Here's what happens to your miles when an airline declares bankruptcy:
As with Air Berlin’s Topbonus program, Jet Airways’ loyalty program—called JetPrivilege at the time—was a separate legal entity. Just like with Topbonus, Etihad owned a majority of JetPrivilege. However, unlike Topbonus, JetPrivilege survived the failure of Jet Airways, but the program lost much of its value.
Since 2002, most current U.S. airlines have filed for Chapter 11 bankruptcy protection. That includes American Airlines and its merger partner US Airways , Delta and its merger partner Northwest , United , and low-cost carriers Frontier and Sun Country . Yet, all of these airlines—and their mileage programs—continue to this day, in one form or another.
For better or worse, there’s one aspect of the U.S. mileage programs that’s different from the international programs that we have discussed. While Velocity, LifeMiles, Topbonus and JetPrivilege are all separate legal entities from their respective airlines, mileage programs of U.S. airlines are part of the airline itself.
Because of these partnerships, it’s unlikely that U.S. airlines will devalue their miles in all but the most extreme situation. Even now, with air travel down more than 90%, these bank partnerships are crucial for the airlines. JetBlue has recently sold $150 million worth of miles to Barclays, and both United and Delta are in talks to sell miles in bulk to Chase and American Express, respectively, in order to raise cash.
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