Why is Lufthansa removing the ability to buy miles?

This interesting note popped up on the Lufthansa website this week:

“The option of being able to buy the miles you are short of for an award flight with a Lufthansa Group airline will only be available for a few more weeks. This option will be removed from the Miles & More programme during July 2014.  Until then you can buy up to 20,000 miles and receive an extra 20% more miles as well.”

This is weird, frankly.

Airline and hotel programmes LOVE selling you miles!

Lufthansa flight

What’s not to like about selling miles to your members?!

The airline gets cash today whilst the miles may not be redeemed for months, if ever

The price paid by general members is SUBSTANTIALLY (ie 300%-400%) more than the price paid by their hotel, shopping and car rental partners

Why has Lufthansa decided to do this?  Here are a few possibilities:

Do they want to force people to earn miles just from flying? – this is VERY unlikely, given that Lufthansa is planning to sell Miles & More as a standalone loyalty business.  It has also not cut back on any other partnerships (in Germany you can rack up miles fairly easily by taking out trial subscriptions to newspapers in return for a big slug of miles for example).

Have they found that people were buying miles to pay 100% of the cost of a flight? – this is also VERY unlikely, since short-haul redemptions are terrible value and you can’t buy enough miles for a long-haul redemption.

This leads me to option 3:

Miles & More has aggressive expiry rules.  Your miles expire after 3 years from earning them, whatever other activity you have in the meantime.  By not letting you buy miles, it is more likely that your existing miles will expire (a good result for Lufthansa) as you will not be able to top them up to a level which makes it worth redeeming.

Of course, Miles & More is so integrated with all of its other partner programmes that Lufthansa is actually powerless to stop you buying Miles & More miles via the back door.

Until last Friday for example, you could have bought 20,000 Starwood Preferred Guest points for just $525 (£313) in the SPG points sale.  These will transfer into 25,000 Miles & More miles.  At just 1.25p per mile, this was actually cheaper than buying 25,000 miles direct from Lufthansa – even taking into account the current 20% miles bonus!  Miles & More wants you to pay €475 for 24,000 miles which is 1.61p each.

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Comments

  1. Separately, Mrs Roger has received an e-mail from MBNA offering double M&M miles in June – 3 per £ for the AmEx and 1.5 per £ for the Visa.

    No interest for us because of the dim overall value of M&M. OTOH, a similar offer for our AAdvantage cards would be useful.

    • Kevinz says:

      I did receive that offer for my aadvantage MBNA card! i don’t have the M&M card.

  2. Important point to note – as long as you make at least 1 purchases each month with your MBNA Miles & More card(s), NO MILES WILL EXPIRE on you M&M account

  3. Lady London says:

    My guess is they see a chance to get lots of small holdings of miles, which collectively add up to quite a lot, off the balance sheet. Why, I am not sure. Perhaps this hints to some financial engineering for a refinancing of some sort for LH in approx 18 months-2 years?.

    Since LH seems to have decided they can compete at the First Class level with Asian and Middle Eastern Airlines, and downgraded the experience for European shorthaul Y flyers by the shift to Germanwings for flights not using their 2 main longhaul hubs FRA and MUC, it’s natural they would take this view about lots of small miles holders especially non-German ones.

    There might be a small speculation too that those same small miles holders, who might not be very experienced frequent flyer members, might be panicked into buying some extra miles quickly.

    Well done Lufthansa we hear you loud and clear.

    • Czechoslovakia says:

      Have you tried the 4U product? TBH, the “Smart” fare (which is usually even cheaper than the LH Basic Economy fare) is, if anything, far superior to the LH product. Better meal (if no alcohol), Better pitch (much better than LH Euro Biz) and in my experience happier crews. Lower load factors mean so far I have never not had the seat next to me free. Pretty much all status benefits kept. Only “downside” from my point of view is there is no Bus. Desk in PRG, and I cant use the fast-line thru security.