1 Reply Latest reply: Jan 13, 2010 11:14 PM by anadyr RSS

Accounting and points

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A recent article in the Wall Street Journal commenting on frequent flier miles reports (emphasis mine):

 

"Airlines have long told customers that flexibility is the key to booking awards—a willingness to travel on different days or even to different cities increases your chances of finding an award. But now airlines are also becoming more flexible and giving customers more options to redeem their miles. That's because it is actually in the airlines interest to encourage fliers to use miles.

A change in accounting rules has made it more expensive for airlines to carry unredeemed miles on their balance sheets. And miles have become a huge cash generator for airlines, primarily by selling them to credit card companies that give them out as customer rewards. If the miles lose their shine by being difficult to use, credit card companies may curb their purchases. Last year, American pre-sold $1 billion worth of AAdvantage miles to Citicorp, propping up the airline financially and showcasing the importance of miles."

 

If there are accounting professionals out there perhaps they can explain what the change was and how it impacts Marriott Rewards and the unredeemed points that we have and they carry on their books?

  • Re: Accounting and points
    Alumni Steward Platinum 8 Reviews
    Currently Being Moderated


    Dear Pingreeman:

    thanks for the excellent explanation!  I knew someone would have the answer, and you did!  Now wonder i Marriott will have the same issue?

    (For each location tag, you will be guided through a 3-step process to add (1) a city and a state or a city and a country, (2) a Marriott brand, and (3) a Marriott hotel.)

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