the redemption rate was X - instead of a death to the program. The airlines have to determine how badly they can injure without having adverse consequences (either legal or business consequences) to themselves.
If they canceled the programs, there'd be Congressional hearings about it. It'd be a circus. They have the *right* to do it, but it's a nuclear option they'd never use.
If they did either of the following - (a) changed the underlying 25,000 mile domestic award that has been advertised directly and in conjunction with bank partners for many years or (b) instituted mandatory airline fees (e.g., YQ) on every award - then I think we'd have massive class action lawsuits and maybe even Congressional hearings as well.
Fortunately for a legacy-style program, they can simply use capacity controls to protect the flights that will sell out. They keep the 25k award on the table...and you are usually flying Sat-Tue-Wed to get it. They can also devalue international and partner awards because they know the masses aren't paying close attention. They can keep the theoretical redemption at a very high value, keeping the value of the miles high in the minds of the credit card user, but closely control how much of that value they actually allow passengers to redeem.
The problem truly lies in the Southwest-style system. I carry higher balances of AA, US, A3, UA, etc. because I'm holding for the "right" award. I don't sit on miles forever due to devaluation fears, but I do hold until I get my "ideal" J or F award...and because of capacity controls I know the airlines are using data to *likely* give me a seat they won't otherwise sell.
With Southwest, I'm redeeming points the instant my balance reaches the value of a one-way MCI-MDW segment. It's immediately displacing revenue, even if I'm redeeming on a flight that will later sell out. It's this "flat" nature of WN - both earning and redeeming - that distinguish it from a hotel program that is flat (dollars-driven) on the earning side. On the redemption side, I'm still holding hotel points for the ideal use...and they still retain some levers to control me from redeeming the most in-demand room.