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The Honolulu Advertiser
Posted on: Sunday, August 16, 2009

Everyday deals can boost frequent-flier miles


    By Tim Winship

     • Suds spectacular

    Judging by the lack of bonus-mile offers over the past 12 months, it's clear the airlines have determined that frequent-flier promotions won't prop up the slumping demand for air travel.

    But that doesn't mean airlines have given up on their loyalty programs as revenue-generators during these profit-scarce times. Rather, the program operators have shifted their focus away from spurring more flights in favor of increasing non-travel transactions.

    Consumers who follow the airlines' lead can rack up scores of frequent-flier miles, without spending a nickel on a single flight.

    Mileage malls: The larger airline programs all feature mileage malls, extensive networks of online retailers that award miles for purchases. Delta currently boasts the largest, with more than 500 merchants, each of which offers up to 10 miles for every dollar spent. Since miles can be earned for everything from clothing to home furnishings, it's an opportunity to bolster one's frequent-flier account with everyday purchases. And when bonus miles are on offer, the miles multiply quickly.

    Among the best of the current mileage mall promotions is US Airways' double miles on all transactions completed at the Dividend Miles online shopping mall through Aug. 31.

    Also through Aug. 31, members of Midwest's program can earn 500 bonus miles for every $50 spent shopping at any Midwest Miles Mall retailer.

    Through Sept. 6, American AAdvantage members can earn up to triple miles for purchases made at the American AAdvantage eShopping mall; there are only nine participating retailers.

    Delta's latest promotion is also limited. While several retailers are offering quadruple miles, most of the 500-plus SkyMiles Mall merchants aren't offering any bonus miles at all.

    United is offering Mileage Plus members 1,000 bonus miles after spending at least $1,000 at participating Mileage Plus Mall retailers through Sept. 15. That's a paltry one extra mile per dollar spent, and only after spending $1,000.

    Miles for sale: It can still make economic sense to purchase a small quantity of miles to reach an elusive award level. And because such sales are so profitable for the airlines, they often sweeten the deal to encourage more transactions.

    Through Aug. 31, American is offering AAdvantage members who purchase 6,000 or more American miles a bonus of either 35 percent more miles or a 10 percent discount on a future American trip.

    And through Sept. 25, members of Delta's SkyMiles program will receive a 40 percent bonus when transferring miles to another program member's account. Naturally, there's a fee to transfer miles: 1 cent per mile, plus a $30 processing fee.

    Miles for dining: Earning miles through the airlines' miles-for-dining programs can be lucrative. Generally, program members earn five miles per dollar spent at participating restaurants. But through Sept. 30, members of the Alaska, American, Delta, Northwest, United and US Airways members can earn 10 miles per dollar spent for qualifying dines on Mondays, Tuesdays and Wednesdays. Same meal, different day, twice as many miles.

    Mileage economics 101: Why all the bonuses for non-flight activities?

    Whenever a frequent-flier mile is issued for anything other than a flight, it adds to that airline's top-line revenue and its bottom-line profit. So, how does American Airlines, for example, make money when I earn miles for charges on my Citibank AAdvantage MasterCard?

    Simple: Every mile Citibank awards me is a mile that they must purchase from American. And while Citibank is probably American's biggest mileage customer, it's only one of more than 1,000 companies buying American's miles to pass along to their customers as rewards for their loyalty. Airlines are in the business of selling miles. And it's a very big business indeed.

    The airlines are highly secretive about the earnings derived from the sale of miles, but my guess is that American, Delta and United mile sales each generate around $1 billion annually.

    Depending on the economic climate and competition, the airlines and their program partners push different aspects of the programs, with the goal of selling more tickets or more frequent-flier miles, or both.

    The current recession is calibrated to promote buying more than flying and for consumers to continue earning frequent-flier miles, even though they've cut back on travel or even stopped flying altogether.