Is it just me, or is anyone else bothered that AA has a "Sr. Investigator" in their AAdvantage program. Almost makes DL's Revenue Protection Unit look like the Boy Scouts.

Over a year ago, there was a thread regarding everyone's value of FF miles. If you fly full-fare 1st class international, then the value of FF miles could reach 8 cents. For most, like me, I consider miles to have a retail of 2 cents and a wholesale of 1 cent. Whenever I accumulate miles, I use the conservative 1 cent value and always try to redeem my miles when I can save enough to place the miles at a 2-cent value. Given this, I would never buy anything that could not get me a mile for 1 cent or would a buy miles outright for more than 3/4 of a cent.

If AA is attempting to prevent people from selling used cardboard boxes, then I guess we can no longer recycle! Is it now a crime to buy trash?

See also for value of miles:
http://www.flyertalk.com/forum/Forum1/HTML/003114.html

I stand corrected somewhat, but the rate is still not 2.2 cents. The rate is 2.465 cents for a minimum of 500,000 miles. For a minimum of 75,000 miles, the cost is 2.49 cents.

If you don't believe me, go to
https://www.aadvantage-orderform.com

Fill out the form for 1,000,000 miles and it costs $24,650. Perhaps when you are calling AA they are not giving you the whole story in regards to "taxes and fees and processing charges". It's still a rAAcket.

A few questions the AAdvantage GestAApo has raised:

Are you telling me that my grandma selling Kellogg's box tops on Ebay is in the wrong?

Is anyone who buys/sells Kellogg's cereal required to get an AAdvantage account?

Is the selling of, say, a coupon in the newspaper for $50 off a flight against the rules? Can I sell the whole newspaper to someone?

How can American void a certificate without knowing what box of cereal my grandma purchased? Are they tracking that, too? (explains their lack of profitability)

How can they even trace the participants anyway? Unless a real crime was committed, Ebay will not release personal data. How do they link my Ebay account to my AAdvantage account when there is no common link?

BizAArre....

Tino,

Thanks for the link to the AAdvantage miles sales page. Interesting; I didn't know one could buy miles for so (relatively) little.

Pity that the minimum purchase is $11,000. Has anyone out there bought these at this price for their own travel purposes?

A few legal items re: AA. No it is not illegal to buy or sell miles as Tango points out, but it is against airline policy, and since they also have no legal obligation to grant you the miles in your account if you violate the terms of the program they generally have a pretty big stick even w/o the law.

As to selling "box tops" I would suspect an argument could be made that it is ok to buy and sell "box tops", HOWEVER the argument could easily be made that because they are being sold for well above market value, (How many non-mileage granting "box tops" do you see selling for $40?) that the value is derived from the coupon contained within and therefore the miles are being sold.

Also before anyone gets too wild buying miles through their businesses, check the restrictions. Seems I looked into this a few years back and I think that they limit the number of miles to be deposited in any one FF account, thereby stopping companies or individuals from buying miles and using them instead of buying the ticket. I am not sure about current rules, but if anyone can confirm or deny this I'm sure it would be appreciated.

Sorry if I may have burst any bubbles, just trying to keep FT'ers out of a mess.

Dupe

[This message has been edited by The Mile Dog (edited 03-21-2001).]

Mile Dog is correct. I just browsed the AAdvantage.com website, and found the following. The rules regarding the purchase of miles prohibit:

- A company from buying miles and using them for business travel (not 100% sure how they would enforce, but it's written in the rules)

- Awarding more the 35K per 12 month period to a single AAdvantage account

The rate, for a minimum of 500K, is 2.3 cents per mile, plus tax. The rate for paper certificates is 2.325 cents per mile, plus tax, with a minimum of 75K miles purchased.

The 0.1 cent difference between what was posted above and what I read on the site today is that they have added a "processing fee" to the cost (as opposed to just changing the rate for the miles...I guess it lets the buyer escape a small amount of taxation).

The two rules listed above rule out a company buying tens of millions of miles to finance company travel. They also rule out the possibility that an individual could buy a large number of miles to achieve lifetime Gold/Plat status.

If there is another avenue through which AAdvantage miles can be legally bought - other than this AAdvantage Incentive program - then the rules may be different.

[This message has been edited by rmccamy (edited 03-22-2001).]

Any company that gets upsets about someone selling boxtops on E-bay is way to *nal.

Tango. There may not be any particular state or federal law against selling FF miles in the fashion stated above on eBay or anywhere else. Heavens, do you want Washington or your state capital to regulate and lesiglate about every minutia that occurs in society? However, there is both case law and general contract law at play here. The point is, when you enroll in a FF program, you agree to adhere by their rules and regulations. You have entered into a contract. If you attempt to deposit miles that were improperly earned -- and purchase of miles in this fashion would be deemed as improperly earned -- the airline can close your account and confiscate your miles because you have broken that contract.

Miles are sold by some programs as a complementary way of earning them, through company and charity incentives. This supplements the miles that are sold to various partners and suppliers who award them. And to assist people who may be a few hundred or thousand short for an award, and can top up their accounts in this way.

Just as they have been successful in cracking down on award brokers, so too would the airlines be in their enforcement in this regard.

Why don't FF programs want you to sell miles. I beleive that if miles were regularily sold then a value would then be astablished and this could be used by the IRS to tax miles. That is something that no one wants. So the programs are protecting the tax status of FF miles by prohibiting the sale, trade, or barter of the miles. Thus no value, no tax basis.
Just my 2cents.

Buying kellogs coupons on EBay is very different then selling/buying miles. You do not have to be a member of the Advantage program to buy the kellogs products. If you are not a member, how can you be held accountable to their rules?

Once you have bought these certificates and then become a member, you still are not breaking the rules becuase what you have done in the past is not addressed in the rules. Since you allready own the certificates when you become a member, how can you define that as buying/selling miles?

People seem to have no problems in trying to beat the system with back to backs, hidden city/nested/and many other methods. When it comes to something as innocent as selling the backs of kellogs products, people freak out like its the biggest crime of the century. I do not get it.

AA and other airlines regularly sell miles today, so as far as taxes are concerned, establishing a basis isn't an issue. The airlines have other reasons not to want us to sell/broker/barter miles.

It all comes down to generating revenue. The airlines are willing to sell miles via special incentive programs or thru product co-branding as in the case of AA and Kelloggs. It also allows them to gain advertising as well.

If any one should be complaining it should be Kelloggs. They're the ones being injured by folks selling the coupons on e-bay. That means one less box of Bran Flakes or Nutri-grain bars being bought.

AS sells the miles in coupons at $.02 per mile.
http://mileageplan.alaskaair.com/MPpremiums.asp