Got an e-mail from United Airlines that said in the event of a bankruptcy filing, “you will continue to reap the benefits of Mileage Plus(R) membership. WE WILL HONOR MILES PREVIOUSLY EARNED IN MILEAGE PLUS, AND YOU WILL CONTINUE TO ACCRUE MILES FOR TRAVEL ON UNITED AND OUR MILEAGE PLUS PARTNERS.”
Now, promises are promises, and bankruptcy is by definition a way to discharge promises. However, it would be a silly business decision to disavow accrued miles because they would take away the accumulated incentive for their best customers to continue to fly the airline. Miles are not just a liability — they are the single most successful marketing tool ever devised.
First, miles aren’t a true liability — they are a commitment to give away for free seats that otherwise go unsold (and they really are the surplus seats, in the limit — because airlines choose how many free seats to allocate to any given flight).
Second, there would be tremendous resentment against any liquidation of mileage.
Third, miles encourage repeat customers. The people with the most miles are generally the best customers. Most airline revenue comes from their smallest group of most frequent customers.
Fourth, historically miles are picked up by an acquiring or surviving carrier. That’s because the surviving carrier wants the loyal flyer base. TWA frequent flyers were acquired by American. Similarly, Pan Am and Eastern flyers had their miles honored by the airlines which picked their bones.
Miles can evaporate, but that’s generally when an airline simply ceases total operations, a la Midway in their first two bankruptcies or Australia’s Ansett. United is different. It’s losing money but it has assets that generate revenue. Lots of revenue. No miles = less revenue. Simple, really.