The big problem with awards programs such as QFF is the fact that points can be earned (principally) on two fundamentally different bases: miles flown; and (nominal) dollars spent. Whilst flight distances are constant (the distance from SYD to LHR doesn't change), inflation devalues money and results in higher prices and greater nominal spending over time. Hence, a person whose real spending remains the same year-on-year (but whose nominal spending increases with inflation) will, without any change to the earn rates, earn a greater number of points in each successive year. If the earn and burn rates do not change over time, the real spending required to earn a particular flight award decreases over time; however, the flight miles required to earn a particular flight award remains constant. Having the real spending required for a particular award fall over time is not sustainable for the program. Hence, changes to the program earn and burn rates do need to made made over time. This then raises the question of what changes should be made.
If the burn rates simply increase with inflation to compensate for the increased spending earnings, this disadvantages those who earn their points by BIS miles as these people will have to fly further to earn the same reward than they did previously. As time goes by, the program becomes less and less like a frequent flyer program, and more and more like a frequent spender program (as many others have observed elsewhere). If the burn rates do so increase, the BIS earn rates would also have to increase correspondingly, which could ensure the current balance between the real points value of miles flown and dollars spent is maintained (presuming that the current balance is appropriate). The alternative is to decrease the rate at which dollars spent is converted to points, and leave the burn rates as they are.
The following example illustrates how unsustainable and unbalanced maintaining the staus quo would be. Let's say prices double every 28 years (based on a 2.5% inflation rate) and a person's credit card earns them one point per dollar spent. To earn enough points to redeem an award flight that costs 32,000 points, that person has to spend $32,000. In 28 years time, if the earn and burn rates do not change, that person will still only have to spend $32,000 (in 2040 dollars) to earn the same reward. That latter $32,000 (in 2040 dollars) has a real value of $16,000 (in today's money). Accordingly, in the 28 years, the cost of the award has halved in real terms, which is not sutainable for the program. Compare this situation to miles earnt by BIS flying. The BIS flying to earn the required 32,000 points is (on very simple assumptions) 32,000 miles both today and in 2040. If the price of airfares moves in line with inflation, that person will have to spend twice as much in 2040 as they did in 2012 (which is the same amount in real terms). This, whilst the BIS earner spends the same amount in real terms in 2040 (compared to their 2012 spend) and does the same amount of flying (compared to their 2012 flying) to earn the points to redeem a 32,000-point award flight in 2040, the credit card earner need only spend half the amount in real terms in 2040 (compared to their 2012 spending) to redeem a 32,000-point award flight in 2040. With no change to the earn or burn rates, the BIS earner is disadvantaged vis-a-vis the credit card earner. (Of course, the BIS earner and the credit card earner could be the same person. However, the principle is the same--their BIS earning is disadvantaged vis-a-vis their credit card earning.)
Thus, without changes, the program becomes more and more unsustainable over time, and more and more balanced against the BIS earner in favour of the frequent spender.
