I can't speak for the legacies but some on the Southwest forum have reported here that they are hoarding their rewards - and even planning to let them expire and pay a $50 extension fee - as they see these awards becoming more and more valuable.

PS: I don't read the legacy boards much anymore so I wasn't aware of Hawaii award mileage requirements increasing, is this old news? Have all legacies increased HI mileage requirements?

AA has announced an increase for HI awards, beginning in October.

UA and AA have announced they are cutting some HI routes.

Capacity cuts are under way, but this "game plan" is primarily the result of the primary input cost - fuel - roughly doubling in recent months. As a result, prices for tickets are, and should, and *need* to rise, if airlines are to remain profitable (and therefore, in business). Leisure travelers are the most price sensitive, and given the higher prices, will likely become a smaller portion of the pie while prices remain high.

If you value miles by their purchasing power of free market goods, then if 25,000 miles + $50 in fees gets you a ticket you would pay $550 for otherwise, they are worth 2 cents each to you. If 35,000 miles + $100 in fees gets you a ticket that you would have paid $800 for, they are still worth 2 cents each. Accordingly, as prices rise but mile redemption levels remain constant, the miles are actually appreciating as a currency. If redemption levels rise (e.g., needing 35K miles instead of 25K miles for the same ticket), their value will depend upon the movement of the free market price of the tickets they buy.

My observation has been that price increases have outpaced mile redemption (and fee) increases, thereby resulting in frequent flier miles being worth more - not less - in the recent year. This may certainly change, but I do not suspect it will much.

All that may be true if every flight you plan to take is available both with miles and cash.

However, if you cannot wait to take a flight until it's available on miles, and more of the flights you need to take are not available on miles even when they would be far cheaper on miles, that changes the whole equation. It makes your miles worth less averaged over the cost of all your flights, because you're able to use the savings of using miles less often, and thus your average savings is less.

So it matters very little what the theory is of flight costs in cash and miles costs in miles.

Another example: If flights are generally going up in price, but there are still occasional sales (and there, so far), and the flights where you can redeem miles are the same ones that are on sale for cash, then you need to compare against the sale price (not the general trend price)!

While I've come to the conclusion that hotel points that started out as hotel points are generally more valuable than airline miles converted from those hotel points, I'm less certain of the value the other way around.

These examples are, for most people, funny money. If you would never pay for the Conrad if you were choosing a hotel for money in Hong Kong, and you would be happy enough with a hotel which charged US$150ish a night (and there are plenty of those most seasons), no way do I see that worth one saver biz ticket to Europe or Japan (as a 6' tall person who can't sleep in int'l coach and thus biz is the lowest award I'll take unless Premium Economy is available). Even with $250ish a night hotels I don't see four nights being worth int'l biz.

While I might never pay $4000 for int'l biz, I do have to consider that an int'l coach flight upgraded with miles would still cost me well over $1000 (in coach fare + upgrade copay) in cash. This is why I consider even 4 nights at $250ish a night not worth the miles I could use for int'l biz.

But that just argues against the very lmited transfer to hotel points available out of AA (but few other airlines). It's an entirely different situation when you earn hotel points as hotel points and then consider whether to transfer to airline miles or redeem for free nights. In the case of Choice Privileges points, for example, 16K points is next week getting me a night at a nice hotel in western Norway where even the cheaper decent hotels are $200+ a night, yet those 16k points would only convert a little of 3k miles (at any miles airline), which is worth nowhere near $200ish to anyone, I think. (The conversion to 6 Southwest credits is a little better, but still not necessarily better than keeping it as points in this example of point redemption value, given that the 16-credits Southwest award is now capacity controlled and it now takes 32 credits to get a "use it anytime" award at Southwest.)

You bring up a very good point, although the theory still matters very much... you are just suggesting that there is a variable I did not include. Availibility of redemption (or "redemption success") should be considered - that is your suggestion. 25K miles for a $500 ticket 50% of the time is not the same as 35K miles for a $700 ticket 20% of the time.

So, the question is: Has availibility changed substantially, and if so, how much? If redemption success has dropped from 50% to 40% while prices have moved from $300 to $500 and the mile quantity required has remained the same, mile value has still appreciated. I could give endless combinations as examples, but my point is that the *degree* of change of each variable is instrumental - not just the fact it has changed at all.

My personal experience has been that - and I am well aware that it may vary wildly from others, "the norm" - I have been able to redeem at roughly the same success rate for the past two years, while prices have risen about 50% for the routes I fly and mile redemption levels for these routes have remained flat. Fees are slightly higher, but not substantial. Net change for me: miles are worth substantially more.

Miles increases Broke my heart
 

On a sad note, I have already explained to my wife that the Airlines have increases milage redemption so much that I will not be able to accompany her on her annual ONE MONTH visit to her mother's house. Yes, it is unfortunate, but I will NEVER be able to spend a month out of my life EVERY YEAR with my wife and her mother. Instead, I will be forced to do anything I want for a full month every year......damn.....

Liar! :)

About a year ago I also thought the troubles airlines were/are encountering could lead to an increase in the value of hoarded FF miles, and I tend to agree that there are many cases where this can currently be demonstrated. Whether it persists long term, I don't know.

But with Delta at least, with their "pay with miles" option, they've evidently decided they can make money with unlimited "award" access, but only at a Skymile value of 1 cent per mile (actually a little less with fees and a bar on upgrades factored in). Interestingly, with rising fares, this trends toward reduced value for miles earned by flying and increased value for miles earned through partner activities, making the "loyalty" program less about loyalty and more about rebating a fraction of what's often an increased cost for a variety of services.

I think it's a cyclical thing. When the economy is bad just about everything with the airlines are bad, when the economy is good the airlines are good. Wait a few years for it to turn around (hope that isn't too optimistic of a time frame...).

You are a FlyerTalker, as am I, and so we have access to information that makes it easier to redeem. The average person who reads neither FlyerTalk nor InsideFlyer doesn't know that the classic best chance for seats is at 330ish days out (but varies by airline!) when seats (award or not) for the flight first come "on line". But only the FlyerTalker might know that that has changed at some airlines in recent times, and that with those airlines which month out the seats become available keeps changing, and if you can't "check back daily" then maybe you can only stay on top of it if you set up ExpertFlyer alerts or such. (And how many non-FlyerTalkers know about such services?)

What I predict with the most certainty is that no matter how much the system changes, FTers will be far ahead of the average public (perhaps increasingly far ahread?) in being able to get decent results from the system. Unfortunately for this discussion, we tend to know the success/failure rates of non-FTers rather poorly, because (a) most people we know personally that might have failure we tend to help have more success, and so we interfere with the "natural results" :), and (b) most anecdotes we hear about from "newbies" who write (to FT, to IF, or to your local paper) about redemption nightmares are just anecdotes (and people tend to write to such places about nightmares much more than about dreams come true).

And that is better? I think I'd rather have a R/T ticket to Europe in F rather than 6 nights at a lux. hotel.

I hate it when that happens you poor soul. :cool:

Multiple responses:

* domestic capacity cuts:
Short haul routes have had RJs replaced with mainline jets.
My anecdotal results over last 6 months.....getting the Business/First Class international sectors of an award ticket have been easier than getting the domestic sector from my city (CLE) to the gateway city. Result- having to buck up anywhere from $125-$275 per ticket to buy the domestic sectors....in effect a devaluation of my miles.

* foreign program fuel surcharges
As noted in previous post, foreign programs include fuel surchaes in their 'taxes and fees'. For my last 6 long-haul award tickets, the average 'taxes and fees' were over $600. While I redeemed Business/First Class tickets, $600 is stil a rrelative good value, but compared to taxes and fees same time last year, I'm looking about $400 more per ticket...another devaluation.

I consider myself a mileage 'bull' like ingy, but the convergence of these two issues above have considerably cooled my ardor for being in accumulating mode for the time being. I guess I'm in 'hold' mode until the dust settles for a few months.

I think we can all agree that the airline & whole travel industry is going through some chaos. Despite the fact that this chaos will present challenges for many people, it also presents others with opportunities. In my business we say, "Where there is chaos, there is money to be made."

There are going to be mileage winners and losers. Chances are the more educated you are about FF programs, the more you will win. Whereas the less educated will lose. All the more reason to keep reading FlyerTalk.

I have to believe somehow, someway, 50% of Flyertalkers will win, 30% will break even and 20% will lose out despite their best efforts. The average flyer will lose out and probably because they will panic and do something rash. For instance, last summer my sister redeemed 60,000 AP points for an economy YYZ-LHR. This is probably the most competitve international route out of YYZ. You can get discounts and there are lots of LCCs. At that time, you could definitely get $400-$600 ai. I offered for her to move the points to my account and I would buy her ticket. However, her 3 friends had already bought a ticket on the same AC flight, so it was too late.

For people with lifetime FF balances of less than 75,000 AND never having redeemed before, they will probably take the "bird in the hand is worth 2 in the bush." Fares are rising and airlines look like they're going bankrupt. I think a lot of people will devalue their miles and book any reward they can get. I believe that behaviour will make reward availability less, but will probably stabilize FF mile value. It will help the airlines get those FF liabilities off the books cheaply.