FlyerTalk Forums - View Single Post - Is it time to hoard miles – will their value go up?
Old Apr 5, 19, 7:59 am
Join Date: Aug 2017
Location: Stilllwater OK (SWO)
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Originally Posted by javabytes View Post

I have been bearish on the value of miles for years now. Admittedly I came from Delta, who arguably perfected the art and science of the “enhancement” (read: devaluation).

Credit cards are printing miles left and right. More demand for award seats means fewer seats available, unless the fare (in miles) goes up to compensate. Airlines then tell us we “asked” for such increases when we complained about poor award availability.

Eventually, I suspect all the US airlines will end up in fare-based redemption. Delta is most of the way there already with its dynamic award pricing. The beauty to such programs, in the eyes of the airlines, is that the reward value is predictable and consistent. That’s also why it should be boring to rational consumers - it’s effectively a rebate. In a world where miles are pegged at $0.01/ea., almost everyone would be better off putting spend on cash back cards. In theory, this should kill the appeal of most mile-earning credit cards, but people are not rational.

Sweet spots have existed for years and continue to exist, but earn-and-burn continues to be the prudent strategy for anyone concerned with maximizing the value of their miles.
I think the current valuation will more or less hold. People that do the careful math already know that cash back cards can get more real monetary 'value', even if plenty still choose to earn miles to redeem them on a first class ticket they would never have paid cash for. Travel sparks an irrationality center of the brain. And like you said, then there are people AA really counts on like my parents, who fly maybe once every four years but have put a decade's worth of purchases on their AAdvantage card thinking it will let them travel more, only to recently find out how little value the miles really have. But, I think if AA devalues too much farther, more people will catch on.
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