Airlines are going bankrupt. Here is an updated list of airlines going bankrupt. What about my miles? Unfortunately, there is no “right answer” to this question. But this post shares the various cases and case studies of your miles. TLDR below.
- What happens to my miles when the airline goes bankrupt?
- Should I liquidate the miles or keep it?
- Are my airline miles worth anything if the airlines is bankrupt?
- Can I still use my airlines miles?
Miles are a separate legal entity from the airline. And the airlines can be bankrupt, but the miles and loyalty points are not part of the bankruptcy deal.
Bankruptcy should not zero out miles. Mile holders are a good tool for airlines to tap into to get people on planes again and restore confidence. People with most miles are usually business travellers. Business travel depends on loyalty. If the miles are gone, that would remove all the loyalty built up and it is costly for businesses.
In previous restructuring bankruptcies people have kept their miles. In general if the airline wants to continue to exist, it doesn’t want to alienate all of its former frequent customers. Fears about losing frequent flyer miles on a bankrupt airline may be exaggerated since companies do emerge from bankruptcy with financial health. That being said, the airline might alter or change its frequent flyer program like having more black-out dates and requiring more miles to book the same flight.
Do note: If airlines merge with others, there might be an “exchange rate” for your miles.
So you can still use your miles on other methods like partner airlines and partners like hotels and restaurants.
But this ideal situation does not always hold. Sometimes, the miles are gone.
Case in point: Air Berlin
Air Berlin declared bankruptcy in late summer 2017. The mileage program, Topbonus, also declared bankruptcy. In this specific case, the miles are GONE with the wind.
Another Case: Jet Airway
Sometimes, the mileage program is saved from bankruptcy. But that does not mean the miles will mean something. The miles only mean something because people believe it in and there is a value to the miles holder. When the miles program has lost the confidence from the miles holder, the value of the miles vanish due to the lack of confidence.
Jet Airways went bankrupt in spring 2019. The miles program survived but lost its value due to the lack of confidence. Today, the miles program (renamed to Intermiles) is still in existence, but there is only 1 airline to redeem your miles, Etihad Airways.
The Real Problem
The real problem is that we don’t own the miles. The miles are still owned by the company. That means the company has the right to determine things like terms of program, price of miles, redemption charges, right to close accounts. So this is why there is no “right answer” or a “one size fits all answer” to the question on miles. The company determines and has the right to decide it all. We have no say, but to use the miles decided by the company.
TLDR: it depends on your airlines. For big airlines (like American Airlines), you’re safe according to history. For smaller airlines, good luck.
Trevellers is my way to change the world. Through my stories, tips and lessons learnt, I truly hope to inspire you to get out of your comfort zone, see the world and see who you truly are. Travel is more than just taking a selfie. Travel is an adventure, where you can truly become who you are, give you the time to reflect and grow to become the person you’ve always wanted to be.