Pssssst, Wanna Buy the Mileage Plus Program?

During the past six years, as many of America's largest airlines either filed for bankruptcy or narrowly avoided it, it's been a running joke among loyalty program watchers like myself that the airlines' mileage schemes were worth more than the airlines which operated them. The tail was wagging the dog.

But while the mileage programs are often operated as semi-autonomous businesses, their financial results have always been merged with those of the airlines, leaving us to speculate as to what, exactly, were their revenues and costs.

An article in the Chicago Tribune sheds some light on the situation, reporting that an investment bank has estimated the value of United's Mileage Plus as a freestanding company at $7.5 billion. (When Air Canada spun Aeroplan off as a separate company two years ago, its market value was $4.3 billion.) United itself, including Mileage Plus, has a market value of just $5.5 billion.

The article quotes the revenue generated by Mileage Plus at $800 million, a figure United disclosed in financial reports filed during its stay in bankruptcy. The assumption is that the bulk of that is from the sale of frequent flyer miles to partner companies, including JPMorgan Chase, which issues the Mileage Plus affinity credit card.

In the end, the investment bank's analyst concludes, spinning off Mileage Plus would "transform the $3.8 billion liability on its balance sheet into a $7.5 billion business."

That certainly constitutes a compelling financial case for creating an independent Mileage Plus. And an independent AAdvantage. And an independent SkyMiles. And so on.

But it raises the question: Are independent loyalty programs good for the consumers who participate in them?

There's no easy answer.

On the one hand, a Mileage Plus with its own bottom line would have that much more incentive to increase mileage-earning opportunities (to maximize revenues) while further reducing award availability (to reduce costs). That scenario is a decidedly bleak one for Mileage Plus participants.

On the other hand, an independent Mileage Plus with a long-term business perspective and a truly customer-centric focus might opt to put the needs of its members first and increase the program's generosity quotient.

Unfortunately, experience suggests that the former is far more likely than the latter.

FrequentFlier Forum Topics

As always, there's plenty of activity on the FrequentFlier Forum.

In the "Airline Programs" Forum, ptit loup was told that there would be no charge to change a US Airways award booking. But on subsequent calls, he was told different stories: "One person said that if I change the route or airline (part of my original ticket included a leg on United) I have to pay $100/ticket. Someone else told me it was $200/ticket. Then yesterday I called, booked the return that I wanted, and they let me do it with no fee!

"I'm not sure if the call center operators are just making up the rules as they go along, but I wanted to point out that 'free changes' aren't free unless you get the right person on the phone."

Also in the "Airline Programs" Forum, Gary Steiger has a heads up for NetBank customers: "NetBank's deposit accounts will be acquired by Everbank very soon. Since Everbank does not offer miles or points for accounts, I advise grabbing NetBank miles deals now before they disappear."

Questions, answers? Post them to the Forum!

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Get a Loan Quote, Get 1,000 AAdvantage Miles

Through August 31, AAdvantage members will earn a 1,000-mile bonus for completing a refinance, mortgage or home equity loan request through LendingTree.

To earn the bonus, use reservation code AA5-15 when requesting quotes via the website linked below, or when calling 1-888-240-9396.

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Buy 2, Get 1 Free From National Car Rental

Between August 12 and December 15, members of National's Emerald Club will receive a free rental day after every two qualify rentals of two or more days each.

Registration is required.

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Double Priority Club Shopping Points

Through August 31, Priority Club members will earn double points for purchases at the following Priority Club Shopping merchants: Circuit City, eBags, Harry & David, HP, Lands' End, Nordstrom, Overstock.com, Staples, and Target.

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Southwest Automates Retro Credit Requests

Rapid Rewards members can now request retroactive credit for Southwest flights on Southwest's website.

After logging onto MySouthwest with a Rapid Rewards account number and online password, select "Add Past Flight Credit" from the side toolbar on the left. Then enter the six-digit flight confirmation number in the appropriate field and click "Get Flight Credit." The requests will be processed instantly.

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More Miles for TripRewards Stays

Members of TripRewards who update their account profiles to earn airline miles will earn 50% more miles -- three miles per $1 spent, rather than the normal two -- through September 6.

TripRewards hotels include AmeriHost Inn, Baymont Inns, Days Inn, Howard Johnson, Knights Inn, Ramada, Super 8, Travelodge, and Wingate by Wyndham.

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Virgin America Has a Plan (a Mileage Plan)

When (and if) Virgin America finally takes to the skies on August 8, it will do so with its own mileage program, EleVAte.

According to the airline's website, EleVAte members earn five points for every $1 spent for travel on Virgin America. "Then, in the coming months, you'll be able to redeem a free trip for as few as 4,900 points. Earn a free flight after as few as 4 roundtrips!"

While the airline is mum on the benefits, those who enroll in the program by December 31 are considered "founding members."

Also noteworthy: at least initially, there are no capacity controls on awards.

Plans call for twice-daily flights between San Francisco and New York (JFK) and five daily flights between San Francisco and Los Angeles.

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Deal Alert from SmarterTravel.com

1) American Domestic Sale Fares from $118

American is offering domestic sale fares starting at $118 roundtrip. Destinations include Miami, San Diego, Orlando, and Atlanta.

Travel is valid from July 23 through November 15. American hasn't listed a booking deadline, but this sale looks to be a near-match of AirTran's systemwide sale. AirTran's fares must be booked at least 14 days in advance, and by August 1.

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2) Delta Domestic Fares from $98

Domestic summer and fall sale fares are on sale from Delta. The lowest prices start at $98 roundtrip, and destinations include New York, Chicago, Orlando, and Atlanta.

Travel is valid from July 24 through October 16. Book tickets at least 21 days in advance. Fares require a one-night minimum stay. Book by August 9.

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Win a Trip for 2 to West Palm Beach, Florida

Enter Choice Hotels' "Points of the Game" sweepstakes by October 1 for a chance to win a trip for two to West Palm Beach, Florida to attend the 2007 LPGA ADT Championship, including air, four nights hotel, a set of golf clubs, and tickets to the event.

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[Visit http://frequentflier.com/sweeps.htm for more travel sweepstakes.]

Feedback from the Frontlines of Travel

"Confessions of a Credit Card Flipper: FLIP THIS!

"In 'Credit Card Promotions Gone Wild, Part 2' you spoke of people who '...sign up just long enough to reap the short-term rewards,' and mention that 'Marketers refer disparagingly to such opportunistic consumers as "flippers," contrasting them unfavorably to truly loyal customers.' I am here to tell you that I am a flipper and I have absolutely no remorse!

"Please don't talk to me about loyalty because I have yet to find a hotel chain or airline that has any loyalty to me. I simply view their sign-up offer of bonus points or miles as me giving them my permission to abuse me and treat me with disrespect at some point in the future. I KNOW IT WILL HAPPEN and essentially agree to it when I request their credit card. In fact, I do not think they would get any fewer responses to their offer if they were to include a line in the application that says "By signing this application, you acknowledge and accept that we will probably abuse you and / or treat you with disrespect at some point in the future."

"I strongly suggest my fellow readers take full advantage of all promotions, keep their credit cards for a period of 11 months then cancel the card with a polite letter to the Customer Service Department. Do not even call the toll free number to cancel, as you will be transferred to a very polite individual who will offer to waive your annual fee, or give you an extra 5000 miles, or two-for-one tickets, which you will never use. None of their offers will be better than you cancelling your account, and reapplying for whatever the promotion is six months later.

"This is the best method of accumulating and points without actually buying anything. Nevertheless, it still does nothing to eliminate or even minimize the real problem of cashing-in on those miles or points, or the frustration you will most likely experience in the process." [RJ - Miami Beach]

"Regarding your article on premium mileage credit cards. We stopped our United credit cards when they started charging interest from the day of purchase. No paying within the month to avoid interest charges. We have maintained a zero balance policy, which they obviously do not profit from. Please add this to your caveats." [Ed S. - Japan]

"No doubt a measure of victory in the war on terror, our government will no longer ban cigarette lighters on commercial airplanes while also permitting mothers to bring along more than 3 oz. bottles of breast milk. This comes with little relief to smokers who still cannot light up onboard or in airport terminals, while offering no new guidance on the inflight baring of the breast to baby at the risk of being thrown off the plane by a disgruntled flight attendant.

"The public likewise has no clue as to what the Department of Homeland Security analyzed in reaching these decisions, or what it cost the taxpayer for it to do so. Perhaps it's all in the hands of the same planners who are directing the rebuilding of New Orleans following Hurricane Katrina.

"In making this decision apparently on the spot, at least we have been spared a Surgeon General's review in September as to whether the summer surge of travelers will be benefitted in the face of having their flights canceled because there's no money left to bring our air traffic control system into the 21st century." [Edgar N. - Portland, OR]

Until next week...