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The Honolulu Advertiser
Posted on: Sunday, March 21, 2010

Redeeming miles gets easier with new offers

By Tim Winship

A number of signs are appearing to make it easier for frequent-flier program members to redeem their miles:

One-way awards: In February, United, American and Delta, the three largest U.S. carriers, united in allowing members of their loyalty programs to redeem miles for one-way flights, for half the number of miles required for a comparable roundtrip.

Under the old roundtrip-only policy, a single flight segment with no award availability forced the mileage-redeemer to either pay twice as many miles for an unrestricted round-trip award ticket, or to compromise travel plans to the airline's spotty seat allocation.

Now, faced with a flight leg with no available coach award seats, the traveler has the option of paying more miles for an unrestricted seat on just that segment, or of booking a restricted first-class seat for the same number of miles required for unrestricted coach.

Cash and miles: United introduced its Miles and Money feature hand-in-hand with its one-way awards. Mileage Plus members can use a combination of cash and miles to book restricted roundtrip coach awards on United and United Express. So, for example, a roundtrip flight between San Francisco and New York could be booked for 25,000 frequent flyer miles, or, using Miles and Money, for 15,000 miles plus $120. So in effect, you are buying 10,000 miles for 1.2 cents apiece. Based on additional test bookings I made, the effective price of miles varied from just under 1 cent to just under 2 cents the airlines generally sell miles for around 3 cents each.

Delta offers members of its SkyMiles program Pay with Miles, available to holders of American Express credit cards linked to the program. And in most cases, the miles have a value of just 1 cent each. On the other hand, seats booked with Pay with Miles are not capacity-controlled, so the hassle factor is all but eliminated.

Award discounts: Another way to help loyalty program members use their miles: Make award travel cheaper. The discounts are offered exclusively on low-demand routes, during low-demand periods. The new industry leader in award discounts is United, which over the past 18 months has offered eight award discounts.

Nonflight awards: Non-flight awards aren't new. But they've been in short supply in recent years, because it costs the airlines more to give away an Apple iPod, say, than it does to award a free seat that would have gone unsold anyway.

Delta just this month rolled out its SkyMiles Marketplace an online portal where SkyMiles members can redeem their miles, or a combination of miles and cash, for more than 6,000 items, including hotel rooms, car rentals, consumer electronics, clothing, jewelry, and so on. United late last year began allowing all Mileage Plus members to cash in their miles for hotel stays and car rentals.

Revenue-based program: Members earn points in direct proportion to the price they pay for their tickets. And when redeeming their points, the award prices lockstep with the fluctuating prices of paid tickets. The benefit is twofold. First, there's no need for capacity controls, since awards are simply priced according to supply and demand. And second, they provide a measure of transparency absent from mileage-based programs.

You may never get spectacular value by, for example, redeeming 25,000 miles for a ticket that otherwise would have cost $1,800, as you might in a traditional mileage program. But in a revenue-based program, you can count on predictably decent value, and unrestricted availability.

What accounts for the change in direction? It's partly business, partly political. Better loyalty programs drive more loyalty and the Obama administration has made it clear that it's much more inclined to lean in the direction of protecting consumers' rights. Enjoy the ride.