Old Feb 23, 07, 9:50 pm
  #1  
mikeinseattle
 
Join Date: Jun 2001
Location: Seattle, WA, USA
Posts: 326
Are frequent flyer programs trying to increase the CASH value of their miles?

I'm sensing as frequent flyer programs evolve even further, they are trying to set a base for the cash value of their points. Many programs are getting more and more into non-airline/hotel redemption such as gift certifictates and merchandise. This trend is evident in the following ways:

1. Airlines opting out of the American Express Membership Rewards program. Airlines usually have to sell their points/miles at a hefty discount to participate in the program. I've heard .8 cents per mile is the transaction rate between AMEX and its partners.

2. Redemption going higher. Continental, UA have converted the ratio for transfers between Starwood to a 2:1 ratio (2 starpoints for 1 airline mile)

3. Lack of promotional bonuses: Continental has not had a transfer bonus for a long time now (approaching 1 year). Before, 20% transfer bonuses were a given every other month.

Airlines and hotel programs have set a standard where they are trying to set a cash value of a minimum of 1 cent per mile and are trying to do everything possible to meet this cash value.
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