Beyond Free Flights: Airlines Look to Alternative Awards

On Frequent Flyer Miles
images/photos/columnists/timwinship.gif
Editor's Note: This story was originally published on March 6, 2006. To see the most recent SmarterTravel articles on related topics, please click on any of the following links: frequent flyer, On Frequent Flyer Miles, Tim Winship.

Never before have so many frequent flyer program members been able to earn so many miles for so many everyday activities.

Sign up for a cell phone plan. Purchase a house. Get an insurance quote. Buy jeans. Enjoy a burger and a beer at the local tavern. If it's a paid transaction, chances are there's a way to earn miles for it.

Advertisement

All indications show the programs' partner rosters will continue expanding. That's because the sale of frequent flyer miles to these partners is an enormous and highly profitable source of revenue for the airlines.

But even as earning opportunities have exploded, opportunities to use those extra miles have remained essentially unchanged. The airlines' ability to honor requests for free tickets hasn't kept pace with program members' ability to earn them. That disconnect has given rise to consumers' well-publicized frustration over their inability to readily redeem their miles.

Customer complaints have put pressure on the airlines to offer more awards. But because the carriers are reluctant to forego the revenue and give away more of their own seats, profit-starved airlines have been forced to look beyond free tickets, adding such items as hotel stays and consumer electronics to their award catalogs.

Following is a summary of the current state of non-flight awards, followed by some thoughts about their likely evolution going forward.

American Airlines

In March 2005, American launched redeemAAmiles, a new AAdvantage feature that allows members to redeem their miles online for hotel stays, points in several leading hotel programs, and Diners Club Rewards points.

AAdvantage members may exchange their miles for points in the Hilton HHonors program, points or free stays with Intercontinental's Priority Club program, and free stays at Marriott hotels. Free nights are available for as few as 12,500 miles (a night at a Holiday Inn Express) and as many as 37,550 miles (a night at an upscale Intercontinental hotel).

Another option is to exchange 10,000 AAdvantage miles for 10,000 Diners Club points, which in turn can be used for awards in the Diners Club Rewards program or exchanged for miles or points in other airline and hotel programs.

Unfortunately, American charges a $25 fee for each redeemAAmiles transaction.

Separately, AAdvantage members may also redeem their miles to wholly or partially pay for hotel packages offered through the airline's tour subsidiary, AAVacations.com.

Continental

Continental's OnePass Online Auction is one of the first among recent attempts to reduce the demand for free flights by offering alternative awards. Continental's approach is to put items such as concert tickets and merchandise up for auction and let OnePass members bid their miles for them.

It's an interesting feature, but members will find their choices quite limited. At the end of February, only 12 items were available for purchase. And the majority were concert tickets, including some to such limited-interest events as a performance of the Orchestra of St. Luke's.

Continental also allows OnePass members to use their miles in conjunction with cash to purchase a range of products, from luggage to electronics to cookware, through the Miles for Merchandise feature. As an example, frequent flyers can purchase a Movado Museum watch on the Miles for Merchandise website for $622 plus 100 miles. But an Internet search for the same watch found it for sale at other online retailers at prices as low as $570, with no mileage add-on. So while Miles for Merchandise has a good selection, it carries a "Buyer Beware" rating as better deals may be available elsewhere.

Delta

The latest development in the non-flight award arena is Delta's Medallion Marketplace. Beginning in March, top-tier elite members of Delta's SkyMiles program can redeem their miles for more than 300 travel and non-travel awards, including electronics, home and garden items, outdoor equipment, and hotel stays.

At press time, redemption rates for the various awards had not been announced, so I can't evaluate the value proposition yet.

Read comments or add your own insight!
Please enable JavaScript to properly view and use this web site.