With Northwest and Delta Air Lines joining United, US Airways and ATA in the no longer exclusive club of U.S. airlines operating in bankruptcy, frequent fliers are growing wary and just weary of their mileage programs. Despite assurances to the contrary and the fact that these programs represent one of the few profit centers for the airlines, the mileage rich are still looking toward redemption.
"I already spend my miles fairly regularly, and I’m with American,” says Brad Berke, a very frequent flier for Slayton International, a retained executive search firm. "If I were with Delta or Northwest, I’d be burning them even faster. Why risk program changes when those miles have value?"
That value, according to IdeaWorks, a Milwaukee-based consultant, is currently about 1.4 cents per mile when redeemed for a seat. But complaints about redemption difficulties due to decreased award seat availability are becoming nearly as common as those about the weather. It’s a situation unlikely to change considering that demand for those seats is intensifying as frequent chargers accumulate miles through credit card purchases faster than they can travel. Delta alone had an estimated 15 million unredeemed seat awards outstanding at the end of 2004, according to IdeaWorks. Getting miles spent is becoming much harder than getting the miles accumulated.
"We don’t see adding options for program members as a growing trend, necessarily,” says Bill Hanifin, a loyalty program consultant with The COLLOQUY Group, Frequency Marketing, Inc in Pompano Beach, Florida. “But some airlines are adding outlets for redemption beyond just seats to their programs."
One of those outlets is Points.com. This site serves as a mileage exchange for several frequent flier programs, including American’s AAdvantage, as well as non-airline loyalty reward programs. Registered users can convert their excess miles, for a fee, into flowers for mom, hotel rooms, gift certificates and even tunes for the iPod, among other things.
The site also facilitates the conversion of miles from one airline’s program into another’s, further broadening a user’s options.
The catch? Converted miles depreciate significantly when applied to other uses. For instance, while a ticket can currently be had for travel between Atlanta and Chicago for 15,000 AAdvantage miles, 11,444 will only buy lattes -- a $50 Starbucks gift certificate.
"The greatest value is still to get a flight,” admits Christopher Barnard, president of Toronto-based Points.com.
And unfortunately, that is all some mileage holders, such as those holding Delta’s SkyMiles can redeem for. Well, that and a few magazines.
"Currently, US Airways, Delta and Northwest only allow their miles to be redeemed for magazine subscriptions … or seats,” says Barnard. Seats that are increasingly hard to come by.
"I have all the magazines I need,” says Jim Lannen, a business owner from Marietta, Georgia, who still has SkyMiles left after redeeming the bulk of his account for a seat award.
"When I first heard the rumors about Delta, I decided to just burn what miles I could,” says Lannen, an occasional flier who accumulates miles mostly through charges to his business credit card. “But with all the hassle of getting those miles redeemed for a ticket on a flight I could actually take, I’ve had it. No more miles. I want to take the flights I want, on the airline I want, when I want. I’m switching to a cash reward card so I can spend my rebate on other things."
Turning away from miles is pretty easy. Consumers face endless choices for accumulating rebates, cash, or points toward virtually any goal—from gas to college tuition, even Calloway-branded golf equipment.
Meanwhile, mileage-linked cards are ubiquitous. Even the airlines’ ability to charge premium annual fees for them is eroding. Delta, American, Frontier, Midwest and United all now offer fee-free mileage cards, though they do not advertise it. These cardholders, however, accrue miles at half the rate of a for-fee cardholder. For heavy mileage accumulators, the savings in annual fees may not make up for the savings they would realize by getting free tickets. But for those who accumulate miles slowly, paying fees over multiple years, the no-fee card may make more financial sense.
But fee or no-fee, are miles just not worth it anymore as Lannen decided?
"There is a high degree of self-selection in the branded credit card area. People who fly a lot want travel as reward. And there is the emotional benefit of knowing that you have enough miles in reserve to buy tickets for sudden trips or will eventually save enough for a once in a lifetime family trip to an exotic location. But when the miles just accumulate, it is like leaving money on the table,” says Hanifin.
Lannen’s not planning to leave anything on the table, “I’m donating the rest of them to the hurricane relief effort,” he reports.
Charity, too, is an option for getting miles spent. Fortunately, one of a growing number the mileage-rich can tap into to realize some of the value they are storing up in their mileage reward accounts.
For more information on strategies for managing miles and points, and updates on redemption options, there are several sites devoted specifically to that task:
- webflyer.com
- insideflyer.com
- firstclassflyer.com (subscription based)
- smartertravel.com
Information on current credit card offerings, promotions and redemption rules may also be found on each airline’s website.
Gayle B. Ronan is a free-lance writer based in Chicago who covers personal-finance issues. Send questions or comments to .