American Airlines Bankruptcy 2011: AA Frequent Flyer Miles Safe?

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by NowPublic Staff | November 29, 2011 at 06:25 am
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American Airlines Declared Bankruptcy on November 29, 2011. Are Your AA Frequent Flyer Miles Safe Or Might You Lose Them?

The parent company of American Airlines filed for bankruptcy on Tuesday, November 29, 2011.

Some travelers are no doubt concerned about what the AA bankruptcy might mean for air travel in the US.

Some frequent travelers are more concerned about what might happen to their frequent flyer miles.

What Happens To AA Frequent Flyer Miles After 2011 Bankruptcy?

According to media reports, AA frequent flyers have nothing to fear. AA air miles are "safe," according to one industry insider.

If history is any indication, there shouldn't be any problems with your AA miles. Previous airlines that went bankrupt all kept their point programs alive one way or the other. While news of the AA bankruptcy is far from good news, flyers can rest assured that their American Airlines frequent flyer miles will be safe.

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EC
EC (not verified)

at 13:36 on November 29th, 2011

I have frequent flyer mileage credits on a bankrupt airline. Are they safe?
No. You may think of mileage credits as "money in the bank". But they aren't. According to the terms and conditions of these programs, airlines can change or eliminate them at any time, whether or not they are bankrupt. Bankrupt airlines will probably try to keep their frequent flyer programs as long as they are still flying. But some airlines in, or at risk of, bankruptcy are already increasing the numbers of miles required for awards. And of course, if they shut down entirely, mileage credits will be worthless.
If a bankrupt airline is liquidated, will some other airline take over their frequent flyer program?
Maybe. Maybe not. More likely frequent flyer records will be sold to a data mining or direct marketing company. You might think that records about you and your travel and purchasing history belong to you. In Canada or the European Union, that's true -- but not in the USA. Under current law in the USA, "your" frequent flyer and travel records belong to the airline, and are theirs to sell. If the airline is liquidated, those customer records will be sold at the bankruptcy auction. No comparable customer database -- identified by name, computerized, extending back for decades, and with information on tens of millions of people -- has ever been auctioned. But the frequent flyer and customer records of an airline like United or American are probably worth US$50-250 million -- more than any other cash-strapped airline could afford. Only if Congress passes a Federal travel or data privacy law could such a sale of travel records about you be prevented.
What should I do about my current frequent flyer mileage credits on bankrupt airlines?
Use them up as soon as possible, while you still can.
Should I care about accumulating more miles in these programs?
No. Don't waste money paying extra for tickets in order to earn more credits in a frequent flyer program that may disappear or be devalued at any time, without warning.

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