According to the latest reports, some 100 million people worldwide are members of frequent flyer programs, holding close to 4 trillion unused flyer miles. For novices, frequent flyer milers are accumulated every time you fly, once you register for a particular flyer scheme, such as American Airlines AAdvantage. Flyer miles can be exchanged for free flights, upgrades, and increasingly, gifts and special offers. What started out as a clever airline marketing ploy has quickly turned into a serious financial asset, prompting some commentators to look on flyer miles as a global currency all on their own.
In the U.S., flyer miles have been haggled over in divorce court proceedings, and there is continued speculation that the Internal Revenue Service may look upon flyer miles as taxable income at a future point. Other airlines have had to introduce policies for what happens to flyer miles when someone dies, as more and more passengers include unused miles in their estates. (Rules differ from airline to airline—some impose a fee for the transfer to a loved one while others provide it free of charge).
Not everyone, though, is enamored with flyer mile programs. Environmental campaigners have long argued that such programs encourage unnecessary flights. "I'm not in favour of frequent flyer schemes and I think we really need to move away from providing added incentives for people to take more flights," says Ciar?n Cuffe, a politician in Ireland and a member of the Green Party. "Air travel is a significant contributor to climate change and we need to be promoting alternative, less carbon-intensive ways to travel."
Despite the concerns, flyer miles show no signs of losing their value any time soon. Once the preserve of high-flying business travelers, they have now become a common and much prized currency among holidaymakers and long distance commuters.
In terms of direct monetary value, the old rule was that a frequent-flyer mile was worth perhaps two cents. This was calculated when the average price of a round-trip domestic coach ticket was about $500. Post-9/11, though, fares have decreased and flyer miles may now be worth closer to 1.5 cents a mile.
Recent studies showed that more than 130 airlines issue them, handing out more than 14 million free flights annually. For some travellers, becoming a member of a flyer program, and subsequently logging all your flight details, can be too burdensome a task to maintain. In addition to the extra workload, airlines often restrict the type of flights you can redeem, sometimes limiting customers to unpopular flights at inconvenient hours.
Michael Gannon, Marketing Manager for Aer Lingus, one of Europe's largest carriers, says airlines have already taken steps to alter the way flyer programs operate, and rejects the idea that they promote unnecessary travel. "What these programs do is reward people who already do a lot of flying. Nowadays, we have a lot of partner groups working with us, so the flyer miles can be redeemed for things such as weekend hotel breaks or other holidays. Airlines are looking to build this side of the program, as often the last thing someone who flies frequently for work reasons wants is another flight."
Gannon says the programs are all about allowing people to offset the costs of leisure travel against their regular business hours in the air, and often people will have flights already booked, but use their accumulated flyer miles to upgrade or take their kids with them. They would take the flights anyway; the airlines are just rewarding loyalty, is his argument.
Try telling that to David Phillips, a civil engineer from California, who became known as the "pudding guy" after availing himself of an offer in his local supermarket. The offer entailed free flyer miles with certain food products, and Phillips, seeing an opportunity, spent $3,000 on 12,000 Healthy Choice chocolate desserts, earning 1,253,00 miles, which together with additional premiums for passing the million-mile mark were enough to cover his leisure travel for the rest of his life.
Phillips, who documented his experience in a book, The Proof Is in the Pudding, continues to accumulate flyer miles despite his lifetime surplus. "Even with all the free trips I take, I'm still earning miles and points about five times faster than I'm spending them," he said. "Less than a million miles is a bad year for me."
