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How have airline miles really devalued? A look back at the 80s

by on Fri January 30, 2015 • 1 Comment

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This week, British Airways joined the ranks of big frequent flyer programs raising award prices in dramatic fashion. And it’s yet again fueled fears that mileage accounts are facing inflation only rivaled by third world currencies.

But a member of FlyerTalk recently posted something fascinating:

The award prices for the Continental Airlines (now United) OnePass program in 1989.

Take a look at the comparisons below. You’ll see the price back then and the price United charges now, after a big jump in prices last year that made some of its premium awards among the most expensive in the industry.

You’ll also see what prices would be if they just increased at the rate of overall inflation since 1989. You need $1.93 today to get as much value as $1 in 1989, or about double.

Here are some comparisons of roundtrip prices:

U.S. in Economy Class

  • Then: 20,000 miles (Saver) – 35,000 miles (any flight)
  • Now: 25,000 miles (Saver) – 50,000 miles (almost any flight, or any flight if you hold a United credit card, have status)
  • Inflation adjusted: 40,000 – 70,000 miles

U.S. in First Class 

  • Then: 45,000 miles (any flight)
  • Now: 50,000 miles (Saver) – 100,000 miles (any flight as above)
  • Inflation adjusted: 90,000 miles

Hawaii in Economy Class

  • Then: 30,000 miles (Saver) – 50,000 miles (any flight)
  • Now: 45,000 miles (Saver) – 90,000 miles (any flight as above)
  • Inflation adjusted: 60,000 miles – 100,000 miles

Hawaii in First Class

  • Then: 50,000 miles roundtrip (any flight)
  • Now: 80,000 miles (Saver) – 180,000 miles (any flight as above)
  • Inflation adjusted: 100,000 miles

Europe in Economy Class

  • Then: 50,000 miles (any flight, but no partners), 65,000 miles on a partner (blackouts most of the summer)
  • Now: 60,000 miles (Saver)  – 120,000 miles (any flight as above)
  • Inflation adjusted: 100,000 miles

Europe in Business Class

  • Then: 65,000 miles (any flight, but no partners), 85,000 miles on a partner (blackouts most of the summer)
  • Now: 115,000 miles (Saver)  – 300,000 miles (any flight as above) or 140,000 miles (Saver partner)
  • Inflation adjusted: 130,000 miles – 170,000 miles

The reality is most mileage prices increased at a pretty reasonable rate – about in line with inflation, and sometimes even less over the last 25 years, with few instances of runaway prices.

Want more signs things aren’t crazy?

Take a look at this Northwest Airlines commercial from 1986 with Fran Tarkenton. They were proud their domestic roundtrip award was 20,000 miles, while United and American were charging 50,000 miles – which is not far off from what we see today.

And think people weren’t complaining about miles back then? Read this article from 1989 where United settled a lawsuit over a price increase from early 1987 when the first class price to Hawaii went from 50,000 to 60,000 miles.

So why does it feel so bad?

First, there is the fact that airfares themselves have not kept up with inflation, not even remotely so.

The average international airfare in 1990 was about $800 according to Airlines for America. In 2013 it was around $1,200, or a 50% increase, just half the rate of overall inflation. Moreover, airline mile prices get adjusted once every few years in big, public catchup steps, unlike real dollars which silently and constantly leak value via price inflation.

Second, airline programs let capacity controlled ‘Saver’ awards creep into their charts. With a price that’s always lower than the ‘anytime’ awards, we feel cheated when we don’t find a flight the lowest advertised price, even though the prices really aren’t comparable. The higher ‘anytime’ price includes a benefit – flexibility – that the ‘Saver’ price isn’t supposed to factor.

Third, we’re just spoiled. We’ve seen an explosion in the flight options we can use with our miles thanks to consolidation in the airline industry. The number of destinations a single airline serves has grown immensely.

And 25 years ago you couldn’t fly a OnePass award with more than one partner, nor could you even connect within Europe. Blackout dates on partners meant you couldn’t even book an award most days during the summer on some airlines.

All restrictions that are unfathomable today.

Not to mention there were no transferable point currencies, the going rate for a credit card signup bonus was around 5,000 miles (or just 10-20% of most bonuses for the last several years), and you had to call in to make a reservation.

The reality is, the airline mile programs are still very generous.

They’re certainly not run like runaway third world currencies, and some might make the case they’re now being managed more prudently than some of the world’s reserve currencies.

Or as Louis C.K. says, everything’s amazing and nobody’s happy.


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One thought on “How have airline miles really devalued? A look back at the 80s

  1. ihb9

    My initial disappointment was tempered by an oh-well-party’s-over shrug.

    On the one hand, it’s too bad that in a few months the Avios needed for the AirBerlin one-way in business class or first class AA transcon tickets I just booked will double. But considering that I earned at least 1.5 MR per dollar and then transferred at a rate of 1.4 Avios per MR, that means my redemption value on those $1800 ticket will go down from $.09 per MR point to $.045 per MR point. Even at the latter rate, it’s still a good deal.

    The folks threatening to burn their BA Visas should do the math. A ticket that costs $1800 or 80,000 Avios when you earn at a rate of 1.25 Avios per dollar is getting you an almost 3% return per dollar spent. Granted, the fuel surcharges on BA sting, but in reality they take what would have been amazing redemption value to a merely good one. The party had to end at some point. Just enjoy it while it lasts.


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