A reader asks about the safety of their miles, and if some of the smaller airline currencies they have aren’t as safe whether it would be a good idea to book travel now using those miles to fly on one of their partner airlines (that’ll still be flying)?
Big U.S. Airline Mileage Balances Are Safe
Frequent flyer programs are the most valuable assets that large airlines have. So even if it wasn’t almost a foregone conclusion at this point that the airlines get government bailout cash, your miles would be safe.
Delta, United, and American have all been through bankruptcy – and predecessor carriers of United’s (Continental) and American’s (US Airways) have been through bankruptcy more than once. The first thing each airline did – on day one of bankruptcy – is petition the court to reaffirm their mileage programs.
Airlines generate profit selling miles to banks, and will need their loyalty programs to fight for market share with empty seats.
Nonetheless I have a preference for bank points that transfer to a variety of airlines at this point. That’s not just a protection against bankruptcy but as a hedge against devaluation. In the short run there will be lots of award seats for redemption. However as airlines print miles to drum up business and planes later fill back up they’ll be looking to adjust award charts.
I expect many frequent flyers to make a ‘flight to safety’. The reader asked specifically about what to do with their Avianca LifeMiles and Aegean Miles & Bonus miles.
Right now LifeMiles as a separate entity seems safe, the risk would be to Avianca (again, absent a bailout) and what any future Avianca risk means to the ability of the LifeMiles program to access Star Alliance award seats. Aegean also faces risk.
Booking Future Travel On A Partner Is No Guarantee Of Travel
One strategy that’s been suggested is that you should consider redeeming your miles from a riskier carrier for future travel on a partner airline. For instance, redeem Aegean’s miles for travel on TAP Air Portugal.
However if the program whose miles were used for the ticket is no longer in business, you shouldn’t automatically assume that the ticket will be honored. You may have a ticket and reservation to travel on TAP, but if the airline issuing the ticket goes out of business TAP won’t get paid.
When Avianca Brasil went out of business last summer, TAP Air Portugal refused to honor redemption flights. I saw reports about the same thing happening with United (I asked United about this and they did not respond.)
Star Alliance used to have a rule requiring alliance members to honor redemptions issued by members that had gone under. It was put in place after Ansett Australia went into administration. Initially Ansett-issued awards were being dishonored by Star partners. That changed, and those whose tickets had been cancelled were allowed to rebook. Based on what happened with Avianca Brazil recently that no longer appears to be in force.
Nearly All Of Your Miles Are Safe
I don’t have financial concerns about the large banks with transfer programs at this point. Nor am I worried about the large U.S. airlines, or the large European flag carriers like British Airways, Lufthansa, or Air France. Looking to Asia Singapore Airlines Krisflyer miles should be fine as well.
Even before the current crisis I wouldn’t have been bulking up on South African Airways Voyager’s currency. And if I had a big stash I wouldn’t bank on a redemption for, say, domestic United Airlines travel will necessary be honored.