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Outlook's behavior with the reply format is to reply in the format of the original message. If someone sends you  plain text message, the reply will always be plain text, because Outlook (rightfully so) assumes the sender prefers mail in that format or can only accept mail in that format. This is good netiquette.

In past years, the reasoning behind the decision not to have Outlook convert the format automatically was in part because not all email clients could display HTML. Additionally, many users paid for internet access by the minute or KB and HTML formatted messages are much larger than plain text messages.

While all modern desktop email clients can handle HTML formatted messages and many users no longer pay for Internet access by the minute, the popularity of smart phones, blackberries, and other handheld or cellular devices still means a lot of people can't read HTML formatted messages on their device and many pay for access by the KB.

"How do I set Outlook to always reply in HTML or RTF? When replying to, or forwarding, an email that is in plain text format, it always uses plain text. I want to force it to use RTF or HTML. I know I can change it every time, but I want it to be automatic."

Outlook does not offer a way to always use a specific format for all replies, be it RTF or HTML. You need to change it on each message or write VBA macro to change the format. (If you use Outlook 2002, 2003, or 2007, you can force plain text replies to all messages by using the option to read all mail in plain text.)

Unless you are 100% sure that the sender is not using a blackberry or cellular phone to read and reply to their mail, you should avoid changing the format on replies unless you have a valid reason - such as highlighting text and inserting tables. Don't change the format just because you like HTML better. If you are replying with basic paragraphs of text, respect the sender's choice of plain text.

Do not use RTF format for any message unless you know the recipient uses Outlook. Only Outlook can decipher the winmail.dat files used by rich text formatting so the recipient will get a plain text message and an attachment that they can't use.

Related information:

Tip 434: Change Reply Format

Tip 298: Converting Plain Text Email to HTML