<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by The Mile Dog:
Whoa here people! Everyone is talking about miles depreciating, but I think TrojanHorse hit on the real value of miles in his post. The value of a mile is linked intrinsically to the value of the underlying commodity it purchases. For example if a free coach domestic US ticket stays at 25K, then the value of a mile is appreciating at the same rate as the fare for this flight is increasing. For example if the fare for the flight you wish to take is $300 now and years from now at retirement it is $600, haven't the value of your miles appreciated as compared to the nominal dollar?
Now this is not to say that I do not think one incurs significant risk of airlines upping the reward levels, going bankrupt, etc., but if the program would stay the same it seems that the purchasing power of a mile is going up as airfares increase over time.</font>
This assumes that the "price" for a ticket that you would purchase with award miles actually does increase over time. In fact, airline ticket prices since deregulation haven't kept up with inflation except maybe in the full fare fully refundable category. Since 9/11 in the "leisure" category, they have actually gone down. In the mean time, we have seen a shift in frequent traveller programs over time from the standard frequent flyer award being able to purchse a ticket that resembles the "full fare" ticket (in terms of restrictions) to only being able to purchase a ticket that more closely resembles the "leisure" ticket (thanks to capacity controls, Saturday night stay requirements, blackout dates, etc.)