I wrote last Thursday about how to choose a frequent flyer program here. Now, I am going to talk about how to use your frequent flyer miles.
Redeeming Frequent Flyer Miles
Redeeming your miles is typically a straightforward process. You should always have your frequent flyer number handy when speaking with the airlines. You purchase a ticket with miles the same way you do with cash. They will use your number to access your account and subtract the appropriate amount of miles as you purchase the ticket. Tickets are available in paper form via regular mail or shipping carriers, and, of course, as an e-ticket.
But before you redeem, there are a few important issues that you should consider. They could affect how and when you use your miles. There are quirks in the miles/points redemption process. The actual monetary value is typically 2 cents per frequent flyer mile (reportedly the airline industry average). For example, if you want to redeem 25,000 miles for a free ticket, the number of miles multiplied by 2 cents per mile is $500. As some industry researchers have noted, it may be smarter to save your miles and purchase a lower cost ticket to your destination.
Furthermore, the airlines have a notorious reputation for blackout dates and limited seat availability for frequent flyer customers. One of the most important parts of your conversation with the ticket agent will be the answer to the question, “What’s available for the dates and flights that I want?” The airlines are under no obligation to offer any more than they decide is viable as outlined in their terms and conditions.
Finally, you don’t always have to use your miles for additional travel. You can use miles and points to purchase other goods and services with certain merchants. For example, registered users of Points.com can use extra miles and points to purchase gift certificates to hundreds of participating retailers. And don’t worry, the list isn’t a who’s who of obscure store names. You’ll find clothing retailers such as Banana Republic, Gap and Old Navy and department stores such as TJ Maxx, Target, Sears and JC Penney. And, for an even broader selection of goods, you’ll even find Amazon and eBay.
Points.com users don’t only benefit from the variety of shopping possibilities, the free registration also includes some other useful services. In fact, the main feature is that you can create one central location for monitoring several award programs. Let’s say you’re a member of three frequent flyer programs and you’re thinking about joining a hotel program, too. But it’s already a hassle to keep track of your miles and points as it is. Points.com enables you to house all that information in one online location called a balance tracker. From there, you can:
- transfer or swap miles and points from one program to another
- sign up for bonuses to earn extra points and/or miles
- purchase points and/or miles
- share points and/or miles with family
- redeem points and/or miles for gift certificates at participating retailers
Donating Miles
If getting a free ticket isn’t at the top of your wish list, consider donating your excess miles to charity. Frequent flyer programs will convert your miles into equivalent tickets that they make available for a charity to use. This program could result in tickets for such agencies as the Make-A-Wish Foundation or the Red Cross.
Frequent Flyer Program Fees and Taxes
As some say, there’s always a catch. And frequent flyer programs aren’t immune to that theory. There are some not-so-free aspects of this “free money.”
Keep in mind that as a frequent flyer member, you do not truly “own” your miles. Many of the frequent flyer program terms and conditions state clearly that passing along mileage in the event of an account holder’s death or divorce is NOT part of the program. However, airlines DO have policies that allow division and/or transfer of mileage to occur. What happens to the miles seems to depend on the situation.
Moreover, as a frequent flyer member, you may pay fees when redeeming miles for tickets. The Taxpayer Relief Act was passed quietly in 1997. As part of this act, when an airline partner gives miles to the program member, the airline must purchase the miles from the sponsoring airline with the 7.5% tax placed on top of the purchase. For example, if Hilton Hotels rewards you with miles for staying with them, they must buy those miles from the airline (in order to give them to you) and pay the 7.5% on top of the purchase price.
What does the tax mean to you, the frequent flyer? In all probability, the cost of the tax is passed on to the consumer/frequent flyer in the form of miscellaneous fees. According to the travel industry, the profit margin for these “partners” is so slim the cost would wipe them out. Still, they need to partner with the airlines to keep their market share (remember what happened to Hertz). So, the partners remain in the frequent flyer program, and the costs are passed on to you the consumer.
One thing that you as a customer can be sure of is that frequent flyer programs will continue to evolve.
If you want a frequent flyer ticket to a popular destination (e.g. Hawaii) or during a popular travel time (e.g. the holidays), check with your airline to see when they start allowing ticket purchases. It’s typically 330 days in advance of the day of travel, so if you can plan your vacation about a year in advance, you’ll have access to the best availability for frequent flyer tickets.
The catch is that 330 days in advance of your departure date is typically not 330 days in advance of your return date! To work around this, call 330 days before your departure date, book your departing flights, and book a random return flight on the same day. Then, call back 330 days before your return date to change your return flight to that date. (You’re usually allowed unlimited free date changes with frequent flyer tickets.)
Many airlines offer air/hotel packages that you can purchase with miles — and vice versa, many hotels offer air/hotel packages that you can purchase with their points. These are often a pretty good deal, far better than using Points.com or a similar site to exchange airline miles into hotel points or vice versa. (The problem with Points.com is that they give you a TERRIBLE exchange rate most of the time.)