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-   -   Is it time to hoard miles – will their value go up? (https://www.flyertalk.com/forum/american-airlines-aadvantage/1813891-time-hoard-miles-will-their-value-go-up.html)

writetorich Jan 8, 17 9:08 pm

Is it time to hoard miles – will their value go up?
 
My view, IMHO, on AA miles.

I currently am sitting on 730,000 miles from when I "earned "1 million miles in less than 4 weeks just prior to the changeover from "all miles count" to MM Status to " only tushy in the seat miles counts". Personal circumstances had me traveling a lot less right after January 2012 or the fall of Saigon. I was a lowly gold with 1,005,000 lifetime miles and decided to jump for the 2 million.

I use to value a mile at 2.5 cents.-- maybe 3 cents I was never a "hoarder" , even with a million lifetime, My balance was very low. I always kept only enough for one spur of the moment premium cabin trip. ( I was single at the time) or an ultra expensive domestic on short notice for work ( was self employed) , even though its tax deductible a $2000 domestic fare was still a lot to pay.

I always viewed miles as redeem them while you can. "Smoke em if you got em"
My view unlike others mentalities , it was not a " Vacation Retirement RA" for future use. The mileage balance was at AA capricious unilateral rules subject to change at any time and could only go down.

Now my view has changed, I am bullish on the future value of AA miles. Its gotten so bad that I think a mile is currently 0.8 to 1.0 cents. And a penny is the upper end. more like 0.8 cents. I think the 0.8 cents is a rock bottom ratchet

However, given that AA has
1- surprisingly not allowed high annual fee affinity CITI cards with high annual spend to partially offset or eliminate the dollar revenue required for status ( maybe a pissing match or an "ambivalent" i.e. love hate relationship with Citi) , the ranks of Elites will thin. ( Barclays still does)

2- the elimination of mileage based accrual will reduce hard core FT'er hobbyist from achieving Exec plat and Plat for a pittance.

3- Earning miles ( other than lucrative sign up bonuses on a new credit card for a new card holder ) will no longer be easy.

4- Like any "currency" , once you reduce inflation and just printing the "money" ( miles) and putting it into circulation, and reduce macro circulation the value will rise.

I'm not expert , but my view is that people who fly a lot AND spend a lot will not be happy with the crazy award levels. Domestically, I never see Saaver , unless at 5 am with the rooster with a connection.

5- Unless AA changes and allows credit card spend to count toward the annual dollar spend requirements, I see a lot of thinning of elites.-- in the past , I got Hilton HHonors Diamond by spend on the Amex surpass card. I was in no way a "road warrior" I remember back when Delta ( who I hated) allowed TOP TIER via Amex spend on several cards because Amex kept sky team afloat and Delta in business during times of over capacity and weak economy,

As the circulation and massive distribution of miles by AA , dries up, they will have to reply to customer complaints that "I don't want to spend 80,000 round trip to fly to Florida in December".

Now that 80,000 miles represents, about $8000 in spend and a family of three , its $24,000 and a lot of time in a seat.

wishing everyone in our community a happy , healthy 2017

Since, I'm not that smart, what do others think??

I think that once AA successfully takes miles out of circulation via the high miles required , we'll see some positive changes on the REDEMPTION front.

Please opine.

JDiver Jan 8, 17 9:12 pm

I respectfully and heartily disagree.

I believe if one is inclined to travel and can use miles reasonably no or in the near future, one should do so, because there will inevitably be inflation (if the past is any indication of he future). I'd not spend just to spend if he dollar:mile ratio is not in my favor.

And AA does in fact allow (Barclaycard AAdvantage Aviation Red an Silver MasterCard) spend to offset to EQD requirements.

writetorich Jan 8, 17 9:14 pm

Jdiver- what do you currently value an AA mile?

JDiver Jan 8, 17 9:19 pm


Originally Posted by writetorich (Post 27728611)
Jdiver- what do you currently value an AA mile?

The value I assess depends on what I can score, not a fixed but rather a dynamic rate.

E.g. one way SFO-LIS fova recent repositioning cruise was priced at ~2.5-3.0 the round trip price, so 55,000 miles per person in J represented good value to me. But with he new variable "price" on award seats, one has to be assiduous and tenacious.

Centurion Jan 8, 17 9:33 pm

Up in value? How can you explain the fact that you find an over the water partner award in biz or F but the First class domestic usa must now be in saver or you entire trip gets AAnytime pricing. This was a hidden devaluation that is discussed in many threads

writetorich Jan 8, 17 9:57 pm

Yeah I agree with you
 

Originally Posted by Centurion (Post 27728679)
Up in value? How can you explain the fact that you find an over the water partner award in biz or F but the First class domestic usa must now be in saver or you entire trip gets AAnytime pricing. This was a hidden devaluation that is discussed in many threads

Yeah I agree with you
will go up in value in the future . Its no longer a perishable intangible that need be redeemed at low values.
The value and options for redemption have been gutted.

But it's harder to earn miles and harder to be elite.

Hence I see things improving.

We are already at rock bottom for the program.
look at DOW in 2009.
now look at it.

writetorich Jan 8, 17 10:11 pm


Originally Posted by JDiver (Post 27728631)
The value I assess depends on what I can score, not a fixed but rather a dynamic rate.

E.g. one way SFO-LIS fova recent repositioning cruise was priced at ~2.5-3.0 the round trip price, so 55,000 miles per person in J represented good value to me. But with he new variable "price" on award seats, one has to be assiduous and tenacious.

The value is what you as a willing buyer would pay for AA miles. It's not really dynamic. ( and no I am not offering to sell a program violation and FT violation
and it goes against my premise that I am bullish.)

Yeah some good deal are out there. I've gotten LGA-NYC shuttle flights at 7500 miles in coach. I also saw NYC- Montreal at 7500 miles ( one way )

I redeem TWO round tixs on the LGA - DCA shuttle for 30K miles ( 7.5 K ) per way per person. A mere pittance to someone with over 700K miles.
Thats 3 cents a mile.

So it's not about the outlier or unique redemption that I am talking about.

Right now I don't have surplus cash. and am not in the market for more AA miles. I have more miles than money at the present moment.

But prior to financial reversals , if i had discretionary cash in bank-- which I don't--- I would be likewarm and ambivalent to buy at 0.8 cents.

Where as in 2008, I would gladly pay 2.0 cents.

So I'd say it's not really dynamic , its what you personally as a non distressed willing buyer would pay for more AA miles.

I was curious what other thought about trying to hang onto miles for the time being.
years back, once , I had GOLD , I did not worry about making PLAT and redeemed when possible. -- unless it was a really bad value obviously--


I see better days ahead for AAdvantage redemption value.

no1cub17 Jan 8, 17 10:22 pm

Hahaha - I mean you're certainly entitled to your view. Hoarding miles has never been and will never be a good idea. But you're certainly free to hoard as many as you want - I'm sure AA doesn't mind.

The complete and utter absence of premium saaver and for the most part confirmable upgrades was ok when AA's award chart was still superior (and earnings were easier). Now? UA and Star are so much better for redemptions - it's not even funny.

But to each their own!

Col Ronson Jan 8, 17 10:23 pm

I never redeem award flights for myself, only for others where i dont like spending money on them ( i find that paying for flights that dont go towards elite status is a waste i.e. the leisure traveler ;) )

So i spend as i need to.

writetorich Jan 8, 17 10:34 pm


Originally Posted by no1cub17 (Post 27728823)
ok when AA's award chart was still superior (and earnings were easier). Now? UA and Star are so much better for redemptions - it's not even funny.

But to each their own!

Yeah , but FT'ers use to bi-ch and moan about AAnytime being double a saver with no delineation or variance for high travel demand dates.

I was in a minority. I always felt true last seat availability from a Y bucket , a J bucket or an F bucket for twice was a great deal.

Lets look at economy. A full Y bucket REVENUE tix was a lot more DOUBLE than a cheapo bottom feeder REVENUE econ tix ( "T" class?) .

but others complained about double AWARD price. I found it very fair.

rjw242 Jan 8, 17 11:18 pm

I've had a few beers tonight but what is this?

shawn67 Jan 8, 17 11:19 pm

I've wondered about this myself. Since miles are getting more difficult to accumulate is the value that AA will place on them go up? Will we ever see again in the future 100% bonuses for buying miles.

tkelvin69 Jan 9, 17 12:07 am

I agree that miles have become more valuable as a result of the decreased ability to accrue them at the same rate. Some of might remember the days of flying 100,000 miles for ~$3,000 would result in 300,000 miles (100% bonus plus sticker conversion). That $3,000 will now be 33,000 miles.

Microwave Jan 9, 17 1:12 am


Originally Posted by writetorich (Post 27728584)
Now my view has changed, I am bullish on the future value of AA miles. Its gotten so bad that I think a mile is currently 0.8 to 1.0 cents. And a penny is the upper end. more like 0.8 cents. I think the 0.8 cents is a rock bottom ratchet

However, given that AA has
1- surprisingly not allowed high annual fee affinity cards with high annual spend to partially offset or eliminate the dollar revenue required for status ( maybe a pissing match or an "ambivalent" i.e. love hate relationship with Citi) , the ranks of Elites will thin.

You've missed me there; US-based frequent flyers (:mad:) can indeed spend their way out of the EQD requirement for Gold or Platinum completely, or offset 50-66% of the EQD requirement of the higher elite levels. EQDs will surely thin the higher ranks to some extent (certainly for us heretofore-loyal foreign-based elites—did I mention :mad:?), but between EQD earning on partners and their Barclaycard deal they've lowered the bar substantially.

Max M Jan 9, 17 1:52 am

The somewhat recent move by AA to change how miles are earned when flying simply puts them on par with Delta and United in terms of how miles are earned.

Yes, people will be earning fewer miles because of miles being earned on fares, but there are many people out there that still have mileage account balances that are 6 or 7 figures. Over time, as people redeem the miles, yes there were be fewer miles collectively "banked" across in accounts.

As long as Citi and Barclays continue to allow churning, and AA continues to offer 100% bonuses on miles purchased directly from AA, there are still ways for people to have a decent 'bank' of miles.

Now, if AA, across the board, dramatically increases sAAver level award inventory then the miles could be worth more than present-- and IMHO that's the ONLY way the miles could be more valuable than today.

Before the AA/US merger, AA had the best overall availability for sAAver level awards on their own metal, and DL was the worst--- with DL's SkyMiles earning the term SkyPesos by FT'ers. Fast forward to 2017, and DL's redemption rates at saver levels on their own metal aren't the worst among the Global 3 U.S. carriers--- now it's AA taking the lead with the fewest number of saver inventory seats.

In a few years, when AA follows what DL is doing, and has award pricing for Premium Economy Awards, you'll see Business and First Class award redemption rates increase correspondingly for those cabins-- both at the sAAver and AAnytime levels.


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