This article was published March 9, 1995 in the Los Angeles Times.
  Buying Miles Is Thrifty - But Iffy
  By Harvey D. Shapiro
 
The irony of the frequent-flier game is that those who accumulate the most mileage may have the least use for their winnings.

"If you fly a lot, the last thing you may want to do is get back on a plane again," says Stan Dale, editor and publisher of Mileage & Points International, a newsletter for participants in frequent-flier programs. Thus a sizable semi-underground market has developed to transfer frequent-flier awards to those looking for cheap ways to travel.

The marketplace definitely seems to be growing, says Todd Clay, manager of corporate communications at Delta Air Lines in Atlanta. Whether you decide to join the players may depend not only on your travel habits and your bankbook, but also on your moral code. Trading in coupons is not quite illegal, but it's not exactly kosher, either.

Key to the trading are coupon brokers, who bring buyers and sellers together. They typically place small ads in the Sunday travel sections of big-city newspapers.

"There are hundreds of these brokers," Dale says. "It's a vibrant market. Some brokers will not buy the mileage until they've got a customer, and some will buy it outright without any customer involved."

Brokers ask sellers to exchange a certain number of miles from their frequent-flier accounts for a so called award, turning over the award certificate to the broker. When a passenger accumulates 25,000 miles, major airlines usually offer an award for a free ticket to any city they serve in the United States; international awards may require 60,000 miles or more. Prices vary, but sellers generally get $12 to $15 for each 1,000 miles accrued, or about $250 to $300 for a domestic ticket.

The broker then sells the certificate to a traveler at a price that may be as much as 50% off the regular fare. It might not save the traveler much over a deeply discounted, advance-purchase economy ticket on a highly competitive route, but it means real bargains on business class and first-class tickets, as well as on overseas routes.

Here's the catch: Frequent-flier programs prohibit selling the awards. They do allow you to give awards away--in some cases to relatives and sometimes to anyone you choose. So the buyer's apologia is that the award is a gift.

"If you're going to do this, you have to keep your mouth shut," Dale says. If users let it slip that they bought the award, their tickets can be confiscated and they will be left home--or worse yet, left far from home.

Clay says the industry's position is simple "There is a contract between the airline and the member of the frequent-flier program, and the rules spell out that the award is for the frequent flier and his or her family."

The airlines are serious about this, he says: "Delta took it to state court in Georgia, and other airlines have done the same in other states. And it has been found illegal."

Well, yes and no.

In New York, Mikki Seligman, a spokeswoman for state Atty. Gen. Oliver Koppell, says of trading in awards "There is no law in New York state that says it's illegal. It's basically a contractual issue between the airline passenger and the airline." But if you're found to have violated that contract by trading in awards, she says, "the airline may throw you off the flight. This is a flourishing industry. We know it exists, but our office has no particular jurisdiction over it."

According to Dale, courts in other states have held that an airline can refuse to accept such tickets, but it can't sue the people tendering them because it hasn't suffered damages; it's just that Mr. X sat in Mr. Y's seat.

"Some of the carriers are more aggressive than others in trying to enforce this," Dale says. American Airlines is one. Delta is also considered a hawk.

"If we become aware of it, the ticket will definitely be confiscated, and the frequent-flier account can be closed," Clay says. "We've done it on numerous occasions."

Are the airlines playing fair? "I sympathize with the airlines for trying to control their programs," Dale says, "but on the other hand, if I earn a free ticket, shouldn't I have the right to decide how to use it?"

Despite tough talk from the airlines, he says, your chances of getting away with buying an award are pretty good. And you can save a lot of money. The real question is whether you think it's the right thing to do."
 

 

 

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