Most (all?) frequent flyers feel they should be able to do whatever they wish with their airline miles. “Sell them, give them away, barter them, trade them—whatever, I earned them so they’re mine to do with as I choose.” That’s the prevailing attitude.
The airlines feel very differently, and have formalized their objections to the free exchange of miles, explicitly prohibiting the sale, purchase, or barter of miles in their program rules.
Of course the airlines do permit miles to be bought and sold under very specific circumstances, particularly when the transactions are under the control of the airlines, at prices of their choosing, and with revenues ultimately ending up in their coffers.
So most airlines operate nice, and nicely profitable, side businesses, selling significant quantities of miles for around three cents each. In the great majority of cases, those transactions are handled by Points.com, which has developed the shopping cart software widely used by airlines to handle mileage sales.
Always on the lookout for new ways to work the mileage exchange angle, Points.com has launched the beta version of its Global Points Exchange (GPX), allowing Points.com members to trade miles and points of participating programs. So far, the list of participating programs is limited to American, Aeroplan, Alaska, Frontier, and Icelandair. But more airlines, and hotel chains as well, will almost certainly elect to participate in the future.
The exchange facilitates the trading of miles. So, for example, an AAdvantage member might need 5,000 miles to top off her account, and also have miles in an inactive Alaska Mileage Plan account. She could offer to trade 5,000 Alaska miles for 5,000 American miles. And someone else, in need of Alaska miles and with an excess of American miles, might agree to the terms of the trade.
Members are free to propose any exchange rate they choose, but for airline miles, trades are likely to be one-for-one, at least initially. Members can either post a trade request, specifying what type of miles they want to give and receive, or browse the offers of other would-be traders.
Naturally, trading miles is not free. Traders pay a fee comprised of two parts, a $6.95 “processing fee” for Points.com, which is waived for the time being, plus trading fees imposed by the airline program. To trade American AAdvantage miles, for example, the trading fees would be $80 for between 1,000 and 5,000 miles, $130 for 6,000 – 10,000 miles, and $180 for 11,000 – 15,000 miles.
It’s a nifty idea, but one that is undermined by a weak value proposition. As is the case with purchasing miles from the airlines, the fees are too high to justify the flexibility and convenience, except perhaps in emergencies and when very small quantities of miles are involved.