New site to use your miles
 

MilePoint.com to Launch Online Shopping Venture Using Frequent Flyer Miles

Delta, Northwest, Continental, US Airways, TWA, America West and Hilton Lead Participants

You've Got Money!(SM)

MINNEAPOLIS, Aug. 29 /PRNewswire/ -- MilePoint.com today announced the first program that allows frequent flyers to convert their miles and points into a new online currency, MilePoint Money(SM), which can be used toward the purchase of goods and services from more than 100 online merchants.

Delta Air Lines, Northwest Airlines, Continental Airlines, US Airways, America West and TWA are the initial airlines that have committed to participate in the program, along with Hilton HHonors Worldwide. Membership in these loyalty programs totals more than 45 million unique individuals who have accrued an estimated 1.6 trillion miles and points.

MilePoint is working in association with the web's largest e-tailer, Amazon.com, which will allow MilePoint Money to be used to purchase Amazon gift certificates on the MilePoint site, and SkyMall with over 100 retailers including Sharper Image, Orvis, The Wine Enthusiast, Hammacher Schlemmer and Frontgate. MilePoint is in discussions with numerous major online merchants that are anticipated to sign on before launch.

To capitalize on the holiday 2000 buying season, the site will be available for online transactions by the end of October. Currently the website -- www.milepoint.com -- is accessible to frequent flyers who want to find out more about becoming a MilePoint member and to online retailers who want to determine what is required to become a MilePoint merchant.

"Airlines and hotels have been looking for new ways to create more value for their customers' accumulated miles. By turning miles and points into online money, we will literally release billions of dollars of purchasing power into the online marketplace," said Bob Crandall, chairman of MilePoint's board of advisors, and former chairman and CEO of American Airlines. Crandall added, "This is the natural and logical evolution of the current frequent flyer programs."

MilePoint converts each mile into MilePoint Money at a two cent per mile rate, which equates to more than $32 billion in online purchasing power from the current audience of over 45 million individuals. MilePoint's proprietary and patent pending operating system, Cambio Technology(SM), manages the conversion of miles into online currency.

Mark Lacek, chief executive officer of MilePoint, said that we will deliver "the largest and most demographically desirable audience the Internet's online merchants have ever seen. Based on an average frequent flyers' accumulated miles, many members will have hundreds of dollars just waiting to be spent online. Some members will literally have thousands of dollars." Lacek said that frequent flyer demographics show over 74% have access to the Internet, 88% shop online and have a median household income of $74,000.

Using MilePoint will be very easy. Frequent flyers register their airline and hotel account numbers in a secure environment at the MilePoint.com website and shop at the MilePoint Mall(SM). When transacting at a MilePoint merchant, the member can apply their MilePoint Money as partial payment toward their purchase during the check-out process. MilePoint forecasts that an average of 10% and up to 25% or more of a member's purchase can be paid for by converting their miles.

MilePoint.com was co-founded in October of 1999 by Mark Lacek, Bill Jansen and Bruce Samuel. Lacek is a respected loyalty marketing industry veteran who helped establish the very successful Northwest Airlines WorldPerks program. He left in 1991 to start The Lacek Group, a Minneapolis-based loyalty marketing firm that grew to over $40 million in billings. The company was recently acquired by advertising holding company WPP and its Ogilvy One division.

Other industry leaders in executive or senior advisory roles at MilePoint include A.B. "Sky" Magary, former president of the Shuttle by United, Bob Coggin, former executive vice president of marketing at Delta Air Lines, Bob Briggs, former president of National Car Rental, Randy Petersen, renowned loyalty expert and publisher and editor of industry trade publication "Inside Flyer," Bill Jansen, MilePoint's chief technology officer and architect of the Cambio Technology, and Bruce Samuel, MilePoint's chief financial officer and previously chief financial officer of The Lacek Group.

The company is based in Minneapolis.

SOURCE MilePoint.com

/NOTE TO EDITORS: Additional information, background and visuals are
available at the www.milepoint.com website in the Press Room area, or contact
David Hakensen at 952-886-7412./

/CONTACT: David Hakensen of MilePoint.com, 952-886-7412, or 612-872-3716/

/Web site: http://www.milepoint.com/

I just tried to view the site but it says I'm not aauthorized. Not a very promising start!

The site is working now. The brief delay gave me time to read the whole press release. Looks like this is for real, with Bob Crandall and Randy involved.

I perused the site, and it looks like a good concept, but the examples they had seemed to limit the mileage use to 10% of the purchase price....

10%, big deal. The only way I would use this site is if the prices are rock bottom to start with. If the airlines have anything to do with this, the product prices will probably be 20% higher then what I can find now.

Yep, I was actually starting to believe the 2 cent fallacy until I saw the limit on how many you can redeem. Obviously these guys aren't giving away free (or 2 cent) lunches.

That's about as appetizing as the "Buy a flower bouquet for $75 and get 500 FREQUENT FLYER MILES!" or buying overpriced crap from the inflight catalog because you get EXTRA FREQUENT FLYER MILES! Gimme a break. Look at the vendors - this is not about saving customers any money: SkyMall with over 100 retailers including Sharper Image, Orvis, The Wine Enthusiast, Hammacher Schlemmer and Frontgate.

It's interesting, though, to see that Randy Peterson is in bed with Crandall on this.

What the heck does this mean?

---
MilePoint forecasts that an average of 10% and up to 25% or more of a member's purchase can be paid for by converting their miles.
---

Whether I use this or not will depend on what "or more" means...

I had a similar reaction. I have some 5K "stranded" TWA miles which I might someday convert to Hilton Honors. At 2c per mile, I would immediately use it for a $100 purchase at retailers like Amazon or Barnes&Noble. But as Tino points out, there is no free lunch ....

No, if you are "capped" at 10% of the total then you have to use your 5K miles for a 10% off coupon on A $1,000 PURCHASE! You still have to cough up $900 to use them up!

Yippee! What a deal!

If the "cash value" of miles are worth a cent (the value at which you can convert miles to $$$, not on fictionally priced Intl FC tix), and arguably 5K miles in an account are worth zero, then what you are getting from buying incredibly overpriced knicknacks is a 5% discount, something you can get from all of these places if you look long enough/buy gift certificates/find web specials/etc if you really wanted to spend the $$$.

[This message has been edited by Tino (edited 08-29-2000).]

In the actual launch, there are no restrictions on the price of what you are buying....it could be something for only $15...certainly not having to buy $1,000, etc. The real approach is to shop just as you would normally do, with the ability to turn some of your miles into money at the checkout counter.

We'll have to wait to see the prices of items before deciding if this is a good deal or not.

They don't specially say you can only use miles for 10% of the purchase, unless I missed it. They seem to quote the 10% as an estimate.

This may in fact be a nice deal for orphan miles.

The issue is not what the price of the item is. The issue is how much of that price can you "pay" with miles. For example if the price of the item I am buying is $15, can I pay for it with 750 miles or do I have to pay with (75 miles plus $13.50). If the answer is the latter then I think it is a bad deal - since in most cases you can shop around or use internet coupons to get the same (or better) price without using any miles.

The press release seemed to imply that you could miles to pay for between 10% to 25% of the price, depending on the merchant.

This doesn't impress me. If I could use points for 50% or more of the purchase, I'd be much more inclined to use this site.

Right now, as advertised(of course it isnt up and running yet, so lets be fair and wait for the details) I think its a big yawn.

No, Randy, the question was "how do I use up 5,000 miles?"

If there is a 10% cap on the miles that you may use, those 5,000 miles convert to $100, but to use them up, you have to buy $1,000 worth of merchandise. This calculation is the same as the one given on the website.

My guess is that the companies that offer the highest caps will be the most obscenely priced goods (i.e., the $75 flower basket).

No use getting worked up over it. The site is not up and running yet, just in the info stage. Once it goes "on-line" we will know what beholds us. It is a will wait and see situation for now.

Randy knows very well what we are looking for. Question is, is he still on our side or has he sold us out. If he is Irish, he found middle ground.

JRF: Even if this site turns out to be less than what "we are looking for", how does that mean "he sold us out"? Randy has a right to be involved with and do consulting for anyone he chooses. He is under no obligation to conduct his personal business for our benefit. I'd say he's already done enough for us with Inside Flyer Magazine and Flyertalk to last a lifetime.

[This message has been edited by dhacker (edited 08-31-2000).]

I don't see how anyone could be upset at Randy for this. If you don't like the concept, don't use it, and it will go out of business.

Remember that there is a fine line these guys have to walk between being a great deal for us consumers and having a viable business plan which will allow them to continue as an ongoing concern. There are a few "too good to be true" deals occasionally with miles, but they can only last for a limited amount of time or else the company will go out of business. There's no such thing as a free lunch especially now that the venture capitol and IPO sources are drying up.

My comment on Randy selling us out is based on the Delta Thread in the Ask Randy area where he has not been heard of or offered any advice. I have no idea if he sold us out or not, and hope that he has not. However, at this point he is guilty by silence. Why have a Ask Randy Board if he ignores it, which then makes me think deeper.

I fully understand he could be in a position where he has to be careful what he says, but at this point something just is not right. Perhaps read some of the comments in Ask Randy pertaining to Delta and you will better understand my concern, although I may be way off on this one. I am cynical when it comes to the airlines and Randy now seems to be "in their employee" for a lack of better words.

I find this "sell-out" concept to be silly.

Randy is on the advisory panel for this website. We don't know what advice he gave them and we don't know if they took or rejected his advice.

As for Randy "selling us out" I find that laughable. Randy doesn't work for us. He works for Randy. I for one, don;t have the right to tell him what to do.

At the worst, if Randy is really behind this concept in a major way, we could, as customers fault his judgement in advising them.

I for one doubt I'd use the sight with only 10% miles payment allowed. If anyone(not just randy)"advised them"(I'm not saying he did, just a what if) this will work with the frequent flyer crowd, then I think they gave
milespoint.com some shakey advice.

I echo the comment, that if you dont like this site, dont buy from it.

Well said Boomer.

JFR,
Keep in mind that people had the same views on latinPass as you do on Delta.yet Randy w/o getting back to the boards about his 2nd meeting w/LP did himself go on the run.
2nd as per this new so called deal,if Randy had started the thread and NOT disclosed his own stake in it as others tried to do on these boards I would agree somethings wrong w/the soup.However,Randy didn't start the thread,and why isn't he entitled to make on it?Deception? not yet in my eyes.

RE: MilePoint...my name is Mark Lacek and I am co-founder, CEO and President of MilePoint.com. As you can see from the press release, the management team and advisors at MilePoint have extensive experience in both the loyalty and the airline business. Based on this background we have created a business model that recognizes the economics of all parties..the Sponsor airlines and hotels, the online merchants and the perceived value frequent flyers put on their miles and points which we know is high. This is why our formula recognizes each mile at 2cents per mile. We also understand that online retailers are spending millions trying to attract frequent flyers to their site and then hope they shop.
This is where MilePoint comes in. We will deliver the frequent flyer, the best demographic on the Internet in exchange for them redirecting their advertising and marketing dollars so that MilePoint members can convert their miles and points into MilePoint Money and use this for the partial payment of goods and services at participating merchants. It is treated as a "real" currency because if you went to the merchants site directly you could pay with cash (via credit card) only. With MilePoint you conduct an online purchase as you normally would but when you are at checkout the merchant will allow you to apply MilePoint Money to that purchase. If not for the MilePoint Money you would have paid full price....you can validate the real application of our new currency and the corresponding savings on every purchase. We are allowing the merchants to accept as much MilePoint Money as they can afford on every purchase. Naturally, most merchants margins cannot absorb a complete purchase of their goods through miles, however, if the merchants don't have to spend the money to get access to the frequent flyer they can pass along those savings. We do not charge the merchants to particpate in MilePoint and are only compensated for sales driven. This way the MilePoint Merchants can feel comfortable providing "real" opportunities to participating MilePoint Members. We are in discussions with over 100 retailers in almost every sector...both products and services and believe we will be able to offer numerous opportunities for our members. Based on the response we have gotten from both retailers and service providers, I think you will see some pretty exciting opportunities. When we go live....go to the merchant site directly and then come to MilePoint and link through to the same merchant, you will see it is real.

We look forward to providing this environment for millions of frequent flyers. We will keep all of you posted.

Thank you for giving us a chance to prove ourselves to all of you. I have personally accrued over 2 million miles over the last decade and want to have this opportunity for myself and my family too. I'm one of you.

Thank you.

Mark A. Lacek
CEO and President
MilePoint.com

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Another point of consideration is that by using this site you would forgo the miles that you earn on purchases e.g. had you gone through Greenpoints, Mypoints, ... etc. So if you do a true apples to apples comparison, you are getting a value less than the advertised 2c/mile.

Just to help clarify the "value" of FF miles, effective September 15, 2000 after American Airlines 10% price increase goes into effect, Aadvantage Miles will cost $.022 each plus 7.5% Federal Excise Tax, plus $.00125 Processing Fee. Therefore the actual cost to a merchant for 1,000 Aadvantage Miles would be $22.00 plus $1.65 plus $1.25 totaling $24.90 ($.0249 per mile)

This cost structure applies to a merchant who is buying a few million miles. I suspect that large buyers such as Citicorp may pay somewhat less.