Slightly off topic, but perhaps interesting to some FTers on how miles are valued by the companies giving out the miles/points.

I used to work for a .COM that allows redemption of airlines miles for points in their membership program. We bought mileages in very large chunks from all major US airlines, I seem to recall multiple million miles per transaction, and we were paying about 1.5 cents per mile depending on the program. We then mint our own currency, and sell them to merchants (such as Macy's) at about 2 cents per mile, which the merchants can award to their customers.

Our currency could be redeemed one point for each airline mile, and we make our profit on the cost differential, currency spoilage, as well as professional service fees.

Believe it or not, there are expiration for these millions of miles that we bought. We also set expiration for the points in our currency sold to merchants. Therefore there are occasionally promotions for particular programs with miles close to expiration that we will just give away.

Another interesting fact is that the redemption for miles are always highest for American Airline AAdvantage miles. UAL runs a clear second, and the rest of the airlines combined probably were less than AA by itself.

Redeeming airline awards for 2 cents a mile is basically a break-even deal. Which translates to about 1 cent per point for Hilton HHonors.

Each airline's redemption communication process is different. It ranged from using FTP, email (secured and unsecured), mailing a floppy of redemption data, to sending out the files to be converted to Unix format and transferred to a magnetic tape before sending to the airline. This is probably part of the reason that why it takes varying amount of time to get your transferred points to show up. Also, this process happens on a recurring intervals, a few daily, some weekly, some monthly and some on less regular basis.

Each airline has different validation rules for account numbers. Most has check digits that we have to embed in our software that will kick out invalid account numbers. They usually also require matching names and accounts, and kick out non-matches back to us. The error communication process often uses similar technology as the outbound, tapes, floppy, email, ...etc. Often times, when a particular transaction errs out, it takes manual intevention to correct it. There are sometimes transactions that got ping-pong back and forth and took forever to resolve.

I will try to add to this post as I recall them.

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International airlines seat desirability map


[This message has been edited by Jet2K (edited 03-01-2003).]