Mileage Running

[garbon]

I've never understood air miles but wow....

Wow indeed.

[stjaba]

Someone I vaguely knew from high school is basically a "professional" miles runner. It seems that he turned himself into a mileage guru- he has a few travel/mileage blogs, and is quoted semi-regularly in the mainstream press on airline travel issues. Based on his blogs, he spends his time travelling the world and staying in fancy resorts- not an entirely bad lifestyle. I would never want to do it, though.

http://travelsort.com/profile-posts/ben-schlappig
http://boardingarea.com/blogs/onemileatatime/

[dps]

I've never understood air miles but wow....

Wow indeed.

Yeah, add air miles to a loooong list.

[Eddie Teach]

Air miles are pretty byzantine though, especially to people who rarely travel.

[dps]

Air miles are pretty byzantine though, especially to people who rarely travel.

Oh, no doubt that the plans are complicated (deliberately so, in all likelihood), but the concept is pretty simple.

[DGuller]

I wouldn't call it simple, and I didn't understand them myself until this thread.  I still don't understand why airlines won't just monetize the perks they are giving out to frequent fliers, and sell them instead.  It seems like an outgrowth from an era when airlines were regulated oligopolies.

[alfred russel]

I wouldn't call it simple, and I didn't understand them myself until this thread.  I still don't understand why airlines won't just monetize the perks they are giving out to frequent fliers, and sell them instead.  It seems like an outgrowth from an era when airlines were regulated oligopolies.

Here is why: the cash cows for airlines are business travelers that go business/first class on international trips. $10-$15k for a business class ticket is not uncommon. No one is going to drop that kind of cash on a ticket--I'd guess that most people that would are going to fly privately.

So they bribe the business traveler to fly their airlines with the perk that if they do so, they can fly for free (or in a better section) when they travel personally. If American Airlines was to monitize the perk, the corporation could take advantage, and business travelers would gravitate to other airlines where they could still get their kickbacks.

[dps]

I wouldn't call it simple, and I didn't understand them myself until this thread.

The concept is that people who frequently fly commercial airlines get perks based on accumulating a certain amount of miles flown is a certain period of time.  I'd call that pretty simple.

I still don't understand why airlines won't just monetize the perks they are giving out to frequent fliers, and sell them instead.  It seems like an outgrowth from an era when airlines were regulated oligopolies.
[/quote]

Well, in effect, they do sell those perks.  They just aren't perks when they simply sell them outright.

For example, say you're using your miles to get a free upgrade to first class.  Even if you didn't have any miles at all, they'd still sell you a first class ticket for that flight.  Or, are you getting a free flight with your miles?  They'd sell you a ticket on that flight anyway.

The whole idea from the airlines' point of view is to get people to fly more.  After all, very few flights are full, and almost all the costs of a flight are fixed.  That $1K ticket to Hong Kong that was mentioned earlier in the thread?  That flight was going to go to HK regardless, and if 1 or 2 more people take that flight to get the miles, thats a thousand or two that the airline wouldn't have otherwise.  And on the other end, when you redeem your miles, even when they give you a free flight, to the airline, that's just 1 less empty seat on that flight.

[Zanza]

Another important perk for business travellers is that you get a booking guarantee in higher status, meaning you can book very short-term (24-48h).

[alfred russel]

Well, in effect, they do sell those perks.  They just aren't perks when they simply sell them outright.

For example, say you're using your miles to get a free upgrade to first class.  Even if you didn't have any miles at all, they'd still sell you a first class ticket for that flight.  Or, are you getting a free flight with your miles?  They'd sell you a ticket on that flight anyway.

The whole idea from the airlines' point of view is to get people to fly more.  After all, very few flights are full, and almost all the costs of a flight are fixed.  That $1K ticket to Hong Kong that was mentioned earlier in the thread?  That flight was going to go to HK regardless, and if 1 or 2 more people take that flight to get the miles, thats a thousand or two that the airline wouldn't have otherwise.  And on the other end, when you redeem your miles, even when they give you a free flight, to the airline, that's just 1 less empty seat on that flight.

From one perspective, that $1k ticket is so wasteful though. A guy wants his status, and is willing to pay $1k (at least) for it, but rather than just giving it to him for $1k, he must pay $1k and endure 20+ hours of torture. Presumably everyone would be better off just selling him the status.

But if you sold the status, you wouldn't incentive the corporate drone who has a marginal reason to make a couple of trips to Europe. Get him to book those flights last minute on your airline, and you may get $20k. Dangling the prospect of a free vacation ticket in front of him is a good way to get him to take that flight. Give him more miles based on his spend, and you suddenly have an accomplice to help you fleece his company. That is why you need to sit on the plane to get the miles--otherwise the company could take the miles, and that would put a damper on excessive travel.

[DGuller]

The next logical question is, why are companies willing to be so wasteful with the expenses they're covering for their employees?  I magine a lot of companies have pretty strong incentives to make sure expenses stay reasonable, and paying $20K for an airline ticket seems like something that would jump to the top of the pile of any corporate bean counter.

[alfred russel]

The next logical question is, why are companies willing to be so wasteful with the expenses they're covering for their employees?  I magine a lot of companies have pretty strong incentives to make sure expenses stay reasonable, and paying $20K for an airline ticket seems like something that would jump to the top of the pile of any corporate bean counter.

The $20k was for 2 tickets, but still, they cost what they cost, right?

[DGuller]

So, if the tickets were $27,000,000 each, the company would still pay?

[dps]

The next logical question is, why are companies willing to be so wasteful with the expenses they're covering for their employees?  I magine a lot of companies have pretty strong incentives to make sure expenses stay reasonable, and paying $20K for an airline ticket seems like something that would jump to the top of the pile of any corporate bean counter.

The $20k was for 2 tickets, but still, they cost what they cost, right?

Yep.  As long as the person taking the trip can provide a work-related reason as to why it was necessary, and provide receipts to show that that was what was paid for the tickets, then the company is going to spring for them.  If a salesman says that he needed to pay a personal call on an overseas client, the finance department is generally in no position to question the necessity of it.  This comes even more into play when there's no question that the trip is necessary, but flying isn't.  If you work in, say, Chicago, and have to make a business trip to, say Baltimore, you could drive it (and the company would still pay for your gas and probably give you mileage, too), but you can almost certainly justify flying instead.  If you get the miles, so much the better.

[HVC]

plus the company gets a good chunk back in their taxes (or lack thereof)