Observations and Conclusions

Observations and Conclusions

The result of this analysis confirms what frequent flier program members have long suspected – – the value of their frequent flier miles have decreased. This document analyzes quantifiable measures such as average air fares and frequent flier reward levels. It has omitted qualitative issues such as the widely-held perceptions of decreased reward availability and the growth of redemption restrictions. If these were included in the analysis, the results would likely indicate even greater decreases to the value of frequent flier miles.

The Major Five Airlines clearly have a problem. Air fares are on a continued downward trend and have yet to bottom out. Millions more miles are entering the system through new sources – – notably co-branded credit cards. Low-fare passengers are increasingly competing for the same excess inventory that was once reserved for reward travel. Added to this scenario is a growing liability of millions of unused reward tickets.

Consumers should expect to see more reward sales and creative solutions as downward pressures continue on current reward levels. The 15,000 mile short-haul reward offered by America West, and tested by American and United, is likely to become prevalent. Newer airlines unburdened by past practices and reward liabilities will likely continue to lead the pack in terms of providing their members with the best reward value.”

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