Some links to products and travel providers on this website will earn Traveling For Miles a commission that helps contribute to the running of the site. Traveling For Miles has partnered with CardRatings for our coverage of credit card products. Traveling For Miles and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone and have not been reviewed, endorsed or approved by any of these entities. For more details please see the disclosures found at the bottom of every page.
With the current crisis not showing much sign of being over any time soon and with airlines all over the world struggling to stay afloat (some more than others) the one question that I seem to be getting more is one about the preservation of award balances. A lot of people would like to know if booking an award on a partner airline will protect their miles/points if the airline that issues the miles goes under.
I’m not going to build up any suspense here – the answer is no.
Why Partner Awards Aren’t A Savior
If you have a stash of Avianca LifeMiles miles (for example) and you’re concerned that the airline may not be around for much longer, you may be thinking that it’s a good idea to use those miles to book a flight (for some time in the future) for travel on an Avianca partner airline that’s more likely to weather this storm…like United.
I can see why that may seem like a logical and sensible thing to do, but the sad truth is that it probably won’t make any difference.
When you book award travel on a partner airline, the airline whose miles you’re using to book that award (the primary airline) has to compensate the partner airline for that award. That compensation takes place after travel has been completed so if the primary airline goes out of business before travel takes place, the partner airline knows that it’s not going to get paid and will almost certainly cancel the booking.
Yes, there have been some very rare exceptions to this in the past but I’m pretty sure that now isn’t the time to be relying on a rare exception coming to your rescue. Rare exceptions are even rarer in times of a global crisis.
If you’re genuinely worried that an airline is going to go out of business and wipe out your award balance your best move may be to transfer those points out to a partner where the transaction is instant (or as near-instant as possible). Transfers to hotely loyalty programs would work well but you should bear in mind that you’ll almost certainly be getting a very poor return on your airline currency so you should be pretty sure that things are looking bleak for your miles/points before you agree to take a huge hit to the value you’re currently holding.
A Glimmer Of Hope
Using a credit card to pay for the fees/taxes on an award booking may be a way to save your position – what follows is not advice so be sure to check with your credit card issuer about what is/is not covered and what recourse you have if an airline goes under.
If you make an award booking, pay the taxes/surcharges with a credit card, and the airline whose miles you used fails to survive long enough for you to take your flights, you may be able to file a chargeback with the issuer of the credit card you used. You’re not going to get your miles refunded in the form of cash, but you may still get to fly.
The whole point of chargebacks is to make consumers whole if they don’t receive a service for which they have paid and if an award booking is canceled that’s a good example of someone not getting the service for which they have paid….but there’s still a rather large grey area here.
An award booking isn’t as straightforward as a cash booking. A cash booking just requires a refund to the original method of payment (back to the credit card) so that wouldn’t be a major problem for a credit card issuer, but a credit card issuer can’t exactly refund miles that it doesn’t control and, more importantly, that presumably no longer exist.
However, in some jurisdictions, a chargeback would require the credit card issuer to put the consumer in the same position as if the booking had never been cancelled and that would require the consumer to be booked on to a flight equivalent to the one they originally booked – same dates, same route and same cabin of service. Assuming you really wanted to fly, this would be a pretty good outcome.
I am deliberately being non-specific here (regarding jurisdictions) because TFM gets readers from across the world and laws/regulations vary widely from location to location – what works in one country/region may not work in another so I’m just trying to give readers an idea of what may be possible wherever they may be in the world.
Talking to your credit card issuer(s) is key here.
Booking partner awards is almost certainly not going to guarantee that you will be able to travel if the airline whose miles you used doesn’t survive past your dates of travel. If you pay for any associated award fees/taxes/surcharges with a credit card and then find that your award booking is cancelled because of a failed airline, there is a chance that you may be able to ask your credit card company to issue a chargeback and still be able to fly…but there are no guarantees.