Reactivate this: After airline cancels miles, frequent flier promises “I’ll never fly American again”

aaparkedWhen American Airlines stripped 43,000 miles from Peter DeForest’s frequent flier account because of “inactivity” it offered to return them if he signed up for one of its email offers.

It seemed like a reasonable deal. But the miles never came, and when DeForest checked the American Web site to see how he could reclaim his lost award points, he was shocked to find the airline driving a much harder bargain with some of its customers.

Here it is:

Now, you can reactivate some or all of your expired AAdvantage miles and use them to claim awards. Through this special offer, you can extend the life of expired miles and quickly boost your available mileage balance.

Eligibility

* Miles that expired on or after December 31, 2002 are eligible for reactivation
* There’s no limit to the number of expired miles you can reactivate
* The price to reactivate miles is $50 for every 5,000 miles (subject to 7.5% Federal excise tax), plus a $30 processing charge per transaction, per account
* This offer is available through December 31, 2009

Reactivate Miles

* Contact AAdvantage Customer Service at 1-800-882-8880
* Reactivate rates are $50 for every 5,000 miles (or any portion thereof), plus 7.5% Federal excise tax
* Fees apply to all mileage reactivations – a $30 processing charge per transaction, per account
* See examples below or view some frequently asked questions – FAQs

Example:
Reactivate 24,500 miles from one account for a cost of $298.75. That’s a $268.75 mileage reactivation charge, including tax, and a $30 transaction charge.

Reactivate 5,000 AAdvantage miles for $83.75. That’s a $53.75 mileage reactivation charge, including tax, and a $30 transaction charge.

You have until December 31, 2009 to reactivate expired miles and make them available for award redemption. If you’re looking to increase your account balance or quickly gain miles needed for an award, then reactivateAAmiles may be the way to go!

Reactivated AAdvantage miles will be credited to your account as a mileage bonus and do not count toward elite status qualification. Please allow 72 hours for the miles to post to your account. You will have at least 18 months in which to redeem reactivated miles for an award. Reactivated miles will not expire as long as your account has qualifying activity in any 18-month period.

That’s a lot of charges and fees.

DeForest translates:

The cost: $50 per 5,000 miles, plus 7.5% tax, plus $30 per transaction, or more than 1 cent per mile to reinstate them.

I believe you wrote something about airline revenue generation scams a while ago, and this sure sounds like a creative one to me. They shorten their expiration timeframe, with limited or no notification, take away your miles, and then offer to sell them back to you.

Awesome deal!

Interestingly, most experts say a frequent flier mile is worth no more than one cent. So basically, American is selling you the mile at the going rate.

Awesome deal.

“By the way,” added DeForest, “when the miles they owe me appear in my account, I plan to use them immediately and never fly American again.”

That’s not what a loyalty program is supposed to do, is it?

I just interviewed Mike Simonetto, a pricing expert at Deloitte (the full Q&A will be published on Friday) and he says airlines like American are engaged in customer segmentation — separating their passengers based on how profitable they are. Is American segmenting customers like DeForest, offering him more lenient terms for getting his miles back, while the rest of us have to pay the going rate? Probably. And are its best customers, the quadruple-Platinum fliers who are always on the road, even affected by this reactivation? I would bet not.

So why are people like DeForest abandoning American?

Maybe it’s the perception that the system isn’t fair, or even that it’s exploiting some of its customers, that irks people like him. I don’t think American and other airlines who are making changes to their loyalty program meant for it to go like this.

(Photo: Jim Frazier/Flickr Creative Commons)

  • Josh Chessman

    USAir did this to me, but they took it a step further. Instead of initially offering me the ability to reinstate my miles they simply sent me an update indicating the number of miles I had at that time and below it the number of miles I had lost because of inactivity. Just another reason I won’t fly USAir if I can avoid it (which is 99% of the time). As to the penny a mile, that is about correct. I recently took advantage of Delta’s “Pay With Miles” to purchase five round trip tickets for my family to Fort Lauderdale. The tickets came to a bit over $220 with taxes and cost 25,000 miles each using “Pay with Miles”. If I had used miles in the traditional way it would have cost me at least 40,000 miles per ticket. While my cost per mile was a shade under a penny, it is still over $1,100 I did not have to shell out of my pocket. Not the best deal ever, but in these tight financial times not bed either.

  • Jennifer

    Huh? Perhaps I’m missing something here. As long as these miles were earned after 1989 (according to AA.com), they don’t expire as long as their is some activity on the account during an 18 month period. Therefore, it appears that this frequent flier is not so frequently a flier on American.

    Miles earned in frequent flier programs expire. This is a known fact and if you don’t know when, check the airlines’ websites. However, in order to keep miles alive, one doesn’t even need to fly– just have some activity on the account. Some airlines, including AA, have programs where you can earn miles by charging meals at certain restaurants. You can shop through their portals and earn a point or donate some miles to a charity.

    Look, most airline miles are very difficult to redeem anyway so I’m no airline apologist but certainly, an airline doesn’t owe loyalty to someone who isn’t loyal to it. As far as notification that miles are going to expire, it would be nice but it’s not required. The information is all available on the airlines’ various websites.

  • Eddie

    I have flown and been very happy with American Airlines for many years. I was shocked this summer when I flew American and discovered that their service has fallen off a cliff. On the flight out ours (and many others) luggage did not arrive with our flight. There were only two staff at baggage claim handling the problem and they were so overwhelmed that they were threatening the passengers that they were going to shut down the desk and quit their jobs. I couldn’t blame them. On the return flight there were only two staff members working at their check-in counter at a peak flying time. The staff looked exhausted, the wait was long, and many of us came very close to missing our flights despite arriving over two hours early. Farewell, American. I’ll miss what you used to be.

  • Anne

    I agree with Jennifer. This guy is clearly no longer a frequent flier on American after 18 months of no activity, and he didn’t pay attention to the rules. I’m tired of stories about consumers complaining because they failed to pay enough attention or they think the rules shouldn’t apply to them.

    I had about 28,000 miles with American that I earned several years ago, although I don’t fly American much anymore. I received notice from American when they put the new expiration rule into place and each monthly miles statement they sent me had a reminder about the rule. When my miles were going to expire this April, I used 25,000 miles for a round-trip ticket from Philly to Calgary. American made it very easy to redeem the miles – I have no complaints about them.

  • Eunice

    These days I think people should be smart about rewards programs, times are tough for everyone, airlines included. They want to reward those people who are at least staying aware of their miles status. I haven’t flown AA in 2 years and I knew my miles would expire so I went on their website and tried to see what would count as “activity.” I made a $5 donation to Unicef and got 10 miles, thus saving my miles from expiring. It doesn’t take much and it will save you anguish and feeling like something is “unfair” when really the terms are very clear, your miles will expire if you don’t do anything.

  • Carver Farrow

    I”m a reasonably frequent flier but I strongly disagree with the airlines canceling miles after 18 months. That seems like a ridiculously short time frame. I felt better about the three year rule. With all the other crap that we have to worry about, I don’t want to have to actively manage my frequent flier account as well.

    Equally importantly to me, if the airlines want to charge for reinstatement, I think a more ethical way would be to charge a nominal, flat fee. Its not like the airlines are giving you anything that you hadn’t earned.

  • Ames

    The trouble with getting angry with an airline and refusing to ever fly them again is that there are so few that always do everything right and they don’t always fly where I need to go. I fly enough, but certainly I am not as frequent a flier as many of the people who post. I consider a good fare at as convenient a time as I can arrange to be all I am going to get. I try to ship my excess cargo and just carry on my bag. I carry enough knitting or books and snacks for at least three times the length of the flight. (I may add an adult diaper though if long tarmac delays continue!) Getting to my destination is all I plan for, anything beyond that such as civility, or a meal is a bonus.

  • Kristina

    Pay attention to the rules. There are many ways to earn miles to change your expiration date and keep your account active. Miles are a bonus for travel. We travel because we have to (for work) or want to (for leisure), not to earn frequent flier miles. I keep a spreadsheet and check it at the end of every year. Since there’s an 18 month expiration period, I’ll always know when my miles are coming up for expiration.

  • Joe Farrell

    I have not flown American in 24 months so I lost 26,000 miles. Its just not worth making the effort to try to figure out the latest scam to take your miles away and give them or someone else more money to keep what you already owned.

    In fact – I stopped worrying about FFB miles about a year ago. First or business class is not worth even spending miles for it any longer. Upgrade fees made it more expensive to buy a coach ticket and pay the upgrade fee than just buying a discounted business class ticket.

    FFB programs were great when they were simply designed to reward you for your business – when they turned into yield management revenue generators they got so many restrictions – well – there was not point to it.

    I called up AA and reminded them that I was lifetime gold – and they went oops – and put the miles back in – but you know – its just not worth the effort any more to keep track of this stuff. Heck – I flew 67,000 miles last year – 12,000 were on airline free tickets. The rest I flew myself. Not a SINGLE ATC delay.

  • Jasper

    To all the people who say you need to pay attention to the rules:

    Why would I? The airlines invented airmiles to create customer loyalty. They are now charging a fee for a service that used to be free. Hmmm, where have I heard that before?

    Airmiles were intended to function on air passengers like a cookie on a dog. Come on here, good customer, here’s a cookie. And now that everybody is used to the cookies, they want to charge for the cookie. So people will look for a cookie somewhere else. It’s the airlines’ loss, not the customer’s. The customer does not go out of business if she flies somewhere else.

  • Carver

    @Kristina

    I think you are missing a amjor point. Miles are NOT a bonus for flying. They are an incentive to get you to fly a given carrier, particularly when another carrier has a more convenient or cheaper route. They are not gratuitously given. They are effectively a form of currency.

    In my case, I only fly American. I am a platinum member and I enjoy the perks associated with being a platinum member and as such, I never book any of the other airlines because I don’t wish to fly as a non-elite.

    And yes, sometimes people fly solely to achieve points, status, or other perks. This is known as a mileage run.

  • David Z

    Chris, are the other airlines doing something similar to this? Perhaps someone can create a “list” of such? (albeit that’s cumbersome…)

  • Les Wilder

    I joined AAdvantage in the early eighties. My first awards trip was to England in 1984, required 60,000 miles for two and included a weekend in an Avis car and a stay at a Portman hotel. Rescheduling our return was no problem and no penalty.

    Now THAT builds loyalty.

    We’re currently scheduled for a long overseas trip on miles (200,000) mostly on partner carriers. Our fingers are firmly crossed that the plan won’t come unglued and we’ll see some baggage at the destination. Foreign carriers aren’t all that liberal about carryon bin hogs so we’ll have to check the 20″ bags.

    The trick to keeping miles from expiring (so far) has been to use a credit card that adds miles regularly. That qualifies as ‘activity’ I guess.

  • Andy

    Good, let this clown not fly AA anymore. He seems like more of a liability than an asset. He sounds like someone who flies a couple of times a year on deeply discounted tickets and demands that everything go 100% correct and complains heavily when it doesn’t. After all, if he flew more often, then he wouldn’t have had an 18 month period of inactivity.

    The 18 month rule is explicitly laid out and customers (on all airlines, not just AA) get reminded if their miles are about to expire. I’ve certainly been reminded by airlines when my miles were close to expiring. In addition, there are countless ways to keep an account active without flying. On AA, you can even donate as little as 500 miles I think and that’ll do it. Or, sign up for dining for miles and have one meal at a restaurant. And so on.

    Also, if this guy is complaining about the fees to reactivate miles, then why did he do it in the first place? Oh, and for what it’s worth, one mile is worth much more than 1 cent if redeemed wisely. If you spend 25k miles on a ticket that would have cost $250, then you’re an idiot. I’ve redeemed tickets for expensive flights at rates or around 3 or 4 cents per mile. Or, if you use miles for business or first class awards, the rate become even better.

  • Carver

    @Andy

    Pretty vitriolic post. Visiting from Flyertalk?

  • Don Steig

    A few years ago I received notice in the Fall that my HHonors points would expire at the end of the year unless I stayed at a Hilton hotel by then. I called HHonors and explained that because my points were going to expire I wished to transfer all my points to airline frequent flyer miles. The HHonors agent told me that I could keep my account active by simply making changes to my profile every few months, which I promptly did.

    My points were removed from my account at the end of the year. When I called HHonors I was told, in effect, “too bad”, I had been given incorrect information by their agent. However, if I stayed at a Hilton Hotel by the end of that month they would restore the points. I was unable to do so and lost a substantial number of points.

    I have not stayed at a Hilton Hotel since!!!

  • Jack Mac

    I think that airlines need to be strongly regulated. The behavior is anti-competitive and smacks of monopolistic powers. When customers have little or no recourse and must do battle for recovery of theft it is time to change the game rules. When has government acted against an industry if they operate correctly? Our health, education and transportation demands scrutiny if we are to remain a first world nation.

    This is not an AA issue but an issue with most of the carriers with few exceptions.

    Our family, which has traveled frequently in the pas,t is so tired of feeling taken advantage that we have decided to travel only out of necessity. At that point we throw all our business to SW if we can.

  • Mr Bad Example

    How can one call themselves a “Frequent Flyer” when there is absolutely NO ACTIVITY on an account for between 18 months and 3 years.

    Especially wen you consider tat all you had to do was buy your wife a dozen roses on Valentines Day through a partner that awards FF miles. The Terms and Conditions are quite clear regarding cancellation of your account.

  • Carrie Charney

    Even though I don’t fly US Airways any more (a logistics issue….not revenge) I keep my close to 300,000 miles by taking those e-surveys every so often. It takes a few minutes of my time and I keep my mileage balance up to date. Some day, I may have use for those miles.

  • Andy

    @Carver…

    No, not at all. But as a frequent flyer myself, I know that I have to take responsibility for certain things myself and not blame others for everything that goes wrong. If my miles expired and the airline provided sufficient warning ahead of time (which I’m sure it did it this case and I wouldn’t really believe if this guy said that they didn’t), then its my fault for letting them expire. If the airline makes an offer to reactivate the miles at a certain rate and I willingly pay that rate, then I don’t complain after the fact about being ripped off. (And by the way, as I posted before, I don’t think that 1 cent per mile is too bad of a deal. Granted, it’s not THE best, but if one is wise about how he uses his miles, he a can easily use the miles at a rate of at least 2 or 3 cents per mile.)

  • alli

    American sucks.. I loyally flew with them as a flight atendant for eight years and during that time took a 30 % paycut and prayed every month to keepmy job, while the greatness of the CEO and execs happily took pay raises and trips. I can guarantee the reason they are screwing with your miles is because they are a bunch of greedy , nasty , shady business folks. I would pay another carrier double just to not fly AA.I never have any problems on Jet Blue, SWA or even Delta…You have no idea the kind of shadiness that goes on at these companies.. I am hoping one day these execs will get exactly what they deserve…some jailtime or a nice pink slip..

  • Molly

    AA is losing money and has come up with every which way to make some. Charging people to reclaim lost miles that could have been easily kept with something as simple as buying a slice of pizza once a year at an affiliated mileage dine restaurant; or donating some miles to a charity, pales in comparison to charging for luggage or meals. In those instances, flyers have no choice – hard to take a trip with only carry-on, or no food.
    So all in all, while I hate that they lowered the retention to 18 months, and yes the fee’s are high to buy them back, I’d rather see AA doing that than charging people for basic comforts that traditionally were included in the fare.

    If we want to rant about AA, then more important is their total downgrade of their frequent flyer program and their service. I fly to Europe 3 times a year. As a Gold member on AA, I could buy the cheapest seat, and then use miles to upgrade. Then they added a $200, co-pay along with the miles, and now the co-pay is $350.00. And that’s each way! So, to upgrade to Europe R/T costs the ticket fare, plus $700.00, plus 50,000 miles! Wait….it gets worse!!! AA recently ruled that I now have to buy a higher priced ticket to be able to upgrade. But wait, it gets worse!!! If there are no available seats when booking (and they’re never are!), flyers have to pay the higher price to even be put on the upgrade waitlist, and if no upgrade becomes available, they’re stuck in a coach seat that they could have paid $200 – $300. less for!
    This is how they thank their loyal Frequent Flyers!
    So, sorry but paying a price for reclaimed miles that someone didn’t pay attention to doesn’t make me nearly as annoyed as AA making flying their planes both more expensive and unpleasant.

  • Peter DeForest

    Dear Andy.

    I’m not a clown and I have been flying on business (frequently) for over 25 years. I won’t insult or make unwarranted assumptions about you, and perhaps you might learn to treat others similarly in the future. Perhaps this can be a “teachable moment” to quote our President.

    I never claimed to be that frequent a flyer on AA, but that should make me someone they would want to attract. I have memberships in more than 8 airlines, 6 hotel chains, and 3 rental programs, and have achieved lifetime status on Delta and United. I am also the managing partner of a consulting firm and influence the travel choices of some dozen professionals. I don’t travel twice a year on deeply discounted tickets (sorry to contradict your theory).

    A few other points.

    - NOT all airlines have gone to the 18 month expiration rule (which is done for their convenience, not yours). AA made the change and did little to publicize it. Other airlines obviously feel that having more generous programs is a valid form of competition.
    - I did NOT receive their emails (I took an offer to accept email from them for 3 months to reinstate the miles. I discovered the mile expiration on month 19. My change in travel resulted from having flown a lot to Asia but then shifting to US travel on not using AA because they were less convenient for me.
    - I did NOT pay to reinstate miles and then complain about it afterwards. Read the article, don’t make incorrect assumptions.
    - My complaint was that AA changed their program without a lot of notice, then takes miles away (which is obviously the intention of the change, to reduce their annual financial liability), and offers to charge you market rates to get back what you had earned. That feels like a scam to me. If you like it, then by all means, pay for the same miles twice.
    - I completely agree with the poster who asked why we need to work so hard to keep the airlines from stiffing us in so many ways. This is a LOYALTY program for goodness sake. And I influence the spending of a lot of travel dollars each year; far more than might be apparent to you.

    It strikes me as very sad that so many people are now willing to accept worse and worse treatment with each passing year. It’s hard enough to keep a business going and travelling all over the world, along with family and other responsibilities, and then being expected to constantly track every plan to avoid being screwed by the clever fine print. Giving something with the right hand and taking it away with the left is NOT a customer retention program. I also remember when you could actually USE your miles (for more than flowers and magazines), and have wonderful trips that created enjoyment and LOYALTY (I flew to Paris on the Concorde with Delta miles, a trip I will never forget, thank you very much).

  • Carver

    @Andy

    Your response was definitely more temperate than your original post where phrases like clown were bandied about. But substantively, my issue is that there are different levels of frequent fliers. Some are road warriors who know ever dependent sub-clause of every paragraph of the loyalty program and others who are just frequent fliers who don’t spend every waking minute thinking about maximizing their miles.

    @mrBadExample

    How can you be a frequent flier without activity for 18 months? Easily. Be teacher. My dad is a school principal. He does the bulk of his travel during the summer, over 50k worth of travel. He’s done this ever year for the past 15 years. Some years he exceeds 100k miles during the summer. But he may or may not travel the rest of the year. This year he didn’t do the summer travel. He will almost certainly do another 50K miles next summer. Is he no longer a frequent traveler?

    Similarly, I have other teacher friends who travel all ovee creation ever summer without exception. But should they miss one summer, their activitty will be zero for 23 months. But they are still frequent travelers by any reasonable metric.

  • Mr Bad Example

    And for a dozen roses or an e-survey they “play the game” and keep their miles. Problem solved.

  • Dave M

    American did the same despicable thing to my 197,000 miles, and as a result I also will never fly them again, and haven’t since I resumed flying after a job change. Not only did they let them silently expire, but they did so without any warning even though they freely send me promotional emails all the time. Why they turned their back on me has me puzzled, but at least I’m not alone, including their scam “reinstatement” offer. The other airlines I fly have warned me when miles were about to expire and offered redemption options. American doesn’t value flyers’ business, period.

  • Duke Nukem

    I think Andy’s from Generation Z…the generation of Zoviet Americans!

  • Allan

    It happened to me in April 2007 when then changed to the policy to 3 years of non activity.

    They gave me my points back. I put a note in my agenda to follow up in just under 3 years.

    In the meantime, they changed it to 18 months.

    Why don’t they just make it 6 months and see if other airlines follows and if they do, change it to 3 days…..

    If I leave my money in the bank, they should not be allowed to take it if I do not go to the bank. Or do they?

  • José

    So, the conundrum here is – how can one be a “valuable customer” and yet not have ANY qualifying activity in a year and a half?