American Airlines Bankruptcy Judge Dismisses Frequent Flyer Lawsuit Over “Old” Miles

Last summer, American informed its frequent flyers who still had old (pre-July 1989) miles that those miles would be ‘converted’ into ‘new miles’ with a 25% bonus on November 1.

Some members sued over the changes, since those old miles were never supposed to expire and American had agreed to continue to honor the award chart that was then in effect.

The American Airlines bankruptcy judge dismissed the lawsuit over the conversion of old miles.

The Supreme Court ruled in American Airlines vs. Wolens that consumers could sue an airline in state court for breach of contract.

In that case, American Airlines frequent flyers sued the airline over July 1989 changes that imposed capacity controls and blackout dates on awards, and implemented mileage expiration rules.

The American AAdvantage terms and condition stated that the airline could changes its rules and policies, but members sued over the airlines’ retroactive application of those changes.

C-SPAN archives the press conference that followed oral argument at the Supreme Court.

In many ways, while the Supreme Court decision was an important one for consumers, the class action itself was not. Once the Supreme Court ruled that the suit could proceed in state court, the class action settled. As with many class action suits, individual members of the class got very little. If memory serves, members who had old miles received non-transferrable coupons valid either for a 5,000 mile discount off of an AAdvantage award when redeeming for two people on the same itinerary or for discounts on the purchase of future American Airlines tickets.

The bankruptcy judge ruled that the Wolens settlement applied to the plaintiffs. Since the Wolens settlement included all members who had old miles, and the suit was about those old miles, the plaintiffs were covered by that settlement and they had not opted out of that settlement.

And the plaintiffs’ lawyers in the class action suit sort of hosed AAdvantage members, agreeing to a settlement that permitted

that American may, and is legally permitted to, in its discretion, change the AAdvantage Program rules, regulations, travel awards, and special offers at any time with or without notice, and that the accumulation of AAdvantage Mileage Credit does not entitle members to any vested rights with respect to such mileage credits, awards, or program benefits. In accumulating AAdvantage Mileage Credits or awards, members may not rely upon the continued availability of any award or award level, and members may
not be able to obtain all offered awards for full destinations or on all flights. Any award may be withdrawn or subject to increased mileage requirements or new restrictions at any time. American Airlines may, and is legally permitted to, among other things, (i) withdraw, limit, modify, or cancel any award; (ii) change program benefits, mileage levels, participant affiliations, conditions of participation, rules for earning, redeeming, retaining or forfeiting AAdvantage Mileage Credits, or rules for the use of travel awards; or (iii) add black out dates, limit the number of seats available for award travel (including, but not limited to, allocating no seats on certain flights) or otherwise restrict the continued availability of travel awards or special offers. American may terminate the AAdvantage Program on six months’ notice. American may make any one or more of the foregoing changes at any time though such changes may affect their ability to use the AAdvantage Milege Credits or awards that the members have already accumulated. American Airlines reserves the right to end the credit or awards that you have already accumulated. American Airlines reserves the right to end the AAdvantage program with six month’s otice.

These terms applied to all members with 35,000 miles or more in their accounts at the time of the changes to the AAdvantage program. The bankruptcy judge found that it bound the plaintiffs and dismissed the case.

About Gary Leff

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 »

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Comments

  1. 1989? These are Cold War miles. I’m really curious how big the balances are, and what incredible life circumstances have prevented them from using them in the last 25 years. I’ve only been in this hobby for 5 years, so I’m a rookie, but I assume American has gone through several award chart devaluations since these miles were earned. Or were these people grandfathered into a completely different program?

  2. Looking at the old award chart…it’s good, but not great. 120k for 2 biz class tickets to Europe on AA metal (there were about 5 cities). Sounds great, but your connecting flight is in coach, and…let’s think about inflation…

    200k today for the same (though with capacity controls) = 67% increase. Over 23 years, that’s about a 2% compound increase per year.

    If you want to do a capacity unlimited comparison (400k for 2 AAnytime) then it’s a 5% compound increase.

    Hardly runaway inflation vs hard currency. And ease of earning miles has grown to keep pace if not more.

  3. Just wondering, were “old” miles subject to a different award chart? If miles are all the same, are they redeemed “first in first out”

    And, given how few methods of earning existed then, how many old miles exist?

  4. My “old” miles went away with the conversion. They debited your account LIFO, unless you specifically used the old miles for an old award chart award. This is similar to what Delta did when they converted Frequent Flyer Miles to SkyMiles in [1995]. The old miles were used LIFO unless needed, and then rolled into SM over a decade later.

    Must be a material impact for a few hundred or few thousand people, max.

  5. Grandfathered. The miles were incredibly valuable. The guy who says he looked at the old award chart is clearly not getting it. Check out the domestic upgrade to F.

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