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Mileage Programs: Worthless or Worth Less? - Page 2

On Frequent Flyer Miles
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Editor's Note: This story was originally published on May 3, 2004. To see the most recent SmarterTravel articles on related topics, please click on any of the following links: frequent flyer, On Frequent Flyer Miles, Tim Winship.

To the north, Air Canada is in Canada's version of bankruptcy protection. The airline's future is so bleak that questions have been raised about the government's readiness to step in and prop up that country's largest airline if the unthinkable should occur.

There are two interlocking probabilities to be aware of when considering the true effect of a bankrupt airline on the value of its miles. First, there are the odds of the airline's liquidating altogether. And second, there are the odds that, even if the airline disappears, the miles themselves will survive. As optimists are quick to point out, that's what happened when TWA finally called it quits. Among the assets acquired by American in the liquidation sell-off was TWA's Aviators program—both the members and their miles. They were folded into American's AAdvantage program, giving them what truly amounted to a new lease on life.

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But today, with so many airlines in such dire financial straits, it is much less likely that any carrier would assume the financial liability represented by a failed airline's frequent flyer program. And that uncertainty undermines the value of any precarious airline's miles.

A squeeze at the top, too

As a final thought, consider the downward pressure on the value of miles for the airlines' very best customers, members of the mileage programs' elite tiers.

On the earning side, Continental and Delta now credit a miserly one-half elite-qualifying mile (EQM) for every mile flown on discounted coach fares. However, in Continental's case, cheap coach fares continue earning a full EQM for every flown mile through the end of the year, if the tickets are purchased on Continental's website.

And on the award side, most of the larger airlines have downsized their first-class cabins and, in many cases, replaced larger aircraft with smaller regional jets that have no first-class seats at all.

Impact: Not only is elite status harder to attain, it now has fewer perks associated with it. More miles are needed to access a lesser product—a double devaluation.

The bottom line

So, what are miles worth?

Less than they used to be, certainly. Airfares are down, and award-ticketing fees are up. Award seats are harder to come by. And in the case of some airlines, the very longevity of miles is in doubt.

But worthless? Hardly. I have an award ticket to attend a June family reunion to prove it.

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