Frequent Flyer Miles Are Profitable...And What You Must Do To Play
Note: One of the best stories we�ve ever read on frequent flyer
miles (FFM) was written by Peter Greenberg, Travel Editor for
Today. We have reprinted it
from MSNBC.MSN.com, titled, �Why Frequent Flyer Plans Keep You
Grounded.� Greenberg says 120 million Americans have FF miles. And
there are 92 FFM programs.
active member earns 11,364 miles per year. And there are 9.7
trillion unredeemed miles in current liability among all FFM
programs. (Approximately 15 trillion FF miles have been issued, at
2-cents per mile that is a $300 billion currency.) Frequent flyer
miles are the second biggest currency in the world, after the U.S.
What does an
award cost an airline? With airlines carrying unredeemed mileage on
the books as a liability, the airlines then estimate that when they
do actually redeem miles they do so with the valuation of 40-cents
for every 1,000 miles. So, redeeming a 25,000-mile award costs the
airline about $10! (Note: With the recent rise in fuel the price
might reach $15.)
airlines, the mileage programs have become one of their few
profitable divisions�that�s right, profitable. How could that be
when airlines sell miles to thousands of marketing
partners�florists, grocers, gas stations, restaurants, banks�so that
you can �earn� those miles when you make purchases? But here�s the
rub: Since the airlines also manage and control redemption of those
miles�without any oversight, regulation or control�they build in a
And while the
airlines claim that more miles were redeemed last year than before,
the actual redemption percentage, that is, the percentage of
eligible miles that were really redeemed by the airlines last year
hovered at slightly below 10%. That�s an amazingly profitable
margin! And for consumers, that�s an amazingly painful experience.
Now that I�ve
given you all the bad news, how then do you go about redeeming your
awards and beating the airline mileage game?
argue that their members are happy with their programs and their
ability to redeem those miles. Really? Dig a little deeper and
you�ll find that what the airlines are not telling you is that the
airlines are playing a game, which they are allowed to do under
deregulation. Since these programs aren�t regulated, no airline is
required to provide any seat free of charge in these programs. This
is similar to the way airlines are allowed to advertise a discount
fare without revealing how many seats are actually available at that
And the game?
Almost all mileage programs of the major carriers get you to enroll
by strongly inferring in all of their advertisements and promotional
materials that as soon as you get to the first redemption
level�25,000 miles�you�ll be sitting on a beach with a pina colada.
But the reality
is that airlines often double the ante. In almost all cases, when
you call to redeem those 25,000 miles for a free coach domestic
ticket, or 35,000 for a free coach ticket to Hawaii, the airline
informs you that no seats are available at that level, but the
airline magically does have your seat for double that amount�50,000
or 70,000 miles! It�s a clever but painful way for airlines to
dispose of their mileage liabilities. And that�s only if they want
to release any seats at all. So what can you do? The answer, it
seems, is be creative in a number of ways:
airports. Don�t just look for award seats to Los Angeles airport,
for example, but also to Burbank, Ontario or Long Beach as well.
routings. Don�t just think point-to-point trips or non-stop flights.
Seats might not be available on non-stop flights, so make a stop in
Chicago en route to San Francisco from Miami. (In my search for
Hawaii flights, throw out the map entirely. On one routing offered
to us to redeem our miles to Hawaii, United told me the only way
they could get me there was Los Angeles to Denver to Chicago to
And if all else
fails, then look to the airline�s mileage partners. Let�s say you
want to redeem your miles on a flight from Los Angeles to Frankfurt
on United, but there aren�t any seats available, try flying United
to Chicago and then Lufthansa to Germany (a United mileage partner).
Los Angeles to Hong Kong? If there aren�t any seats on American
Airlines, try one of its partners, Cathay Pacific or Qantas through
In many cases,
you may need to book as much as 320 days in advance to get those
seats. Some airlines, like Continental, offer a feature on their web
sites that allows you to check mileage seat availability up to 11
months ahead. That�s the good news. The bad news: you have the
luxury of being disappointed online!
And if all else
fails, and the reservation agent tells you there are no seats
available on any flight on any route to any nearby airport on your
primary or any partner airline, it�s time to speak to a supervisor.
Why? The key reminder here is that loyalty programs are worthless if
they don�t reward you...for your loyalty! In almost all cases,
supervisors have the discretionary power to override computer blocks
and release mileage seats.