The Extra Mile

For a limited time, transfer miles (for a price)

May 24, 2004 - If there were a frequent flyer's wish list, at or near the top would be convertible miles.

The idea behind convertible miles derives from the similarity between frequent flyer miles and traditional currencies. Like yen, dollars and euros, airline miles can be earned and spent. And since it is a defining characteristic of money that it can be exchanged and converted, the same should be true of miles. Or so the wishful thinking goes.

If the analogy held, frequent flyer program members would be able to freely exchange miles with others, and convert miles between different programs.

But that's not the case.

There are several reasons, technical and financial, why airlines are reluctant to allow unfettered mileage exchange. The single most pressing consideration is linked directly to the programs' core goal: to encourage and reward loyalty. If miles earned by Joe for flying on American can be transferred to Jane or converted into Delta miles, then Joe has no particular incentive to keep flying on American. In other words, convertibility tends to defeat the very purpose of mileage programs.

Notwithstanding that fundamental misgiving, airlines over the past few years have begun allowing, even promoting, mileage exchange. But these limited-time promotions fall short of the free exchange envisioned by mileage mavens in one key respect -- there's a fee for every mile transferred. Not coincidentally, these promotions come at a time when airlines are in dire financial straits.

There are no fewer than four such opportunities currently on offer, two of which come to a close at the end of this month.

Through May 30, members of Air Canada's Aeroplan may transfer a maximum of 999,999 miles to other program members by paying a 2¢ (Canadian) per-mile fee. (The relatively steep fee and high maximum may reflect the fact that Air Canada is in Canada's version of Chapter 11 bankruptcy protection.)

Through May 31, Continental OnePass program members may transfer an unlimited number of miles to another OnePass member for 1¢ per mile.

Through July 31, members of American's AAdvantage program may transfer up to 60,000 miles to other AAdvantage members for a fee ranging from 5¢ to 1¢ per mile, plus a $25 processing fee.

And through Dec. 24, Northwest WorldPerks members may transfer up to 50,000 miles to other members' accounts by paying a $25 processing fee plus 1¢ per mile.

With the exception of Continental, which requires a phone transaction, the transfer process may be completed on the participating airlines' websites. But many mileage-earners balk at the price tag for that convenience: a fee which is almost equal to the transferred miles' value.

While all the aforementioned transfers have end dates, it's a safe bet that most will be repeated periodically throughout the year, at least until the airlines regain profitability. United had a similar promotion in effect earlier this year which is also likely will be reprised.

With the recent steady stream of transfer promotions, the wishes of frequent flyer program members have come partly true. But as long as the fees are pegged at a penny or more per mile, plus taxes and other fees, mileage transfer will be a better deal for the airlines than it is for their customers.