fassy

I'm not 100% positive I'm following you hear? Who you want to take to court for what?

What I was saying is: my colleague has a lot of miles but just don't use them. He will never reach the $ per mile the airline has calculated for a mile to be worth while you as someone who knows go to use the Miles effectively for luxury travel will cost an airline more per mile than they anticipated. But in the end I guess the airlines do that calculation and will put the redemption levels in a way they break even or profit out if it.

Also, Miles in most programs expire and I have not seen any successful lawsuit to stop that. Weird enough as my money in the bank (hopefully) will not expire.

Also there are a couple of studies which show that mileage programs lead to higher travel cost for the company since employees will try to fly their preferred airline. Even if there are certain safe guards like the travel tool giving you the cheapest option for a given flight... There are ways around it like changing the time window for departure/arrival to filter out the cheaper alternative or just wait another day or two to book the trip and see if that changes the cheapest option... If you want to make sure this doesn't happen the easiest way is to get rid of the incentive to be too picky about the airline you're flying with zero mileage earning tickets.

pinniped

That's just it: they expire, because the airline owns them. They don't belong to me, so I have no say what happens to them.

If it is somehow ruled that *I* own them, and the IRS determines them to have a basis, then it won't take long for somebody to make a very cogent argument that an airline can't unilaterally take my property away from me. IANAL, but it seems like a 1st-year law student could probably form a pretty strong case for that.

I was just saying that if we all own our miles, your buddy sitting on half a million just sells them to the first willing buyer and is done with it. (If he chooses, of course.) You wouldn't have people sitting around on piles of unused miles, hamstrung in part by the fact that in today's rules the airlines own the miles and can legally prevent you from selling them. (Or...take them away if you do...)

fassy

Ah, allright... Yes. In theory correct but that view is different from country to country.

Even though the airline owns and taxed the miles like in Lufthansa case, it was seen as income for the awardee of the miles. Weird world, right?

I guess in the end nothing will happen for a long time but these tax and extra benefit discussions are a reason a lot of companies (at least in Europe) try to avoid talking about by just having the policy to not ran miles or regard them as company property.

Actually I also have to tax my cellphone usage since I get free private calls, the use of the company laptop for private mailing etc. nobody does that but I know e.g. Companies which due to that prohibit private use of any company asset. I think the only thing which gets taxed almost always and everywhere is a company car.

GUWonder

Redemption is not capped at a fixed value per mile in most programs, even as they do assign a value for purposes of reporting/recording liability and revenue recognition.

fassy

I guess you can say it is. The airline has some idea what a mile is worth to them by looking at what they will need to give you for it. Assuming the cap is what they use also for their financial reporting: .3c, so 105.000 miles costs a r/t in C Europe-US on LH which is then 315€ plus scam charges (YQ) of 500€ which will cover the extra fuel, taxes etc. the only real cost they have to transport you is minimal (extra meal etc) and should be covered by those 815€. Same calculation holds for first class while for economy the airline probably even earns money on the award ticket. The seat would have stayed empty most likely anyway otherwise they would not open it up for redemption so the calculation that the reward ticket was worth thousands of €s might be true for the lucky frequent flyer but hardly reflects the real cost the airline has to calculate.

Looks a bit different for the U.S. Programs without YQ but still they will do the math and put some limit on the value for miles one way or the other even thought they will not tell you: hey, your mile is worth xx, since then people would probably not redeem under that number and the model which currently compensates the few maximizes with a larger mass of blissfully ignorant award pax will collapse. Looking at the development of the U.S. FFPs over the last years they are probably at that point that too many people the to maximize which has become a more public sport since the Internet with all the forums and blogs makes it more easy to leave about it. But in theory I still believe there is a fixed cap value on a mile somehow.

pinniped

I will fully admit that I'm just speculating here. We all are. The full taxation of miles under U.S. tax codes (e.g., as assets held by every individual account holder) would open so many cans of worms on so many tangentially-related legal fronts that I don't think anyone has any real idea where it would lead.

Cloudship

Are we talking about loyalty programs such as Hilton Honors and Avios, or credit card rewards programs? I think they are different. Credit card miles belong to whoever is doing the paying - so if it is a company credit card they are paying, they get the points.

Now this is only from a US point of view, but I don't understand how they would be able to take or tax loyalty program points. That would imply they are an item with financial value. That would imply they would need to be transferable and you could hold onto them. Once the airline or whoever gave them to you, they would be yours to do with as you please.

pinniped

A think the general armchair-lawyerin' being done here would suggest that the points are always the property of the issuer, issued in the name of the flier (airlines), guest (hotels), or payer (credit cards) - where it's most feasible in a corporate setting that the credit card points (AMEX MR, Thank You, Chase, etc.) the likeliest to flow back to the employer.

Efrem

It seems that you're talking about points for paying. Most of this thread is about points for flying, awarded to the personal account of whoever's butt is in the seat regardless of who paid for the ticket or how.

The question here is: I make five business round trips between Boston and California, at 5,000+ miles each for a total of 25,000+ miles earned from business travel (regardless of who paid for it and who got credit card points, or airline points from an affinity credit card, for paying). Now my sixth trip is coming up. I can book an award ticket using those miles. Does my employer have the right to require me to do that, or doesn't it? If it does have the legal right, is it a smart move to require that I use them that way?

Badenoch

From the airline's perspective those points belong to you not your employer or anyone else who paid for your ticket. You can agree with your employer's request to use them for a business trip or you can tell them to pound sand. The employer has no right to the points.

What happens if you didn't have a miles account or had spent the miles on personal travel or something else? What about a colleague who isn't collecting the miles? Would his/her trip be paid for?

MaxBuck

The employer has every right to the points if the conditions of employment dictate that they do, and to require they be used at the company's direction. If the company policy is either vague or unstated, things become unclear, which means it becomes a matter between employee and supervisor - a good reason for companies to establish written policies if they intend to keep the miles for themselves. Case law isn't at all well established on miles ownership.

The correct response to this question was offered in the second post in the thread. Lots of hogwash has followed.

fassy

You forget that laws are very different across the globe and what is written in the employment contract or some policy might not be legally binding or even lawful.

More often than not some of the practices and policies in large companies have been ruled to be unlawful when challenged in court, e.g. there have been ruling in some countries that the common travel/company policy saying that travels out of work hours will not counted as working time is not legal. Other examples are that countries actually say it is not legal to get reimbursed on travel meals but the company has to pay fixed taxfree per diem rates, no matter what the travel policy says.

Thanks for the compliment

pinniped

Has there been any ambiguity to date? The current state is that the airline owns the miles with no limitations, regulation, or oversight. Has this ever been seriously challenged by anyone with any degree of success?

MaxBuck

First, my remark related to USA; good catch by you. I have no idea what legal circumstances might dictate elsewhere.

Second, I'm unaware of any legal challenge to employers' use of "their employees miles." Unless and until such challenge establishes case law, employers have valid claim to the miles so long as their employment policies so dictate. Again, USA only here.

Ownership of FF miles ad litteram is not the issue here; for all practical purposes (and given certain limitations) they belong in fact to the frequent flyer, who can then redeem them for flights and other stuff.

Efrem

Nobody disputes that the airline owns the miles. However, the airline grants, under the terms of its frequent flyer program, permission for the account holder to use the miles in his/her account for rewards in the name of anyone he/she designates. An employer can require that, under these terms, miles earned through employer-paid travel be used to benefit the employer. Accepting this requirement can be a condition of employment, at least for people hired after the requirement is put in place.

Whether such a requirement would stand a legal challenge, and whether it's worth imposing in terms of morale impact versus money saved, are separate issues. I don't know about the first of these. When it comes to the second, I'm in the camp that says it's not worth it.