I don't think the number of seats in first and business that we will see are going to be as impacted as you might think. Remember that as they continue to cram more seats into the plane and passengers continue to get larger (at least in America) more are opting for seats with more room. Plus there is still a substantial amount of people who have the disposable income to opt for first class. Also first class seats give passengers a way to spend their miles. I am sure the airline would rather you purchase a $400 ticket and then spend several thousand miles upgrading that ticket. Then they can, A) resale that seat you are now vacating, and B) keep you from occupying a coach seat on another flight. Airlines are more than happy to encourage you to spend your miles on things other than an actual ticket. Plus coach seats are naturally easier to sale than premium seats. Finally there is always the benefit of rewarding loyalty with a better seat, but then again they aren't "thanking you" for being loyal, they are just moving your butt out of a coach seat they can sell. So while there may be some reduction, I doubt it will be as drastic as reducing it down to four seats from twelve (unless it is US Airways).

Regarding a devaluation of airline miles, I do agree. Although the extent I think will be largely impacted by what Southwest does. I feel this devaluation will happen as they try and push customers towards upgrading seats or purchasing items from their online shopping malls.

Thanks for the kind words. I agree about the entitlement that seems to be present among most frequent flyers. However I am not surprised that this attitude occurs.

-Nathan

While most frequent fliers in the US are stuck with one airline due to the presence of fortress hubs, there are a few cities that are competitive. In Los Angeles, for example, the four major carriers (UA, AA, DL and WN) are pretty much neck and neck, with each having about 15-20% market share. Chicago (AA and UA) and New York are other examples.

The way I see it, these few competitive cities are what is stopping the airlines from devaluing their programs. If American slashes benefits and raises redemption prices, for example, then people in Dallas and Miami will have no choice but to put up with it, but people in LA and Chicago will migrate to other carriers.

As the three megacarriers shrink the fortress hubs they inherited in mergers (CVG, MEM, potentially CLE and PHX) and Southwest expands, it actually reduces the number of people tied down to one carrier and makes it harder for airlines to devalue their programs without a backlash.

Randy has generally been upbeat about the FF programs' futures, so if he turns around it would be a really bad sign.

The cartel-like behavior we're seeing from the legacies (artificially limiting supply to push fares up) is creating a real opening for LCCs and ULCCs. If you look at where Spirit has added flights, for example, some routes, like ATL-DFW, really look like shots across the bow at legacies. They've had quite a take on that route as well. It's not the greatest of flying experiences and you can get really nickel and dimed, but if legacy carriers push things too far it looks more attractive.

For its part, Southwest could take away a lot of leisure business as long as it has a better bag and change policy.

On the FF programs, I think the non-flight miles are what's going to push it over. Delta already has terrible availability on low-tier awards unless you're looking for, say, Des Moines in January. Eventually there's a tipping point where even infrequent travelers cease to believe their miles will be realistically redeemable. In the meantime the airlines happily sell the non-flight miles.

So the futue model might be a points-based program like CapitalOne and redemptions as cash equivalents on LCCs and ULCCs.

Or, like DL, they could have 3 tiers of awards and just not have any seats at the lowest level. Look at the award calendar on some routes and it's solid yellow (approximately twice the mileage cost) or worse. Quite a stealth devaluation, really.

I think I remember reading somewhere that Delta was viewed as the worst for redeeming miles. American was second and United as suppose to be the easiest to get award tickets on with regards to the big three.

-Nathan

While you make some valid points I think the airlines will not venture into the "Capitol One" like programs. Their purpose is to retain flyers to their brand and if two or more airlines chose that type of program then why do it ? No one would have that "loyalty" to fly them.

Spirit is an airline that in my opinion and ONLY mine is one to stay away from. Thats all I'll say.

I fly a lot of miles a year and thus accumulate and use them to travel to Europe every year. Either FC or Business and frankly have not had that much an issue getting tickets. Now there have been times when I have had to keep trying and naturally adjust my vacation plans around the award tickets, but hey thats ok, nothing is perfect.

My home airline is Alaska so I am at the mercy of their "partners" for all my award travel and even then it works. Also AS is really good about contacting their partners to assist you.

my understanding is that the points selling biz are the airlines' biggest profit center. why they going to throw the biggest profit center away?