Why have mileage expiration dates?
Feb 8, 2007 | 5:59 pm
#16
In memoriam
Join Date: Jan 2006
Posts: 4,020
I suspect that US Air was getting something for every sub ordered.
I ordered some subs a year or so ago to burn a couple of thousand left over US Air miles and inadvertently ordered more than my miles would cover. I got all the subs. And, now, US Air is showing that I still have a positive balance in my acct. Kinda weird.
Back on topic: one big reason that miles expire is that they must be carried on the airline books as a contingent liability which can hurt the ability to report profits. Once they expire, reported profits can go up.
I ordered some subs a year or so ago to burn a couple of thousand left over US Air miles and inadvertently ordered more than my miles would cover. I got all the subs. And, now, US Air is showing that I still have a positive balance in my acct. Kinda weird.
Back on topic: one big reason that miles expire is that they must be carried on the airline books as a contingent liability which can hurt the ability to report profits. Once they expire, reported profits can go up.
Feb 8, 2007 | 6:35 pm
#17
Join Date: Nov 2002
Posts: 1,236
Wrong. As hard as is it to get award seats if they expire everyone else's miles, then mine will be useable. I watch my accounts enough to keep them from expiring. If they had a 30 day expiration I would keep mine alive and be one of the few people in the world competing for award seats.
Feb 8, 2007 | 6:43 pm
#18
Original Poster
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So, to phrase the question a different way, if it cost the airlines virtually nothing to maintain the miles on the books, is it still smart to expire?
Feb 8, 2007 | 6:51 pm
#19
Join Date: Mar 2000
Posts: 5,658
To have you use them up.
So, I was reading this thread....http://www.flyertalk.com/forum/showthread.php?t=593589
and the thought came to mind that as the FF programs have evolved, there seem to be *less* reasons to expire miles then before. To wit:
1. Perception: There's no way a customer can see it as a plus to have less time to use their miles.
2. Cost: While I know FF miles represent a significant liability on the books, I would assert that it also costs them money to remove the liability. :
isclaimer:: I don't claim to be an expert on this subject. However, if the government has established enough "value" in miles/points that some programs charge a fee to offset taxes for transfers, it would seem that when an airline expires miles, the government would consider this similar to voiding a gift certificate. In these instances, the states usually require that revenues be disgorged to the states as unclaimed funds.
I'm not 100% sure my logic on #2 is correct. Nor do I think there's any chance the airlines would see it this way. I guess I just don't see the value in encouraging people to burn or lose. Since airlines are much more likely to raise the "price" of an award than lower it, letting them sit on the books would seem to increase the likelihood they don't get redeemed.
So, why eliminate something a customer earned but might not use when the act of taking back what they've earned might cause them to go elsewhere?
and the thought came to mind that as the FF programs have evolved, there seem to be *less* reasons to expire miles then before. To wit:
1. Perception: There's no way a customer can see it as a plus to have less time to use their miles.
2. Cost: While I know FF miles represent a significant liability on the books, I would assert that it also costs them money to remove the liability. :
isclaimer:: I don't claim to be an expert on this subject. However, if the government has established enough "value" in miles/points that some programs charge a fee to offset taxes for transfers, it would seem that when an airline expires miles, the government would consider this similar to voiding a gift certificate. In these instances, the states usually require that revenues be disgorged to the states as unclaimed funds.I'm not 100% sure my logic on #2 is correct. Nor do I think there's any chance the airlines would see it this way. I guess I just don't see the value in encouraging people to burn or lose. Since airlines are much more likely to raise the "price" of an award than lower it, letting them sit on the books would seem to increase the likelihood they don't get redeemed.
So, why eliminate something a customer earned but might not use when the act of taking back what they've earned might cause them to go elsewhere?
Feb 8, 2007 | 7:26 pm
#20
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Wrong. As hard as is it to get award seats if they expire everyone else's miles, then mine will be useable. I watch my accounts enough to keep them from expiring. If they had a 30 day expiration I would keep mine alive and be one of the few people in the world competing for award seats.
i can do it in 29 days, man! Of course I totally object to the prospect of shortened mile expiry dates. Even if I could keep up, it makes it less fair and if we allow such changes, they will simply do more and more. One day it could be nearly impossible to manage!
ya know, sometimes I think they are eventually going to make it so WE say "Oh heck, just do away with miles anyway!" and then they will.
Feb 8, 2007 | 10:33 pm
#21
Join Date: Mar 2006
Location: YYZ
Programs: Haven't been flying for a while... :(
Posts: 478
It makes a lot more sense trying to wipe miles off accounts and the books simply to get customers that don't add value off the books. I'm sorry, the person with 5000 miles in their account from one promo three years ago should not represent a continued liability on the books for whatever value that is... $10? And one that would never get wiped off until the death of that person.
Of course, the forced usage of miles is another issue, and one that doesn't make sense at all. Why Air Canada would prefer to forego revenue from a Super Elite that is saving up miles by forcibly expiring miles older than 7 years is bizarre from my view. I mean, I can *nearly* understand the 12 month activity requirement, but not the 7 year requirement. 100k miles may be a small number here, but it's a plenty big number for occasional flyers that just want to take a family to Florida. And a Super Elite may have plenty of miles to burn, but if most of them are paid for by the employer, why force them to use miles when they still generate so much revenue?
Of course, the forced usage of miles is another issue, and one that doesn't make sense at all. Why Air Canada would prefer to forego revenue from a Super Elite that is saving up miles by forcibly expiring miles older than 7 years is bizarre from my view. I mean, I can *nearly* understand the 12 month activity requirement, but not the 7 year requirement. 100k miles may be a small number here, but it's a plenty big number for occasional flyers that just want to take a family to Florida. And a Super Elite may have plenty of miles to burn, but if most of them are paid for by the employer, why force them to use miles when they still generate so much revenue?
Feb 9, 2007 | 11:24 am
#22
Join Date: May 1998
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Somehow I doubt that's the motive, although that may be the (unintended) consequence.
Miles cost an airline less as a contingent (inchoate) liability than it would actually cost them to fly someone to burn the miles. For one thing, the "contingent" liability calculation certainly incorporates the "breakage" -- the miles that will never be redeemed for whatever reason -- while the actual cost of delivering (low though it may be, perhaps $25 or so per ticket) will always be higher than the contingent liability for that (potential) ticket.
Miles cost an airline less as a contingent (inchoate) liability than it would actually cost them to fly someone to burn the miles. For one thing, the "contingent" liability calculation certainly incorporates the "breakage" -- the miles that will never be redeemed for whatever reason -- while the actual cost of delivering (low though it may be, perhaps $25 or so per ticket) will always be higher than the contingent liability for that (potential) ticket.
Last edited by Counsellor; Feb 9, 2007 at 11:33 am Reason: spelling
Feb 9, 2007 | 11:30 am
#23
Join Date: May 1998
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It makes a lot more sense trying to wipe miles off accounts and the books simply to get customers that don't add value off the books. I'm sorry, the person with 5000 miles in their account from one promo three years ago should not represent a continued liability on the books for whatever value that is... $10? And one that would never get wiped off until the death of that person.
Wiping them off as a "tidiness" exercise may make some sense, but probably not for a number of years (5? 7?) and even then you'd need to do a cost/benefit analysis since, outside of tidiness, there would be little true benefit in doing so.
Feb 9, 2007 | 12:17 pm
#24
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Somehow I doubt that's the motive, although that may be the (unintended) consequence.
Miles cost an airline less as a contingent (inchoate) liability than it would actually cost them to fly someone to burn the miles. For one thing, the "contingent" liability calculation certainly incorporates the "breakage" -- the miles that will never be redeemed for whatever reason -- while the actual cost of delivering (low though it may be, perhaps $25 or so per ticket) will always be higher than the contingent liability for that (potential) ticket.
Miles cost an airline less as a contingent (inchoate) liability than it would actually cost them to fly someone to burn the miles. For one thing, the "contingent" liability calculation certainly incorporates the "breakage" -- the miles that will never be redeemed for whatever reason -- while the actual cost of delivering (low though it may be, perhaps $25 or so per ticket) will always be higher than the contingent liability for that (potential) ticket.
My understanding is that the miles aren't counted as a contingent liability (at least by most airlines) until they mount to the level that they can be redeemed for something. In other words, the accounts with a few thousand orphan miles (and there may be many of them) don't add to the contingent liability.
Wiping them off as a "tidiness" exercise may make some sense, but probably not for a number of years (5? 7?) and even then you'd need to do a cost/benefit analysis since, outside of tidiness, there would be little true benefit in doing so.
Wiping them off as a "tidiness" exercise may make some sense, but probably not for a number of years (5? 7?) and even then you'd need to do a cost/benefit analysis since, outside of tidiness, there would be little true benefit in doing so.
except for the fact that they CAN and DO like to clean house just cuz they want customers to either get with it or get lost. It pisses off many people--to sign up for something thinking it could be something cool only to have it go away later cuz of some rule change or new polilcy in 1 point type. But that's business sometimes. I think it's evil sometimes and maybe the only thing one can do is start their own!
Feb 9, 2007 | 12:55 pm
#25
Join Date: Jul 2004
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You mean I signed up for card X at airline Y on their promise of FREE FLIGHTS and big mile earnings to get 20,000 miles for this MasterCard I never use (because my wife and I agreed to not spend a lot on cards --or at all) only to find out that the points expired a year and a half later?? [/I]
You mean to tell me when I go to redeem these miles I must race to a que that is already mostly full on the telephone 330 days out from my date of travel? I got 3 kids and a mortgage and the last thing I have time to do at home is get on a computer and research this stuff! There's NO WAY I can plan a trip that far in advance!
You mean to tell me when I go to redeem these miles I must race to a que that is already mostly full on the telephone 330 days out from my date of travel? I got 3 kids and a mortgage and the last thing I have time to do at home is get on a computer and research this stuff! There's NO WAY I can plan a trip that far in advance!
Prudent executive should be PROUD to use product their company makes any day of the week, aren't they?
AX
Feb 9, 2007 | 1:05 pm
#26
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I think I know how to fix this... Just imagine changes to FFPs if airline directors and other execs will receive their "benefit" of having free flights on their airline in form of frequent flyer miles to be deposited to director's account and to be spent as per program terms and conditions.. Imagine conversation: "So, Mr. Tilton, you would like to fly your family to Sydney in first? that's fine, the only problem is you have to book 330 days in advance, we have only one F seats, at midnight Wednesday in July."
Prudent executive should be PROUD to use product their company makes any day of the week, aren't they?
AX
Prudent executive should be PROUD to use product their company makes any day of the week, aren't they?
AX
Feb 9, 2007 | 2:05 pm
#27
Join Date: Feb 2007
Posts: 1
Reactivating expired miles
I just found out after booking a trip on my AA miles that they didn't actually check my account and my miles have expired. I know I can reactivate them for a fee, but has anyone had experience negotiating a reactivation?
Thanks, Tripped Up
Thanks, Tripped Up
Feb 10, 2007 | 10:14 am
#28
Join Date: Oct 2005
Location: BTV
Programs: BA GGL, LH SEN
Posts: 108
I think I know how to fix this... Just imagine changes to FFPs if airline directors and other execs will receive their "benefit" of having free flights on their airline in form of frequent flyer miles to be deposited to director's account and to be spent as per program terms and conditions.. Imagine conversation: "So, Mr. Tilton, you would like to fly your family to Sydney in first? that's fine, the only problem is you have to book 330 days in advance, we have only one F seats, at midnight Wednesday in July."
Prudent executive should be PROUD to use product their company makes any day of the week, aren't they?
AX
Prudent executive should be PROUD to use product their company makes any day of the week, aren't they?
AX
Feb 10, 2007 | 4:05 pm
#29
Join Date: Mar 2006
Location: YYZ
Programs: Haven't been flying for a while... :(
Posts: 478
Probably too late by now. There were some old tricks about "miles posting late" if the miles just expired but you have some qualifying activity in the meantime that takes time to post, like hotels or cars. YMMV, and good luck.
Feb 10, 2007 | 5:11 pm
#30
Join Date: Feb 2004
Posts: 117