One Mile at a Time With many airlines struggling to stay alive, one common question has revolved around what happens to your frequent flyer miles in the event of airline bankruptcy.
Unfortunately there’s no one size fits all answer to this, though let me address this on a few levels, since there are several good questions people have been asking:
- What happens to miles if an airline files for bankruptcy protection/administration?
- What happens to miles if an airline liquidates? Is the answer different if a frequent flyer program is spun off?
- What happens to previously booked frequent flyer tickets if an airline goes out of business?
What happens to miles if an airline files for bankruptcy protection?
On the most basic level, what happens if an airline files for bankruptcy protection, whether that comes in the form of Chapter 11, administration, or whatever else the name is? Well, nothing should happen. Miles will continue to be valid and exist.
The one change you may notice is that airlines could temporarily limit the ways in which members can redeem miles. That’s because they’re trying to limit their redemption costs.
We’re seeing this trend even among airlines that aren’t on the verge of bankruptcy — we’re seeing lots of airlines limit redemptions for merchandise or other third party rewards to keep costs down.
What happens to miles if an airline liquidates?
Well, that would be bad news. In the event that an airline does in fact liquidate, and that includes the frequent flyer program, then your miles are worth nothing. They’ll no longer exist, because the program will no longer exist.
Another scenario is that the airline is taken over by another airline, and if that’s the case, the impact on the frequent flyer program could vary:
- The airline could choose to take over the frequent flyer program as well
- The airline may or may not honor existing mileage balances
An airline liquidating and miles going “poof” isn’t as common as you might assume, as I’ll talk more about in the next section…
What happens to miles if a frequent flyer program survives an airline?
For many airlines, frequent flyer programs are massive profit centers. This means that:
- At some airlines frequent flyer programs are spun off and aren’t actually part of the same company, and are therefore considered an independent business
- Even if frequent flyer programs aren’t spun off, there are instances where we could see frequent flyer programs survive the airline
It’s awfully strange to see a frequent flyer program without an airline, but it’s not unprecedented. For example, Jet Airways’ JetPrivilege frequent flyer program continues to operate, even though the airline liquidated over a year ago.
