<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by johnndor:
To some extent they are a liability.
If I wanted, I could transfer miles to Hilton, then exchange for merchandise. Granted, some of the exchange rates are pretty poor, but this is how they limit the number of miles exchanged for merchandise - by giving poor conversions.
Otherwise, everyone would be getting tvs and bicycles for their miles, which would cost the airline cash.</font>
You are now getting close to the "true market value" of a FF mile. It is a value at which the mile can be readily exchangeable. I would argue that the value for a Hawaii First Class ticket is not applicable, since your miles cannot be readily exchanged for that product.
As alternatives to air flight become more prevalent for awards, you will see what those miles are worth. I continue to hold that the everyday value is about a penny, but more if you are willing or able to find additional award seats (ex. you are elite level).
I have not paid more than $200 for a coach ticket since Sept. 11, so my personal value of miles has declined.