HAVING a hard time exchanging those frequent-flier miles for a ticket? How about a box of chocolates instead?
To assuage mounting traveler frustration over the difficulty of booking frequent-flier tickets, airlines are offering members a cornucopia of goods that have little to do with flights. Starting next month American Airlines plans to let its frequent fliers use miles to book car rentals and hotel stays online. Earlier this year, Delta revamped its online Marketplace, smoothing the purchase process and expanding the merchandise to include everything from a ¾-pound tin of Godiva chocolates (8,500 miles) to laptops (285,000 miles). And next month, Delta will allow all members of its loyalty program to exchange miles for gift cards for stores like Gap and Lands’ End — a perk previously reserved for elite fliers and Delta credit-card holders. Meanwhile, United has created an entire ad campaign around alternative award options, including hotel and car rental bookings, and is billing itself as the airline that “wants you to use your miles.”
Loyalty Without Seats?
Airlines had to do something to convince loyalty program members that all those miles they’ve been racking up are still worth it. Landing the flight you want using frequent-flier miles has long been a challenge, but it’s gotten worse over the last two years as airlines have shrunk capacity to increase profits. Reward trips in the United States dropped 10.3 percent to 21.7 million last year from 24.2 million in 2008, according to the latest data compiled by IdeaWorks, a loyalty program consulting firm. And with airlines under continual pressure to pack flights with paying passengers, that free ticket will only become more elusive as travel demand rebounds.
“If consumers don’t see any potential reward at the end of the mileage-earning road then they’re going to start disengaging from these programs,” said Tim Winship, editor at large for SmarterTravel.com and the publisher of FrequentFlier.com. “When that happens the airlines lose the significant revenues generated from the sale of miles to all the program partners.”
Enter the chocolates. Alternative awards attempt to address “the perception that may exist among some travelers of difficulty in using their miles,” said Tom O’Toole, chief operating officer of Mileage Plus Holdings for United, which has also been promoting a guarantee that any open seat on its plane can be booked with frequent-flier miles — so long as you’re willing to dole out enough miles. “We study intensively what travelers want in a loyalty program, and travelers told us they want to be able to use their miles.”
Doing the Math
Hotel rooms, rental cars, even chocolates may sound like a good deal if you’ve ever tried to book a frequent-flier ticket only to be thwarted by black-out dates and tiered mileage calendars showing that the one day you want to fly requires double the miles. But are the alternatives worth it?
The answer to that question depends on how you value your miles. The conventional calculation is to divide the price of a ticket by how many miles you would spend for the same thing. Using 25,000 miles for a $350 ticket, for example, would yield 1.4 cents per mile. By contrast, a KitchenAid 10-piece porcelain cookware set that costs $150 on Amazon.com is listed on United’s online shopping page for 24,800 miles, or 0.6 cents per mile. Here, the free ticket is clearly the way to go.
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