Frequent-Flyer Miles

The Economist answers things I’ve always wanted to know about airline frequent-flyer miles:

Calculations by The Economist in January 2005 suggested that the total stock of unredeemed miles was worth more than all the dollar bills in circulation…The biggest collectors of miles today are not frequent flyers but frequent buyers. More than half of all miles are earned on the ground, notably on credit cards linked to airlines’ programmes or on telephone calls.

On most airlines, one mile is earned for every mile flown. But what is a mile worth? Airlines sell them to credit-card firms at a rate of between one and two cents a mile. Yet if you make the best use of your miles, such as flying business class across the Atlantic, the market value can be up to 10 cents per mile. In 2004, over 20m free tickets were issued, and on a typical flight 7-8% of passengers were travelling on such tickets. You can also use miles for hotel rooms, car rental, holidays, restaurants, CDs and magazines, but these account for a small fraction of miles spent.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.