This is one time where I agree with the airlines accounting, for the most part. If the airline sells the 25K miles for 2 cents each, they are certainly entitled to book $500 in revenue. On the liability (eventually expense) side of things, the main factor in determining the amount to book is the incremental cost of flying that extra passenger who claims an award seat. This is approximately $25, give or take. They can't, and shouldn't, book the full $500 as the liability because the FF programs are set-up to basically use seats that would go unsold. Thus, the incremental cost is the correct cost to use as a liability.

I know what you're saying. That's why I've been flying like a Banshee the last 2 years, having burned off well over 2 million miles from just United alone. 100% on Saver Awards, I might add.

I'm not just doing this because I know I can't take it with me (and I am approaching AARP membership age, which is something to rationally consider)...but also because I'm pretty certain that there will be some more devaluations a-comin' from my main carrier.

I enjoyed and benefited from redemptions in the Golden Age of Frequent Flyer programs, and am now enjoying them during the comparative Silver Age we seem to be in. I just don't want to be stuck with too many hard earned miles that get devalued in what may be the Lead Age ahead!

I'll tell you all this though, it's been very fun flying First or Business Class all over the world these past 2 years on free award tickets. But the funny thing is that I'm still traveling so much on paid tickets, that I'm having trouble keeping my account down to where I want it to be!!! http://www.flyertalk.com/forum/wink.gif

Bet some of you wish you had that problem! http://www.flyertalk.com/forum/wink.gif

[This message has been edited by PremEx (edited 08-08-2003).]

Bet you'll get plenty of offers to help...

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View from the Wing: A blog about Free Miles and Free Markets

You know, I have already. And sometimes those "offers" are fulfilled. Which is also part of the fun of the redemption process. http://www.flyertalk.com/forum/smile.gif

I would agree with what Randy says, to a certain point. The opportunity to get the reduced award is here now and it was not before, so it is better. Also, I would agree that Southwest must fit your travel desires - that is - if you want to fly more than a year from now, not in cattle class, or to an international destination, Southwest is not for you.

The other thing, though, about the difficulty in redeeming, is that there are many more miles awarded by the airline than ever before, which it more and more difficult to claim that award than there used to be. Airlines are also paid for probably half of the miles that they award, which means that these seats are not really being given away free anymore - in fact - they sell the seats mile by mile.

I just experienced the difficulty of trying to get an award trip to Europe and thankfully I had miles in three programs, because it was the third program called that came through for me. I do think the airlines may start seeing people get discouraged with the lack of available awards because many flyers did not use the programs 20 years ago and do not know how the programs have evolved. Also today may well be called the "discount age". All anyone seems to care about anymore is the price - that is - until they see negative changes. They want the service they got from the big carriers 10 years ago at the price of Southwest - not going to happen.

I would make this recommendation to the airlines that would probably make things better for both parties: Maybe they could have reduced mileage amounts for anytime awards if a companion ticket is purchased at any available fare (no forcing a "Y" fare). So if you want to go to Europe from the US, it would be:

50k capacity controlled award
50k anytime award with purchase of a flight
100k anytime award

Since most people probably do not vacation alone, that would bring revenue to the airline and also encourage the accumulation of miles as they would be more easily used. Even if I have the miles, I would often gladly buy one ticket if I could get the other one awarded on the day that I prefer to travel.

I agree with your view of accounting. The shady part is that how the airlines account for the liability side creates a strong incentive for them to be disengenuous in honoring their promises about free travel. In other words, the more difficult they can make it for you to redeem the free ticket they promised to you, the lower the liability they have to record under accounting rules. To be precise, the accounting is kosher, the business practice (of promising something but not making meaningful disclosure of the limitations) is not IMHO). I mean, how many of us know how many award seats exist per flight, and whether some flights have any award seats at all?

As for the reduced price awards, its a red herring. If you traveled and earned miles when awards cost twice as much, OK, you are getting a bargain. But most of us accrue miles when the awards were at 25K. And more frequently, loyalty programs (typically hotels) devalue their miles rather than devalue their awards.

I'm surprized nobody has brought up the subject of 'last minute' fees. I've seen the interesting case where somebody paid $82.50 for the privelage of redeeming 25,000 miles for a last minute ticket on AA. The exact same flight could also have been purchased for $200, so I guess he did save $120. However, this seems to go against the whole logic of the program. Somebody that books a month in advance may actually take away the seat from somebody who wanted to pay full Y at the last minute. However, somebody redeeming a last-minute saver award is almost surely taking a seat that would otherwise be sitting empty.

Another interesting quirk is availability vs. purchase cost. Twice I've booked trips that were a combination of paid and free travel. In both cases, the flight with FF availability was also the flight with the highest price, while the lowest cost flight had no FF availability. Seems that there is revenue management the airlines could put in place that would actually help FF redemption.

L Dude 7-

Burning/Redeeming FF miles for a ticket that would otherwise cost $200 in cash might not be the most prudent or strategic usage of miles...whether or not the last-minute fees are included.

It really boils down to how your personal circumstances dictate your ultimate award use. I cannot really understand why anyone would burn 25K for a coach domestic flight which when booked in advance -- as one would likely need to do to get the discounted redemption level -- and paid for in cash would go for under US$300. Particularly when for 3x that number of miles, one can generally get a Business Class award seat to Europe or SAmerica [from NAmerica]. That ticket has a value of US$3K to US$5K. One could perhaps make a case for a last minute 2x domestic award in coach, when a walk-up ticket could cost US$2K for a transcon. [But that would be a worst-case use of miles.]

I have used AC's 15K shorthaul award many times to fly to US gateways for MRs, or for short-notice regional trips which can get quite costly for cash. When used for MRs, I generally earn back the 15K -- 12K off season -- and more, and as an elite can even double the base miles earned on these trips. So this is a very cost-effective domestic award.

I have been a member of FF programs from the very beginning, so I tend to support Randy's argument. Being of the same age, I do consider my primary FF account to be akin to a pension fund, for use in the future. But I do make regular use strategically when the cost benefit is there, or when I feel it is time to indulge in one of those multi-city First Class trips to Asia or Africa. We have indeed suffered from the ravages of inflation. I recall it was once possible to get four Business Class tickets anywhere Canadian Airlines flew for a mere 160K points. Yes, earning was a bit more difficult, since we did not have double mileage for elites [we didn't even have elites!], but we certainly had a lot of multi-miles promotions [remember the DL/Amex triple miles!]. And in the "good old days", those awards came with equally generous hotel [a week in a suite at the Hilton as part of the pair of Business Class seats to Europe or Asia] and rental car awards [a week's luxury car!]. Sorry about all those !, but given what we get today...

I have no problem with capacity control. I have seldom had problems getting flights and service classes I want, though admit I do not have to plan for a family of four to get to Hawaii or Disneyland/world.