Here is an extract from a NY Times Business Section on FF programs.
http://www.nytimes.com/2006/04/26/bu...leonhardt.html ((Free registration required at NY Times website))
""What Price Loyalty? Something Free:
.... MILES have become one of the most successful business ideas not just of the last quarter-century but in the modern history of capitalism. They have been a diabolically brilliant way to separate people from their money while making them feel as if they were instead getting a gift. Sure, you just spent $800 fixing your car, but you charged it to a credit card that awards miles, putting you that much closer to a free vacation.
If you believe the popular idea that a mile is worth about a cent, the 14 trillion unredeemed miles that travelers hold are more valuable than all of the United States currency in circulation, as The Economist magazine has noted.
....
"We figured if we were successful," Mr. Crandall [[former CEO of American Airlines and credited with creating the first airline FF Pgm]] told me this week, "we could replace S&H Green Stamps."
They have obviously done that, and then some. But the comparison also has a darker side. Green stamps, after all, aren't around anymore. They were the victim of their own inflationary spiral in the 1960's, when stores started awarding double and triple stamps, which cost them gobs of money.
....
They were another example of the notion that corporate America tends to drive every good idea into the ground like a tomato stake, as the writer James Grant has said about Wall Street. Now frequent-flier miles are following a similar path.
....
But I'd bet you wouldn't find the same premium today. Low-fare airlines are a lot bigger than they used to be, and they have their own frequent-flier programs. Corporate travel managers, meanwhile, can use software to force business travelers to choose the cheapest ticket.
....
And miles don't have the pull they once did, because they, too, have been swept up into an inflationary spiral. Hard-core travelers who once viewed upgrades to first class as an inalienable right now find them hard to come by because so many miles are sloshing around and planes are so full these days. Claiming free tickets on popular routes can also seem almost impossible.
Frequent-flier programs are not about to disappear, because no airline can afford to abandon them unilaterally. But compared with Mr. Crandall's original goal — to keep airline seats from becoming a commodity — the frequent-flier mile is looking pretty old and tired for a 25-year-old.
Just look at what United is doing to celebrate the 25th anniversary of its program. It is letting its best customers use their miles to buy Callaway Golf clubs, Coach sunglasses and Canon digital cameras. That turns frequent-flier miles into just another discount, rather than the guarantee of loyalty that Mr. Plaskett envisioned.""
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We all need to reread our Economics 101 textbooks from college and see what happens when inflation hits ANY currency in ANY country over the last 1,000 years. That is starting to hit the FF miles programs. The basics are prices go up, up, up when more currency starts to chase less and less products. Just look at the AA program. Getting a base 25,000 award is virturually impossible, but a 40,000 mile award for the EXACT SAME seat is generally much more available. That is classic inflation.