Dear Randy,

With miles and points constantly being devalued, how do programs expect their members to stay loyal?

I run everything through my program credit cards, and I focus on one airline program and one hotel program to maximize my status and points. Do I start over when a program (ahem Hilton HHonors) changes its structure ... again? Or do I ride out the storm and hope the program managers come to their senses?

- Jenni

Randy replies:

This is a common concern for members of various travel loyalty programs and this may well be the one question that most travelers can relate to the most.

You've got a question about riding out storms of change which I'll address but I would first like to address your observation that miles and points are constantly being devalued.

I'm starting with this to make sure you fully appreciate the unique differences that create value for your miles and points and to better clarify a common misconception of how to gauge "value". One way to look at devaluation is when award charts change--meaning that miles and points accumulated in the past now have less value because it will take more of them to redeem for a particular award.

The other is a discussion around what a mile is worth, and when that changes downward, you can infer that your miles have been devalued. The current buzz is that a mile is only worth 1.2 pennies compared to just two years ago when a mile was generally considered worth two cents. Logic might indicate that over the past two years your miles have been devalued. But this is a single-sided observation because the very reason that a mile is worth only 1.2 cents right now on average is because airfares are at historic lows.

So while we see the individual mile value go down, so has the cost of acquiring those miles. Truly, you really can't have it both ways ... high mile value and a low cost of earning miles. The two values work in conjunction. If value per mile is high, so is the cost to earn them, meaning higher airfares. And because of this, it makes it important to manage your accrual and redemption of miles. Most savvy frequent flyers this past year made decisions to not cash in miles for travel, choosing instead to pay for trips they might normally use miles for, because airfares are so low. The reason is that it is likely that airfares will rise in the future which means that the value per mile will rise making it more practical to use the miles at that time. Buy low, redeem high.

As for the devaluation of when award charts are adjusted? No argument there--but measure how easy it is for you to maintain an active account and add to your miles or points on a continual basis. And even in these situations there are some advantages. Who this year did not notice several award sales from United and Delta that offered normal awards at a discount? There is a balance if you learn to manage and make use of the opportunities.

Bottom line: The value of miles can fluctuate and you should learn how to take advantage of the ups and downs.

As for your question of how programs expect their members to remain loyal? It may surprise you but a majority of members become fixated with the most convenient program and don't spend time asking questions or seeking advice. They become loyal to the convenience, and as a result blind to the choices.

As to the Hilton HHonors changes, like you I'm not convinced they are totally necessary at the present time. However, HHonors is a rich program and these adjustments may be an admission that it's been a little too rich.

For instance, last year InsideFlyer did a comparative analysis of all the major hotel guest programs and HHonors on a consistent level of spend excelled in every category clearly rating the highest in payout of awards. No member likes to see a rich program reduced to being average and only time will tell if the current feedback from HHonors members (much like you) will make any difference.

Generally, it remains a fairly good program. Perhaps not as rich as before, but often while a program may not rescind a change like this, they do re-tweek other parts of the program to at least give back some of the takeaway. I say ride this one out for now but do some research to determine if HHonors will now line up with other programs. And if so, why change?

Dear Randy,

I have a lot of US Airways miles. The airline seems to be on shaky ground, economically speaking. Do I need to be in a rush to use my miles for fear of the airline going under, or do most defunct airlines usually get taken over by another airline and the miles get transferred to another program? Is this likely for US Airways?

- Ann

Randy replies:

Ann, you've asked a question that more and more frequent flyers are beginning to ask ... and for good reason. While it's true that there have been any number of airline mergers in the last several years (TWA with American, America West with US Airways and Northwest with Delta) we should not assume that all frequent flyer miles of defunct airlines end up in happy homes. Outside a merger, the opposite is actually true--at least four airlines recently have gone out of business and left all the members of their frequent flyer programs with no dreams of ever using their miles and points: ATA, Aloha Airlines, Eos and MAXjet.

Unfortunately, no one saw it coming with these airlines. Granted, they were not in the same league as US Airways, but it wasn't all that long ago that United Airlines made a run at buying US Airways and US Airways took a run at buying Delta. That is all in the past.

Last year, Moody's listed US Airways among those companies with the largest amount of total debt and among those with the worst probability of default ratings. Not a list you want to be on, but if there is one thing we know about US Airways, it's that they are pretty scrappy and have managed to outlive reports of their premature death. There are very few who thought they would last this long.

As for the here-and-now? Last fall they were able to raise close to a billion dollars and their lean and mean approach to fees and others decisions that effect both infrequent and frequent flyers, while never popular with the flying public, has brought some relief to this airline--this is the only North American airline that charges most members a fee to redeem frequent flyer miles for flight awards.

From my research and close watch of the opinions of FlyerTalk members, there does not seem to be any consensus that US Airways would find a safe harbor with another airline at the present time. American and Delta are locked into a battle to wrestle more control in a partnership with JAL and thus unlikely to have additional financial resources or focus to pursue US Airways.

And frankly, American could use US Airways as the airline has been locked out of domestic alliances (except for their Alaska Airlines alliance) and that can make a big competitive difference. One would logically assume that US Airways' broad north-south East Coast routes would go a long way toward ensuring that American does not get lost in an industry countdown.

All other major airlines have already cast their nets elsewhere and if one were to read the headlines, it would appear that Continental and United are getting along just fine and have almost forgotten their other domestic partner, US Airways. This sort of limited-engagement of their partnership with these two airlines tells a huge story.

Someone could imagine Southwest Airlines buying US Airways--but that's just a rumor for another day.

We continue to hear the Chairman of US Airways, Doug Parker, refer to more consolidation in the industry but not a single analyst can point toward any scenario involving US Airways in this area. As for me, I continue to be upbeat that US Airways is in no absolute danger of collapse at this point.

However, having said that, here are a few solutions that can make for a better night's rest for you:

1) You could continue to fly US Airways and enjoy most of the benefits of their program by using a more stable partner. For example, use the Continental OnePass program to collect your miles when flying US Airways. This will give you some piece of mind and yet allow you to fly US Airways if that airline is best suited for you. This is as simple as supplying US Airways with your Continental OnePass membership number when flying that airline. You can still redeem awards on US Airways from your Continental OnePass account and I have absolutely the highest expectation that Continental will survive.

2) As I previously mentioned, you can't rule out the slim possibility of a collapse of US Airways and to manage that, you could take a few minutes and plan some dream trips using your current mileage balance for awards nearly one year out. Essentially this is considered 'cheap insurance' since these awards should be for partner awards on either Continental or United or other Star Alliance partners. If US Airways were to disappear at least your awards would still be there for you. Of course with this scenario, you would pay for redepositing your miles to your Dividend Miles account if (and I assume) US Airways is still here a year from now.

3) There is also the idea of not risking or worrying about your miles and simply move your business to a competing frequent flyer program and airline--no hassle, no hustle.

4) And that brings me to this approach--if this airline and its frequent flyer program works for you, be happy and stay with it. There are any number of happy members of Dividend Miles and given that I see no immediate danger of collapse over the next 3-6 months (barring any other drastic changes to the industry), many of us have miles with US Airways and are adding to them--US Airways has been fairly good at some imaginative promos lately with partners and for elite status.

So, there you have it, a look at past airline mergers with respect to your frequent flyer miles, a more recent recap of the latest situation involving the safety of your miles as well four different things to consider based on your own level of comfort with this airline.