I replied to a thread in the AA forum to a post where someone had said that he had been having trouble upgrading while traveling through AA hubs and that AA should put more seats "up front", the way TWA had done.

I responded that maybe that was one reason why TWA went bankrupt.

I got some responses disagreeing with me A LOT..!!

I have come to the conclusion that many members of ff programs, elite flyers especially, are in denial when it comes to airline economics.

In the near term, I agree that the frequent flier programs are cash generators for airlines.

Airlines make money off of their frequent flier programs by selling miles to other companies (car rental, hotel, phone, internet, etc, etc). So it is a positive cash flow for airlines.

But--normally, when a company sells a product--it has incurred its production costs to sell their product to you before you buy it--and usually the company has no further obligation to you except in a warranty.

But airlines are selling miles that for the most part are to be redeemed for future air travel. They may have had some sales cost associated with selling miles to other companies, but the biggest part of their liability to the ultimate consumer of those miles is off in the future somewhere.

I saw today the "deal" where people can use different kinds of stored value cards and earn points by "charging up" their stored value cards with a point earning credit card. I calculated from the one program using a Citi AA card can earn miles at a cost of 0.3 cents or 3 tenths of cent each.

Now that there are like 9 trillion miles out there in frequent flier accounts. When does the concept of inflation hit frequent flier programs?

It has got to sooner or later--if someone is getting 3 ff miles for 1 penny and it takes 90,000 miles to get a business class seat to Europe, then $300 will get you a seat to Europe which AA would sell for $3900--.

The airlines are selling miles and incurring a future liability where the airline can arbitrarily modify the value of the points it has already sold.

IMHO--the big awakening will occur when one of the major carriers goes under and their ff program is not picked up by another airline. Then all of the hoarded miles become worthless--or even worse--

What if in the US situation, a shutdown occurs and the alliance carriers refuse to fully honor all the award tickets that are now or have been booked in the past few months for travel next year by all those mile hoarding US Dividend Miles members?

It will be the first time a major airline ff program will default on its ff benefits and promises.

Once people start to see that the benefits of those ff miles are not guaranteed ---or they get a dose of severe devaluation when the airlines increase the mileage requirement for a trip or severely restrict the available supply of award seats--it will be like the banking crisis in 1933--a rush to redeem---

I can't help comparing frequent flier miles to S&H Green Stamps. Perhaps I am wrong--but whatever issues caused Green Stamps to fade away will also eventually happen to ff miles.

Being able to accumulate miles such that you can get an award seat for less than 1/10 th of the cost of what you could buy it for without ever stepping on an airplane until you cash in for an award tells me something "ain't" right.....

If you want to see the "head in the sand" mentality of frequent fliers--take a look at the AA forum over the next couple of days.

Rumors are out that AA is going to institute some type of "co-payment" in order to upgrade from the back of the bus....er, umm---I mean plane..

If you ever wanted to see an example of the entitlement class--you'll see it there....