Hi there,
I'm writing a paper on loyalty programs for a college marketing class. I'd like some opinions on the issue of orphan miles from an airline's perspective. As I understand it, the airlines are happy to "buy back" the miles they issued coz it reduces their future liability.

But in buying back the miles, aren't they affecting loyalty to their programs? For example, I have about 7,500 miles in my Northwest account, which is too far from a free ticket. If the airline utilized a service like MilePoint.com to buy back those miles in exchange for merchandise or magazines and stuff, sure it reduces their liability by 7,500 miles. But that also means that the next time I fly, I'm going to be more willing to check out fares on American, United, Continental etc. However, if I still had those 7,500 miles, I'd probably check Northwest first..right? So whats worth more to an airline...customer loyalty or reduced liability? I know there's no right or wrong answer to this question, but I'd appreciate any opinions or comments.

Thnx.