Tag Archives for valuation.
As part of raising funds on the private market and from the U.S. government, the airline had its unencumbered assets appraised. Parker reported that the value of these assets came back at $10 billion “excluding the AAdvantage program.”
During the airline’s earnings call Parker was pressed on what appraisals found the AAdvantage program to be worth.
These are the broad factors need to be taken into account when estimating the change in value of a mileage currency, and they’re likely to apply differently to each program based on, among other things, the tendency to print miles and the financial stability of the program in uncertain times.
We need to be thinking about how much we value miles – and how much they need to change – recognizing that there are forces pushing the value both up and down at the same time.
What is the value of miles and points by airline, hotel and credit card program? Miles used to be thought to be worth 2 cents. I think that conventional wisdom developed out of the idea that a cross country flight cost about $500… or 25,000 miles. 25 years ago that was generally true, and award availability wasn’t really a problem either.
Today the CEO of Delta talks about their miles being worth a penny. When American Airlines awards a mile for travel they book one cent of liability on their books under new accounting rules adopted for 2018. Those rules required the airline to accrue the expected value of transportation to be provided in exchange for their miles.
Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel -- a topic he has covered since 2002.
Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »
