These days, even the most infrequent fliers try to squeeze as many miles as they can out of each trip, in the hopes of one day achieving what has become the holy grail of air travel: the free flight.
But while consumers are dutifully stacking miles and points, the airlines may be counting on those "rewards" going bad before customers can cash in. At least one-third of all points and miles are never redeemed, according to a report published by Colloquy in April 2011.
The ballooning U.S. rewards industry -- which is based on brand loyalty programs like those used by airlines -- was valued at $48 billion last year, and that's a conservative estimate. But much of that gold remains buried treasure that consumers hoard yet are unable to access.
In the case of frequent flier miles, it may be difficult to unlock free flights for a number of reasons -- from a low number of rewards seats (PDF) to hidden taxes, as Citibank customers found out when they were sent 1099 forms for grossly overvalued "bonus" miles earlier this year.
Do consultants hold the key?
Consumer advocate Christopher Elliott reports in the Orlando Sentinel that many individuals who work in the travel industry are now offering to navigate the complicated ins and outs of frequent flier miles for those willing to pay. Elliott's article highlights the services of Ryan Lile at the Savvy Traveler, who, for $75 per hour, will happily put your miles to use.
"Most people will drive themselves crazy trying to book flights that are just not there. It can be a nightmare," said Dennis Kutwal at CookTravel.net. Kutwal is a pro at negotiating the ins and outs of airline frequent flier miles and Amex Pay With Points.
Whether it's United's Mileage Plus or Southwest's Rapid Rewards, each airline has a program that promises consumers they will be rewarded for their loyalty. Many credit cards also issue a form of currency that can be used towards air travel. But when it comes time to sell or use this funny money, you'll quickly find that not all miles are valued at the same price.
Each point you earn is generally worth anywhere from .5 cents to 1.5 cents, but trying to figure out their exact value in real money can be maddening. If you buy airline tickets with American Express Membership Rewards, you get a value of one cent per mile. When airlines sell you miles, they may charge up to 3 cents per mile. When your head starts spinning, you can turn to the equivalent of an online banking service, like Points.com, to manage your miles.
Airlines devalue points and miles.
In 2010, IdeaWorks placed thousands of queries for rewards seats and ranked 22 airlines by the frequency with which they accept frequent flier miles for requested flights. The study found that Southwest Airlines' Rapid Rewards program placed first for availability, while US Airways' Dividend Miles program came in last.
How does Southwest manage to accommodate over 99% of customer requests to purchase tickets with frequent flier currency, when US Airways can only accommodate a paltry 10%? The answer lies in the number of coveted rewards seats airlines choose to set aside.
Photo courtesy of IdeaWorks.
Even some of the most accommodating airlines will limit their liability for rewards seats by enforcing strict expiration dates. In the travel world, expiry policies for frequent flier miles are notoriously unclear -- not just ambiguous, but, in some cases, poorly communicated as well.
Thankfully, the The Global Traveller Blog took the time to group major airlines by the duration of their miles. If you've been racking up miles on Delta, Shanghai or TAP Airlines, you can breathe easy -- your miles don't have an expiration date. United and American Airlines' miles expire after just 18 months.
Then things start getting more complicated. Air France's miles are forever -- if you have elite status. Air Canada's miles stay fresh for one year after your last activity or seven years after earning them -- whichever comes first. Miles from Spirit Airlines get tossed out after only six months.
So, slip on your bifocals and read all the fine print, before your miles go south. Or you can pay a consultant to do it for you.
Contact Blake Fleetwood at JFleetwood@aol.com. Additional reporting by Caroline Lewis.
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