The Panic Button and Airline Miles

It would seem sometimes that the press enjoys sounding alarms. Actually, the do not “enjoy” being alarmists as much as it is their duty. Reporting on the status quo in not exactly reporting since status quo refers to a situation where nothing has changed. So, when something deviates from the norm the press is quick to report it. This, sometimes, leads to minor panics and conclusion jumping. Case in point, several money and finance news services are reporting that the collapsing airline industry is rendering airline reward cards worthless. It is true that problems in the airline industry have had a ripple effect on accrued reward miles. However, the notion that this effect is devastating is over hyped.

Here are a few facts: the high rising price of fuel has led to fewer flights taking off. The costs of running the same number of flights this year is far greater than it would have cost three years ago. So, the adjustment in the number of flights is understandable. Also, several airlines have slashed ticket prices to attract more flyers. (Yes, some have also raised prices as well) These changes have impacted rewards cards in two ways. First, the less flights that are available, the less choice one will have when redeeming travel miles. Secondly, if the price on flights drops then the redemption value of the points is lowered. That is, the same points that would acquire a $500 ticket are now being used to acquire a $400 ticket.

These two points of contention are valid but not indicative that airline miles are worthless. They simply reflect the common ebbs and flows of the market. The free market is always in a state of flux. It will always react positively or negatively to economic factors. Airline travel cards simply get caught up in the mix. This is neither a good thing nor a bad thing. Its just simply the way the economy works.