I’ve been on the road a lot lately — which means that my posts have been infrequent and that they have a travel theme. Today’s the same. Sitting on the tarmac in O’Hare for two hours tonight, I came across this stunner in today’s Wall Street Journal:
“There are an estimated 10 trillion unused frequent-flier miles in circulation now, worth some $165 billion.”
That dollar figure is more than the GDP of Egypt. And if you were to distribute all those miles evenly among Americans, it would amount to one free trip for every man, woman, and child in the United States.
Message: Cash in those miles soon. Or they’ll end up worth as much as that pile of Beanie Babies in your attic.
Hi Dan, Actually, there were about 21 trillion issued miles in 2007, worth somewhere north of $ 300 billion (at marginal cost).
At the IFRIC 13 (look it up) Fair Value, the miles have an estimated worth to frequent flyers of about $1 trillion.
The problem is that it would take 1 million Airbus A340s to redeem all of these miles, which ain’t gonna happen. So you are correct, if nothing is done, the miles will simply devalue in real value.
However, there is a wrinkle. IFRIC 13 now requires that the FFP split the cost of the ticket into airfare and airmiles, and the revenue attributable to the miles can only be retrieved from the balance sheet when they are actually redeemed.
Thus there is plenty of motivation for airlines and FFPs to find ways to redeem airmiles that do not involve flying.
If you’ve got unused/unneeded miles forget the magazine subscriptions and assorted junk and instead support the brave men and women serving in the military through these amazing programs-
http://www.heromiles.org/
http://www.lbeh.org/
(H/T Johnny Bunko: #3 It’s not about you and #6 Leave an imprint.)
How about donating some of those soon-to-be-wasted 10 trillion miles. Here are some ideas:
Operation Hero-Miles (to send injured troops home from Afghanistan and Iraq): http://www.heromiles.org/
The Make-A-Wish Foundation: http://www.wish.org/help/donate/non_cash_gifts/airline_miles#at
Plus, all the major airlines have their own donation programs. Why not give them away, instead of throwing them away.
Businesses also love gift cards for the same reason. I read that some big box stores like Best Buy make millions from unused cards.
I know a startup that is looking to allow users cash in on this surplus of miles. Check out http://www.travelfli.com/ (still in closed beta). I’ve seen them present their technology and it looks very cool.