Okay Roger, let's be on record here that you are the one that introduced this topic, so if it gets lengthy (and of course informative) it is all your fault.

This is one of the most interesting topics of the day as what seems like a growing number of travelers - being lead by some of the media - represent the view that their miles are not worth as much and for those that earn some, many or most of their miles by credit card use, think that moving to a cash-rebate card is the smart thing to do.

As we get into this conversation, I have no personal stake on the answer - if one considers that you need to be for or against this hypothesis - have frequent flyer programs lost their value and are they still worthwhile?

Okay, it’s all my fault. But the question ‘Are FFPs really worth all the toil and trouble?’ is not something that the ‘media’ has dreamed up, but by the growing number of complaints I get from disgruntled frequent fliers.
Here is a recent exchange from my Q&A column:
Omri Katz, Tel Aviv:
Q: As an El Al frequent flier member, I recently booked four roundtrip ‘bonus’ tickets to the United States. In addition to the required Matmid points, I was charged an amazing $496 per ticket in what I take to be airport taxes, fuel surcharges and local taxes. That’s might expensive for a ‘free’ flight. Is there a one-stop source for comparing supplements charged by other airlines for mileage award tickets?
A: Several readers point out that there is no such thing as a free flight. When Marion Hagemeier in London booked a round-trip award ticket to Dusseldorf using BMI Diamond Club miles, she paid an additional £82 in taxes.
Surcharges on award tickets, the norm with European and Asian airlines, are now being introduced by U.S. carriers, such as Delta and Northwest Airlines, according to frequent flier specialist Ravindra Bhagwanani, managing director of Global Flight (www.globalflight.net).
‘An award flight within Europe can easily cost $150; an inter-Continental flight even up to $300 – not what I would define as “free,”’ Bhagwanani says. ‘This policy undermines the credibility of FFP’s. Many flights on low-cost carriers are often cheaper than award tickets on traditional carriers. Where logic stops, frequent flier programs begin!’
Alas, there is no ‘one-stop’ source for surcharges on award tickets. An attempt to make this transparent for U.S. FFPs can be found at http://i.slimg.com/sc/sl/graphic/f/fr/frequent-flyer-fees.pdf.
Sept. 12, 2008

From: Martin Bleasdale, Les Baux de Provence, France:
What I find outrageous, and frankly disgusting, if not downright criminal, is the airlines' practice of including in the ticket taxes, not only the airport user charges, security fees, etc, but also a portion of the cost of the fuel they use to get from A to B, the so-called fuel surcharge. This surcharge is NOT a tax, and should not be classified as such. It's part of the cost of the transportation.
Including the (increased) cost of fuel in a paid ticket is fair enough, but to include it in the taxes payable on a "free", frequent flyer miles ticket, is daylight robbery.
[They might as well include the rest of the fuel, airport landing fees, amortized price of the airplane, IFE, in-flight meals, drinks, pillows, blankets, cabin air, cabin lighting, crew salaries, etc, etc, and call it all "taxes". That way they could charge full price for a free ticket….]
Sept. 14, 2008

There’s no doubt that frequent flier programs are said to be the most successful marketing idea of all time. Since Bob Crandall at American Airlines introduced ‘AAdvantage’ nearly a quarter of a century, an estimated 124 million travelers worldwide are busy counting miles with one or more of the 140 airline programs, many of which have scores of airline and non-airline partners, such as hotels, car rental firms and credit cards. Some FFPs have as many as 200 partners. You don’t need to fly to earn miles.
Many airlines make money from FFPs by selling miles to their program partners. United Airlines is said to generate more revenue from ‘Mileage Plus’ than selling airline seats. Likewise American Airlines with its ‘AAdvantage’ program. FFPs enable airlines to build a data-base of travelers, especially very frequent travelers, with the opportunity to build a direct relationship with them.
But if FFPs are so successful, why is it that the number of unused miles is increasing dramatically? Insiders estimate that a staggering 14 trillion unredeemed miles are floating around in the system.
This is because it has become far easier to earn miles than to redeem them; too many miles are chasing fewer airline seats. Airlines therefore have devalued the currency, making it harder to redeem miles with a thicket of arcane rules, such as blackout periods for the days you want to travel fly, limiting the number award seats available on certain flights, and expiry dates.
The three main airline alliances, Star Alliance, One World and SkyTeam, allow travelers to earn and redeem miles on their partner carriers – a total of 32 major carriers. Thus, by pooling mileage in one or the other account; for example, by giving your Lufthansa number to United Airlines, or vice versa, when you fly with either carrier. This has allowed many travelers to reach gold, or platinum, status by concentrating their miles on a single program.
But some miles are more equal than others. This is because individual programs have different rules, such as award levels or the category of fare that earns you miles; which has left travelers confused and frustrated. And may have diluted loyalty towards a particular carrier by ‘commoditizing’ miles.
And don’t expect reciprocal perks and recognition, even or especially, if you carry a gold or platinum card. You may not get top priority on the waiting-list, or the run of the best lounge with an alliance partner airline.
Back in my corporate days, before miles entered the travel equation, recognition, in the form of membership to airlines VIP clubs, was by ‘invitation only.’ Working in Geneva, I became a member of the Swissair ‘Travel Club.’ This delivered privileges, such as priority wait-listing, escorting to the plane by the station manager, a reservations hotline, and impromptu upgrades. But the ultimate status symbol was wafting into the first class lounge with a green (economy) boarding pass ostentatiously stuck in your top pocket.
There is no prize for guessing why ‘no-frills’ airlines tend either to have either simple, transparent, FFPs, or none at all.
In the United States, Southwest Airlines (which invented ‘no-frills’) and JetBlue – two of the most successful carriers in North America – have programs more generous than the major loss-making legacy airlines. For example, JetBlue awards two to six points, depending how long the flight; 100 points entitles you to a ‘free round-trip flight anywhere.’
The basic problem nowadays is that it’s far easier to earn miles than redeem them.
There’s no such thing as a free lunch.

Roger:
it seems to me that there are a few issues here that are typical of the confusion. Your reader from Tel Aviv even says "airport taxes, fuel surcharges and local taxes." So, are we now holding frequent flyer programs responsible for every other entity that seeks to pile on or raise the cost of airline travel? Airport taxes? Blame the frequent flyer program. Local taxes? Blame the frequent flyer program. As for fuel surcharges. Well, hate to disappoint anyone, but I certainly don't like them any more than the next passenger and I do really hate them as a temporary part of frequent flyer awards. But, perhaps unlike others, I do have a sense of rational thought here and understand that Eos Airlines, MaxJet, ATA, Aloha Airlines didn't have any fuel surcharges on their frequent flyer awards. Cool huh? Yea, we should have all moved our business to them. Well, unfortunately none of those airlines made it in the most recent operating environment of fuel costs as related to the airline industry. Roger, would you suggest that we simply ignore that stat and proudly hold ourselves out for the capitalism of miles and say - "Damn! Everyone else. I want My Award For Free." I really see this as a temporary inconvenience for everyone - frequent flyers and frequent flyer programs and hope that I'm right that if the markets settle down, fuel surcharges will wilt away.

But I'm not done yet with some of the comments related to your first post. I see you have some comments from a "frequent flier specialist" related to the fact that low-cost carriers are often cheaper than award tickets. Brilliant deduction? But aren't we forgetting that if that was important to you as a frequent flyer, you would have first earned those miles with that particular low-cost carrier. But the frequent flyer didn't want to do that. Must have been the fact that EasyJet and Southwest doesn't fly between Europe and Florida. Or maybe it was because Ryanair and AirAsia don't quite have the seat separation that the Upper Class of Virgin Atlantic has. Seems to me that this comparison of low-cost replacement to any award is quite unfair for several reasons. #1) If the low-cost was so important, then you'd have never ended up flying one of the larger global alliance participating, upgrades available sometimes with separate check-in areas and priority waitlisted in times of flight cancelation and sometimes very important elite line fast track security lines airlines. #2) What ever happened to the early days of these programs when an award had value determined by it's aspiration, it's use rather than a sub-set of members with online price comparison to shave the value of any award to it's lowest common denominator? Really, when someone says thank you - do you really try and analyze their motives for saying that. Can't we just bask in the glow of a reward, even a kind remark for just a little while. #3) How does anyone really compensate for the fact that some members just really enjoy using miles rather than money for their travel vs. those that really enjoy saving and using miles only when there is an extreme value associated with their redemption. For any award that was redeemed when the same ticket could have been bought for less (if you are playing the miles valuation game) with a low-cost airlines, why blame the frequent flyer program. Why not reasonably blame that member as not being that smart about the personal finance of frequent flyer redemption?

In my mind, the low-cost thing is an easy way to make a hollow point in this dialogue.

I remember I was a lone consumer voice at the ‘Frequent Flyer Conference 2006’ in Bangkok, a gathering of nearly 200 airline and systems software executives.
The first question to the panel was, ‘What is the role of frequent flyer programs in the overall marketing mix?’ To which I found myself replying, ‘To con travelers into thinking that they’ll get a free lunch.’ The corollary is, ‘Do you want to pay top dollar for a full-fare ticket and earn miles that you may find hard to redeem, or pass on the miles and buy a discounted business-class ticket for less than half the published price?’
Which is probably what I had in mind when I forwent the chance to shell out a daunting £3,168 for a round-trip business-class ticket from London to Bangkok with British Airways, or Singapore Airlines, earning miles, to pay £1,332 with Austrian Airlines, and settle for a comfortable flight. Period.
Loyalty is not measured in miles alone, but in how much revenue you bring to the airline. Few airlines outside of North America allow you to earn miles on any published fare or allow you to use miles for upgrades. Typically, European and Asian carriers only award miles on the more expensive, fully-flexible fares.

Randy, I do concede your point about taxes, surcharges etc being added to award tickets. That’s fair enough, if one accepts that add-ons are a weasel way for airlines to jack up fares. (Along with charges for each piece of baggage etc. But that’s another story.)

But you must concede my point that it’s easier to earn miles these days than to find ways of using them for flight and upgrades. Has there been an erosion of ‘value’ over the years.

For heavens sake, Randy. You are the guru in this domain! And perhaps it is foolhardy of me to take you on. But I am compelled by the number of complaints about mileage programs that I am getting from my readers from all over the world.

... "weasel way" actually to be more correct, WEASEL WAY. Roger, I am a passenger and frequent flyer like you and the others and really don't like the new ala carte system of fares but certainly have adjusted to similar attempts to railroad more money from me like the banks do with similar policies. But, as noted, let's digress back to the topic.
One of the reasons why we will differ on our thoughts is because I do spend a lot of time doing research and most of my thoughts on the topic are based, or at least grounded by, the facts rather than the emotions of the topic.
For instance, one of the most compelling swipes at the topic that frequent flyer may not be worthwhile any more is the availability of award seats. The two biggest hurdles as presented by various media claiming to represent every frequent flyer on earth is that "no one can ever redeem their miles any more," and "with airlines cutting back, there will be fewer seats available for members."
I'm not hear to say that these are the two biggest myths around the world of miles, but let me use facts to at least distill them to something more reasonable to understand.
#1 No One Can Ever Redeem Their Miles Any More
This has long been the single biggest misunderstanding in the industry. At least for the media. Almost all major frequent flyer programs make every single seat, every flight, every day available for award redemption. That is a fact. The missing part of this from some of the media coverage of the topic seems to conveniently leave this out. That's really not fair when you think of it. The truth is that the only way you can't get an award is if the flight is completely sold out.
Now, here come the boo birds! Yes, the truth is that none of us frequent flyers (including me) ever want to pay full-price (double miles) for an award when we think we should get it at the discounted price. Airlines do have two levels of award redemption, a "saver" type award with limits on the number of awards available per flight, and then the "anytime" award which for most major programs is any seat, any day, any flight. So, to be totally fair to the airlines, you simply can't get a situation from most airlines where you can't get an award. We just don't want to pay for what the award costs and as such, we can't use our miles. Does that really seem fair to blame airlines because we (and remember, I am the same way) don't want to pay the going price for the award and much rather find it easier to badmouth the program and say "nothing is available." Now granted, the airlines are far from perfect in this whole mess and have really brought this problem on by themselves, but I'm only seeing facts, not the much relied on emotional response.

And for #2: With Airlines Cutting Back, There Will Be Fewer Seats Available For Members.
Again, a reasonable emotional concern, but unfortunately not true. Let's take a look at award redemption year-to-date. I like to use Continental OnePass because they are sort of a bellweather program with restrictions plus and minus compared to other programs. In years past they are neither the most generous or the stingiest, sort of the middle. Here's the facts - despite the cutback in routes and seats, 2008 is shaping up to be the highest redemption year ever on record for award redemption. So if indeed, airlines cutting back, etc., etc. how does one rationally believe me? Well, if you click here, you'll go to the online page where for years Continental Airlines has recorded their award redemption statistics, thus complying with the Customer First initiative several years ago (most other airlines aren't as forthcoming despite their pledge to be so).
http://www.continental.com/web/en-US/content/onepass/rewards/totals.aspx

Do all the numbers - real numbers - yourself and what do you find? You find that year-to-date, award redemption is up over last year by double digits. Again, the emotion and general media would have you believe that with the airline cutbacks no one will be able to find an award ticket. Sorry, but the facts are, members are finding awards in record numbers. In this airlines case, I think OnePass is up over 20% in award redemptions from last year. Gee, imagine that. Other airlines I've chatted with are almost all up in double digits from last year for redemptions. WHY? Well, it's not what the "Sky Is Falling" crowd might think. Fact is many of these awards members are booking have always been there but the airlines in their very stupid manner, never really developed the correct tools for members to find their award seats online. In the past year many programs have added award redemption calendars to their tool set which allows members to "at-a-glance" see what is available days and even weeks in advance and behind their chosen dates.As well, many programs are getting better in adding their partner inventory to the online booking tool so that members don't get the dreaded "NO" notice any longer. But the reality is that despite all airlines cutting their routes, we've been there before and managed to fly through it. Where airlines cut some seats, their partners are likely to retain seats and let's be a little realistic - if an airline is cutting flights to a particular city, would we really want to fly there? Airlines typically, but not always, cut capacity to destinations that passengers are not interested in filling to plane for. So, San Francisco, New York and destinations that frequent flyers always want to redeem their miles to are still on the radar.
So, Roger, I know you're going to say that I sound like a shill for the airlines but nothing could be farther from the truth. My differences of thought often come from the amount of research I do on the topic and trying to limit my emotional attachment. But these two arguments contain facts from my retort and I'm interested in what the reply is to a fact?

Roger says: "For heavens sake, Randy. You are the guru in this domain! And perhaps it is foolhardy of me to take you on. But I am compelled by the number of complaints about mileage programs that I am getting from my readers from all over the world."

Don't worry Roger, there will be topics that I'll easily salute your knowledge on. As for the number of complaints there may be out there, I don't want to diminish that in any manner as I get them as well, I'm going to ponder a few ideas on why this may be and post those thoughts next. I do believe that there are a number of them which are entirely legitimate in their complaint.

The answer to this may lie in the concept that these programs seem deceptively simple but as we know are endlessly complicated - and therein lies the complaint. More later.