How safe are our miles?

As I was wandering through the chaos of Swindon town centre yesterday a thought suddenly struck me - we had just been in Zavvi where a number of signs were up saying that they were not honouring any gift vouchers purchased before they went into administration.

My thought was that myself, like many others, have little nest eggs of miles in various frequent flyer and hotel reward accounts all over place. Taking the Zavvi situation as an example, I guess that one of the first things that any administrator would write off would be liabilities with no associated revenue.

It certainly seems that 2008 will be a warm up act for 2009 as far as the economy goes, with a strong likelihood of further casualties in the travel industry. Further consolidation along the lines of BMI and Lufthansa should protect our miles, but should any of them go bust and then be swept up after going into administration I doubt there will be any protection.

So will this change your attitude towards a save or spend approach? I for one was planning on saving for a long haul F / UC in 18 months time, but now I'm not so sure. Perhaps it's better to think more short term.

Ultimately, its down to how safe companies like VS, BA, Hilton and the rest are. You would hope that they will all see out the current challenges - but I wouldn't be surprised if there are a few big failures next year.

So on that positive note(!), a very happy and safe new year to all v-flyers everywhere! [y]

Nibbs

[Scrooge]

I don't see any worries on the horizon for VS or BA and certainly not Hilton, they all have plenty of valuable assets that could be used to cover short term loans and they all have solid customer bases.

[HighFlyer]

Ditto Scrooge. I think Zavvi are a different case. When Virgin sold up I think that was a sign of the times and changing industries, I cant see how Zavvi could make it work if Virgin couldnt, especially with iTunes and online retailers taking over.

I am slightly worried about my Bmi miles now that LH are taking over, though I am sure we have plenty of time to see what, if any, changes are made to the program.

Thanks,
Sarah

[mcmbenjamin]

Are there some companies that sell insurance on miles? AmEx did but can't find anything now.

If an Airline went under, I would imagine all Miles would be lost. I would also imagine that if an Airline was taken over, depending on the circumstances it would not go down too well if the new owner did not honour some or al of the accrued air miles.

After all, they buy the asset for it's goodwill and customer loyalty.

quote:Originally posted by nibbs
As I was wandering through the chaos of Swindon town centre yesterday a thought suddenly struck me - we had just been in Zavvi where a number of signs were up saying that they were not honouring any gift vouchers purchased before they went into administration.



From witnessing a blazing argument, on this exact topic, between what I would describe as a fake ugg boot wearing lady (read Chav) and the store manager in the Brighton Zavvi on new years eve; the position is that a refund can be provided but not in store. The administrators have stopped the tills from providing refunds to gift cards.

The assistant serving me told me you must write to the administrators and they will provide one with a refund. This seems a fairly reasonable process and something I am sure the vast majority of people will be happy with. For some reason the chav I saw, seemed more interesting on making the soon to be jobless manager, feel even worse.


quote:Originally posted by HighFlyer
When Virgin sold up I think that was a sign of the times and changing industries, I cant see how Zavvi could make it work if Virgin couldnt, especially with iTunes and online retailers taking over.


The reason why Zavvi was hit was because it only had one supplier of CD's/DVDs and that was a company called E Entertainment (or something) which was a subsidary of Woolies. When Woolies went into administration, Zavvi stopped recieving any stock and therefore, in effect, ran out of stock and couldn't sell anything in the run up to Xmas.

Whilst Itunes et al are taking over on downloads, there is still a large market for DVD's and Computer Games to be brought in store.

With regards to BD, one would imagine that the scheme will be somehow merged into LH's scheme perhaps in a simular fashion to the way AF/KL did. I believe that the Swiss scheme (Swiss of course being owned by LH) is a sort of subsidiary of the LH Scheme.

My accountant told me that many big firms are going under because their suppliers can no longer get the insurance they need to safeguard payment for stock between supply and settlement. So solvent Companies are suddenly unable to trade.

There is currently a class action going on in the USA for EOS rewards that were earned before they went bust. I suspect that even if successful only partial restoration will be made.

It could be an issue - all these points will have to be included on the balance sheet as liabilities so companies will be looking at them closely and trying to limit them.

Smiths stopped issuing new club card points last year and any outstanding balances have to be used by the end of February 2009. I only found out by accident so I redemened the £5 or so I had pdq. I suppose they are relying on people not using their points and this will improve their balance sheet.

Allied to some points schemes moving to a rolling basis to keep points active (must check my UA balance and see how I can use my points) there is already some tightening of criteria and so help reduce the liabilities.

Must keep an eye on my other points collecting cards. I can see a mini shopping spree coming on ....

Oh and willd your guff boot wearing 'lady' must be related to the one I saw in the Croydon branch !

[Scrooge]

Your half right.

The FF part of the vast majority of airlines is actually a separate company (and many times the most profitable part)they purchase miles from the airline, then sell them at a profit to other companies, so there is no real liability held by the airlines themselves.

When miles are redeemed they pay the airline a set fee for that seat. It is all rather convoluted.

Now I don't know the situation with the FC, if it is separately held or not...Just a disclaimer.

Well I fully intend on clearing my FC account, with redemptions, just like I did with BA.

I'm not hanging around to find someday that my hard earned miles are worthless. So some very 'comfortable cheap travel' is on the horizon for Kered [y]