If you believe miles are free then send me a PM.

I've got a perpetual motion machine for sale.

Its not the IRS' decision at this point. Congress answered the question for them. The fact that the IRS failed to determine a value was not for lack of trying. Congress decided that since people do in fact regard these as "free" tickets, they should not be taxed.

Actually, I believe that the price would go up.

Airlines, of course, gives miles for travel, and certainly factor in the cost of the award tickets when pricing. However, they are not the only source of miles. Miles come from hotels, credit card issuers... And this companies, hoping to draw money from the clients of the airlines, buy miles to the airlines. Some companies outsourced their FFP, and the companies in charge of them often posts better results than the airline itself.

Miles earn'd from iDine aren't necessarily free. There are two iDine programs, one which is free, and gives you I think 5-10 miles per dollar spent. The other is $49/yr, but gives you 10%-20% rebate back to your credit card (basically a rebate). For the person about, if you assume he dines at a restaurant(s) that award 10 miles/$, then he spent $1000/month. That same $1000/month would get him $200/month in rebates. Instead of 100k miles/yr, he/she would be looking at $2000/yr (at this point the $49/yr fee becomes irrelevant).

Maybe not all of us, but I'm sure some of us would rather have $2000 cash than 100k FF miles. That 100k miles (and a 'free' award ticket I might use them for) definitely is not free if I gave up ~$2000 to get them. Similarly, miles earned from airline credit cards are not free, because if I didn't use that card (that gives the miles), I'd have used another card that gave me a cash back reward, or other bonus (ie. AMEX Membership Rewards).

Jeff

First of all, that's assuming that the person is in just one iDine program. Your "simple" comparison only works then.

But frequent iDine users know very well that in many/most areas the majority of the restaurants only let you get miles (or cashback) for one visit per month PER PROGRAM. So if you want to eat at the same restauarnt repeatedly, if you are accumulating miles in 4 FF programs through iDine, you can earn for eating there 4 times, but if you are using the cashback program you touted, you can only eat there once a month. And in many areas, eating enough (especially by yourself) to get to that many miles a month is much harder to do earning into one FF program (or cashback) than dividing it among several FF programs.

So assuming that dines for miles in situations where you could have taken cash instead are not free, what about dines for miles where you already used up your once-a-month cash possibility at that restauarant and can ONLY earn miles (or else nothing at all) on your second, etc, visit there?

(Technically, there are TWO iDine cashback programs, the one you mentioned for $49 with iDine/Rewards Network directly, and the Restaurant Savings Program which is at no additional charge for Diners Club cardholders tho there's a $95 annual fee for that. But that only extends the same situation to the third, etc, visit, not to mention that it only does that at restaurants that accept Diners Club.)

Anyhow, as I use my miles generally only for upgrades or for premium class awards, in either case 100k miles tends to value at well more than $2000ish for me. And there's no OTHER way I can think of (if I don't want to play dubious money order recycling games) that I could take $2000ish and turn it into 100k miles, while there's other ways I could get $2000ish (including saving money by not eating out! :) )...

Some airlines will let you buy miles directly, usually with a maximum amount per calendar year though. You could also benefit from some promos with money changers (after all, their purpose is to convert money back and forth...)

The rate is often not as good ad 0,02 per mile.

This is a good point.
Some years ago I bought some miles to top off an account. Later when I was booking an award ticket there was a comment from the agent that the ticket was "free". I told her that I had bought miles but based on her information I would now dispute the charge and be sure to mention her name in the process. It was amazing how fast her attitude changed...

Another time I was using an award ticket with an airline that very often runs co-marketing promos where they essentailly "sell" miles. (For example, sign up for some new service and get 10,000 miles). Later the flight was cancelled and during the rebooking process I was treated less than reasonably but the agent who also said something about the miles (not just ticket) being free. I said that I manage a company that buys many miles from their airline for such promotions, and I would call our A/P dept and tell them to stop all payments to the airline since miles are in fact free (and again to be sure to mention her name). Again, her attitude changed pretty fast. Of course I was lying, but it felt good... :p

I am on the "miles are not free" side.

The miles I get from credit card purchases are paid for by the credit card company. It is worth it to them because so many of us will then run balances at a high rate of interest. I pay an annual fee for my CitiBank card, but get a very low interest rate for that.

If anyone knows of a no-fee card with an interest rate below 8% let me know.

I have flown almost exclusively on AA for many years to keep my miles in a single pile. I have paid in money, in time for connections when a direct or non-stop was available, etc. etc. This has been worth it to me since most of my trips are for a long distance and the stays are typically for a month. So a few extra hours or some other inconvenience in order to get elite status or accumulate useful miles seemed a reasonable way to earn the miles. I sure wouldn't do it if I flew the number of segments many on FT fly.

These programs were conceived of as loyalty programs and were a payment for consistent usage.



Mile, in the end, are currency which have value and which are earned and spent, IMO.

Best wishes,

Teacher49

But the tickets are taxed, aren't they? Don't we pay all kinds of taxes when redeeming miles? Or are these expenses "fees" which would not constitute taxation?

I encountered the thing with a Hyatt employee upon check in on Friday night.

"Oh, you are on a free stay" - Er, no bubba, I spent approximately 16 nights away from my home to earn these two free nights. It really rankled me.

Everyone I have ever gifted a ticket/hotel stay to has been amazingly thankful and realizes that these are not free, but earned miles.

My mom supports my extra pushes for EXP, especially now that she has experienced the BA first lounges. :)

lala

Even if you don't count the (nominal) fees everyone seems to charge to give you miles..... just add up all the time you spend trying to understand and work the system if you ever doubt they are actually 'earned!' :p

I used to be one of these INfrequent flyers, but after 3 LHR-NRT flights on differing carriers (within 9 months) I did my own maths:
typical cost of flight with cheapest carrier: £450 ($820).
Typical premium to fly with *A carrier: £50 ($90) - but can be less.
Which means that after 5-6 flights I can get an award flight at a 40% discount. (roughly 5x£50 means I paid about £300 for a 'free' flight)
Miles aren't free at all.
But the 20kg extra baggage allowance... I can't put a price on that!!