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Northwest flyers can bid miles for merchandise

Northwest is on a roll, frequent flyer program-wise.

The timing is somewhat ironic, since in the event of a merger with Delta, Northwest would more likely be the acquired than the acquirer. So Northwest's mileage program would be absorbed into Delta's, making its program features, good and bad, moot.

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But whether the latest Northwest moves prove to be last gasps or not, they're worthy of note and comment.

Last month, Northwest launched PerkChoice, a truly worthwhile enhancement to its loyalty program that permits members to use cash for one leg of a trip and miles for the other leg. This week, the airline premiered the WorldPerks Auction site, where members of Northwest's WorldPerks program can bid their miles for merchandise, event tickets, and trips.

Auction sites such as Northwest's fail or succeed on the basis of two factors: First, whether they offer a wide variety of meaningful choices; and second, how much value participants derive from their miles when used to purchase auction items.

At this point, the WorldPerks site is hosting 40 auctions, featuring 38 different items. That's hardly an overwhelming selection.

The value proposition is similarly underwhelming.

Prominently highlighted on the site's homepage is an auction for a J.A. Henckels Everedge Plus 13-piece knife set. As we went to press, the high bid for the set was around 30,000 miles. According to the price-comparison site NexTag.com, the item could be purchased from several vendors for $49.95. If the auction were to end on those terms, the winner would be reaping less than 0.2 cents (that's two-tenths of a cent) in value from every mile redeemed.

That's just 10 percent of the 2 cents most savvy mileage collectors aim to get for each mile redeemed—by using 25,000 miles for a ticket that would otherwise cost $500, for example.

If such low valuations turn out to be the rule rather than the exception, WorldPerks members would be well served by steering well clear of the auction site.

The standard line among airlines with mileage-auction sites is that they provide program members with alternative outlets for mileage redemption. True. But for whatever reasons (including, no doubt, the psychology of auction bidding), consumers tend to overpay when buying in an auction environment. In this case, that means that WorldPerks members get paltry value for their miles, and Northwest erases the mileage liability from its books at very little cost.

Unlike PerkChoice, which offers a real consumer benefit, the benefit of Northwest's auction site appears to accrue exclusively to the airline itself. Consumers should just say, "Pass."

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