The Extra Mile

United-US Airways Link Puts More Miles in Play

Q&A: Mileage Surcharge for Car Rentals?

October 24, 2002 - On November 1, United and US Airways will link their frequent flyer programs, allowing members of United's Mileage Plus program to earn miles for US Airways flights and US Airways Dividend Miles members to earn miles when flying on United. No double-dipping: miles for any given flight can be deposited in one program only.

The frequent flyer tie-up is part of a more comprehensive marketing alliance, including code-share flights and reciprocal airport lounge access, recently approved by the Department of Transportation.

Members of both programs will have to wait until early 2003 -- an exact date has yet to be announced -- to redeem miles for award flights on the other carrier.

The relationship will include reciprocal benefits for both airlines' best customers as well.

From January 1, 2003, miles earned for US Airways flights will count toward 2004 elite status in Mileage Plus. And miles earned for United flights will count toward 2004 Dividend Miles elite status. Plus, elite members of each program will receive special flight bonuses when flying on the other carrier.

Participants in both programs will benefit from the additional opportunities to earn and use miles. More important, the tie-up is expected to generate hundreds of millions of dollars in revenues for both carriers, significantly improving the prospects of long-term survival for United and US Airways.

The DOT is currently reviewing a similar alliance proposal linking Continental, Delta and Northwest.

Readers: Miles on their Minds

Question from Gloria

I just got in from Dallas where I rented a car from Avis. I may have missed this before but I have just noticed a 7.5% tax on the frequent flyer miles I accumulated with this rental. Something new?

Answer

The surcharge traces its roots back to the so-called Taxpayer Relief Act of 1997. Buried in the Act's fine print was a provision which imposed a 7.5% federal excise tax on the sale of frequent flyer miles. So when Avis buys miles from an airline to give to you, the renter, Avis now pays that airline somewhere between 1¢ and 2¢ per mile, plus the 7.5% tax. Avis is passing along the cost of the tax, but not the cost of the miles themselves, to you.

Among the other major rental car companies, Alamo, Dollar and National also assess a Frequent Flyer Tax Recoupment Surcharge, typically 5¢ or 6¢ per day. Hertz, effective October 1, charges a flat 50¢ fee per day, up to $2.00 per transaction, to earn airline miles for most rentals.

If you bristle at being charged extra for what is, essentially, a marketing expense, both Budget and Thrifty still offer the industry-standard 50 miles per rental day with no surcharge.