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What does Avianca's bankruptcy filing mean for the LifeMiles program?

May 11, 2020
5 min read
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Editor’s note: At TPG, our top priority is providing our readers with the information needed to make educated decisions about travel and rewards-earning strategy. This is not the best time to travel, domestically or internationally, as airlines have cut major parts of their route networks. But we are sharing this information to provide value for future travel once coronavirus concerns have subsided.

As the coronavirus pandemic continues to drag on, airlines that are unable to secure financial assistance from their local governments are finding themselves in increasingly tough spots. Now the spotlight is on Colombian carrier Avianca, which filed for Chapter 11 bankruptcy protection in New York on May 10.

Avianca is the second-largest carrier in Latin America and has a strong U.S. route network, though it hasn't operated a regularly scheduled commercial flight since the end of March. While Avianca plans to resume flying as the pandemic subsides, award travelers around the world are worried about how this announcement will affect Avianca's frequent flyer program LifeMiles.

Today we're going to walk through the points and miles implications of Avianca's bankruptcy filing, and why your miles are probably safe.

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The mass appeal of LifeMiles

Just a few years ago, Avianca LifeMiles was an obscure program that only the most advanced award travelers knew anything about. More recently, American Express Membership Rewards and Capital One have added Avianca as a transfer partner, making the lucrative LifeMiles award chart more accessible than ever before.

There are a lot of reasons to love LifeMiles, from the low award rates for Star Alliance premium-cabin awards to the fact that LifeMiles doesn't pass on fuel surcharges, even for partners like Lufthansa where premium-cabin awards can get notoriously expensive when booked with other frequent flyer programs like Aeroplan. LifeMiles also offers discounts on mixed-cabin awards, meaning that flying first class from the U.S. to Tokyo with an economy connection on to another destination like Okinawa (OKA) will price out cheaper than just the nonstop flight to Tokyo.

Related: How to avoid fuel surcharges on award travel

That's to say nothing of the fact that Avianca already offers the cheapest one-way premium-cabin awards between the U.S. and Asia, charging 90,000 miles for a first-class award when United MileagePlus and Aeroplan (Air Canada) both charge over 100,000 miles. For all these reasons, LifeMiles has become one of my favorite programs to use and accounts for about 50% of all my redemptions over the last year.

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Related: Everything you need to know about Avianca LifeMiles

What Avianca's bankruptcy means for LifeMiles

While frequent flyer programs started as small divisions within the airlines they served, they've grown massively in recent years. There are a number of airlines that make more money from their loyalty programs and credit card partnerships than from actually flying planes, and for that reason, many frequent flyer programs are now run as separate business entities.

This is the way Avianca is structured, with LifeMiles operating as a separate company from the main airline. Importantly, LifeMiles is not a part of Avianca's Chapter 11 bankruptcy filing. This means that LifeMiles currently has enough capital to meet all of its obligations, and Avianca has doubled down on its commitment to the LifeMiles program even as it enters bankruptcy proceedings. All LifeMiles elite members have had their status extended through January 2022, and members can continue to earn and redeem LifeMiles while Avianca restructures.

Related: Why you need LifeMiles for domestic travel

The biggest question mark here is what will happen to Avianca long term. If the airline is able to successfully restructure and emerge from bankruptcy protection, there won't be any long-term effect on the LifeMiles program. If, however, Avianca goes out of business or is forced by creditors to liquidate, that could spell trouble for LifeMiles. While customers wouldn't lose their mileage balances in this case, they could lose the ability to redeem them for Star Alliance award flights as LifeMiles can only access that space through Avianca.

You may still be able to redeem miles for merchandise, car rentals, hotels and more, though the program would lose a lot of value. Given LifeMiles' close relationship with financial institutions all over Latin America and globally, it's possible that the program could live on even without an airline partnership in a worst-case scenario.

Related: If you're worried about airline bankruptcy, here's how to burn through your miles now

Bottom line

While a Chapter 11 bankruptcy filing is a signal that things are bad, this action also gives companies more time and assistance to sort out their debt and chart a stable path forward. It's important to understand that LifeMiles is a separate company from Avianca, and is not affected by this bankruptcy filing.

Members can continue to earn and redeem their LifeMiles as usual, and as long as Avianca is able to emerge from bankruptcy protection successfully there should be no long-term impact on the program.

Featured photo by Fabrizio Gandolfo/SOPA Images/LightRocket via Getty Images.

Featured image by LightRocket via Getty Images

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TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
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Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
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Best card for premium perks while traveling
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
5X5X miles on flights booked through Capital One Travel.
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  • Intro Offer
    Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

    75,000 bonus miles
  • Annual Fee

    $395
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    740-850
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Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023