Counsellor

Certainly. Basic games theory.

Of course, the same can be said for mileage granted by Frequent Flyer programs for flying. If they all disappeared, all the airlines would "win"; but if one airline began awarding miles again for flying, that airline would "win" at the expense of the others that didn't.

When AA started the first Frequent Flyer program, they were immediately followed by others -- in self-defense, more than anything else. This is also why a promotion by one airline is frequently picked up by competing airlines.

There is competition between the airlines and between their programs as well.

- Some of the competition (the "good" competition from the consumer's viewpoint) is to try to gain customers by adding value to the program for the consumer. You could call that the "race to the top". It's usually driven by marketers rather than accountants.

- The other type of competition (the "bad" competition from the consumer's viewpoint) is the race to "save" money by removing benefits -- through what the airlines always call "enhancements" because you can't expect them to be honest and call the changes "retrenchments" -- where the airline tries to see how much it can withdraw from the program without losing customers. You could call this the "race to the bottom". It's usually driven by accountants rather than marketers.

What we're seeing here is a race to the bottom. Usually in such case the customer loses, and frequently the airline loses as well, because they miscalculated just how much a customer would take before moving elsewhere. I suspect that will be the case here.

I could also go on about how the airline accountants have failed to factor into their equation the huge number of miles that are not awarded for flight-related activity, and how "expiring" those miles decreases their attractiveness, but that's a subject for a later post.