Dec. 10 - Should you buy someone else's airline miles? Or sell yours? You see the small ads in the travel sections of newspapers, including USA Today - offers to buy or sell airline reward tickets. It's an arena fraught with peril, but that doesn't mean you can't score a great deal, especially when it comes to business- and first-class tickets.
WHAT'S AN airline mile worth? It's a question with no exact answer. A friend of mine recently cashed in 5,000 American Airlines miles in exchange for three months of service from America Online. If you value miles at 2 cents each, as has traditionally been the yardstick, she paid the equivalent of $100 for about $66 worth of AOL. If you value each mile at a penny, however, she got a deal by "paying" only $50 worth of miles.
Of course, the value of frequent-flier miles can also depend on how badly you need them or how many you have that you can't use. If you're drowning in miles, you probably value them less than someone who needs just a couple thousand more to snare a free airline ticket.
The question of a mile's worth grows more relevant every day, as both the number of ways of accumulating miles and the options for redeeming them increase. Once, miles got you airline tickets, hotel nights or rental cars. Today you can use miles for all kinds of goods and services, from magazine subscriptions to consumer products.
And the question of a mile's worth is something you should weigh each time you consider using your miles for an airline ticket. If you can buy your ticket in advance at a good price, it may be worth paying cash and saving your miles for a time when you have to travel at the last minute or can't find a well-priced ticket.
But what about the mileage mills? This cottage industry of buying and selling miles is all about establishing the value of airline miles. Search online or check out the classifieds in major newspapers and you'll find brokers willing to buy your excess miles or sell you discounted tickets obtained by cashing in other peoples' miles.
Should you bite?
OFFICIAL AIRLINE POLICY
The airlines are happy to let you cash in your frequent-flier miles to obtain a ticket for a friend or family member. But it's against airline rules to sell your miles to someone for a ticket. Or to buy miles. Note that it's not against any law - just airline rules. And airlines say they'll confiscate any ticket they can identify as having been obtained that way.
But if you're flying on an award ticket secured for you by someone else, how does an airline know whether or not that someone else is your boyfriend, cousin or stranger? The answer is, an airline doesn't know. And that's the loophole that has allowed airline mileage brokers to prosper.
Some airlines seem to care more than others. There's a lively trade in tickets on Southwest, the airline considered by brokers to be the most lenient. United Airlines is said to be very cranky about the buying and selling of its award tickets.
No matter what airline is involved, the mileage broker business is unregulated. Call the phone number in one of those ads offering award tickets and you might get the pager of someone who, it turns out, may not be very eager to give you his name or discuss the nature of his business. On the other hand, some brokers are happy to provide names and explain how they do what they do. And they even seem to have actual offices.
Three brokers who are forthcoming about what they do are Travel Planners International (800-859-8695), Forbes Travel (800-621-3968) and Travel Enterprises (800-239-8269). And two Web sites working checking out are www.mileagebrokers.com and www.awardtraveler.com.
SELLING AND BUYING
Brokers match people with a surplus of miles with people who want miles. The broker obviously makes a profit by selling miles for more than he or she pays for them.
Here are a few things you should know:
Most brokers won't buy less than 25,000 miles - the number normally needed for a round-trip, domestic ticket.
Brokers will usually only purchase your miles when they have a buyer. They'll keep your name on file along with a notation on the number of miles you're willing to sell. Then, should someone call needing a ticket on the airline with which you have miles, you'll get a call.
This is a cash business, and the risk is almost all on the part of the consumer. If you sell your miles, you'll get paid when the miles are collected; if you're buying, you'll get your miles after you've paid cash. Credit cards are not always accepted. That's a drawback, because you can't cancel the charge if you don't get what you were promised.
Keep in mind that many award tickets have black-out dates, so be certain the ticket you're buying can be used on the dates you need it.
Most tickets aren't refundable.
If you're selling miles, most companies will pay you between 1 and 2 cents per mile. If you're selling a lot of miles, such as 200,000, you could reap $3,500. If you're buying an award ticket, you'll pay a price that is below retail. Otherwise, of course, what's the point?
LET'S DO THE NUMBERS
I asked my research associate, Karin Palmquist, to call 10 ticket brokers and price a variety of tickets. She found that some companies (such as www.mileagebrokers.com) refused to deal in domestic coach tickets. The company's Web site offers 50 percent to 70 percent off business and first-class tickets only.
Travel Enterprises quoted a price of $650 for a domestic, round-trip coach ticket. That may seem high at first glance, but remember if you have to travel somewhere at the last minute, you could easily pay twice as much. If you can buy your ticket through normal channels two or three weeks in advance, however, you should be able to beat that price.
Prices vary depending on date of travel and airline, but for business-class trips between the United States and Europe, ticket prices range from $2,200 to $3,000 round trip, $2,800 to $3,800 for first class. That's at least 50 percent less than you'd pay if you bought directly from an airline.
Round-trip tickets between the United States and Asia sold for $2,200 to $2,700 in business, $3,600 to $3,900 in first class.
Domestic business and first-class prices were $850-$1,000, significant savings over retail prices.
One reason you're paying less is that you're accepting some risk. You may be advised by a broker that if an airline employee asks if you purchased your award ticket, you should lie. Some brokers will even put you on the phone with the person whose miles you are buying so you can become acquaintances. Well, sort of. You may be given the name, address and phone number of the person whose miles you are using in case you're challenged by an airline ticket or gate agent.
Whether you're buying or selling miles, remember only you can determine how much an airline mile is worth. Mileage mills offer considerable savings, especially for last-minute travel and for business- and first-class tickets. But if you have difficulty lying to airline employees, then buying a ticket through a mileage broker may not be for you.
One trip in coach class from New York to Singapore, however, might change your mind.
Rudy Maxa's column appears weekly in MSNBC.com's Living & Travel Section. Maxa is host of "The Savvy Traveler," a one-hour travel show heard coast-to-coast on nearly 200 public radio stations. He is also a contributing writer to Worth magazine.