Frequent Flier Mile Misconceptions

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Frequent Flier Miles Are Not Currency

For years, airline executives, third-party mileage strategists, and even chattering-class columnists like me claimed that frequent flier miles were the nation’s “second currency.” Well, guess what. Miles ain’t currency—at least not in any sense that businesspeople can recognize.

Airlines have complete power over the value of your miles, your ability to earn them, your power to use them, and your right to trade, sell, or give them to other people. No government agency regulates frequent flier plans, and the airlines have almost always prevailed in court cases concerning miles. If you must compare miles to something, consider them scrip issued by a company store. They can be used only within the narrow strictures established by the company, they are not liquid, and they cannot be exchanged for cash.

Airlines also seem hell-bent on destroying the value of their scrip. Next month, for instance, Delta Air Lines will become the fourth of the seven largest U.S. airlines to tell passengers that there are seats they can never claim as an award regardless of the number of miles they’re willing to pay. (Northwest, U.S. Airways, and Southwest Airlines also restrict their awards in some manner.) What are frequent flier miles worth if there are times when even the creator of the scrip will not accept them as payment?

In their heyday 15 years ago, frequent flier programs were a relatively fair, comparatively free, and generally liquid marketplace. Airlines gave you miles in exchange for doing business with them and their partners. You were able to exchange those miles for two types of merchandise: “restricted” awards for seats on off-peak days and times, or “unrestricted” awards that usually cost twice as many miles but guaranteed you a seat whenever and wherever the airline flew. But airlines have essentially turned frequent flier programs into unregulated lotteries: You never know when—or even if—you can use the miles for airline seats.

Frequent Flier Programs Are Not the Only Game in Town
Experts claim that there are about 10 trillion outstanding frequent flier miles and that the airlines continue to pay out millions of award seats each year. But for the most experienced business travelers, frequent flier programs are passé. It’s simply too difficult or too costly to claim the best awards, such as premium-class seats to Hawaii and the Caribbean and international first- and business-class seats during holiday-travel periods.

Smart travelers have begun to look elsewhere. Major hotel chains like Marriott, Hilton, Starwood, and InterContinental offer more rewarding and less restrictive frequent guest programs. Besides, business travelers have learned that when it comes to a fabulous family vacation, lodging often costs more than airfare. Another good contender: Membership Rewards from American Express. It offers a wide range of travel benefits and easy-to-value merchandise awards like gift cards at major retailers.

The Fine Print
Here’s one more nasty devaluation of the frequent flier programs: During the past year, all of the major carriers have slapped expiration dates on their miles. If you don’t do business with the airline or one of its partners in 18 to 36 months, the airline will simply confiscate the miles you’ve already earned and “zero out” your account balance.

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