Ridiculous or not? Paying a ransom to rescue your frequent flier miles

Not so long ago, your frequent flier miles were gone when they expired. But not anymore.

Airlines are willing to rescue your delinquent bonus points — for a price. Cricket Moore recently received a series of emails from US Airways about 15,688 miles that had vanished after she failed to redeem them in time. If she wanted them back, it said, she could either apply for an affinity debit card that charged an annual fee, or pay $100.

Elliott Advocacy is underwritten by Travelers United. If you’ve been mistreated by the airlines, Travelers United is your voice in Washington. Join the #1 travel advocacy organization working with Congress to improve and protect travelers. Plus, get $400 of annual benefits you can use for travel for only $29/year. Add your voice to ours. Make travel better.  Join today.

“I didn’t pay up,” she says.

In the past, most airlines made offers to save old miles on a case-by-case basis. But in a series of emails sent to Moore by US Airways and other passengers, it has become clear that this is being done in a systematic and automated way. Other airlines, including most notably United Airlines, have reportedly been making similar overtures to their delinquent frequent fliers.

“When their miles expire, consumers are between a rock and a hard place,” says Tim Winship, editor of the site Frequentflier.com. “On the one hand, allowing the miles to simply disappear feels like submitting to a robbery. On the other hand, paying as much as one cent per mile to reactivate expired miles feels like… well, submitting to a robbery.”

Indeed, US Airways’ fees are little steep. It charges $50 to salvage up to 4,999 miles and $300 to save between 50,000 and 99,999 miles.

“For airlines, it’s a huge win,” says Winship. “Any revenue generated from reactivation fees is virtually all profit, since there’s no real cost to them to undo the expiration.”

Ironically, many of those rescued miles will never be used, a study suggests. Americans accumulate approximately $48 billion in rewards points and miles annually, according to new research by Colloquy. At least one-third of the points, representing $16 billion in value, goes unredeemed by consumers.

Put differently, the average household that is active in loyalty programs earns $622 a year, but does not redeem $205 of those rewards. That’s enough to buy an airline ticket or two, outright.

Moore says the ransom was too high for her. Besides, she just doesn’t like US Airways.

“It doesn’t go to most of the places I fly to,” she told me. “So it’s always a lose-lose for me.”

But many others will take US Airways up on its offer, coughing up between $50 and $400 or more to retrieve their miles.

Not all airlines are taking the same flight path. Recently, both Delta Air Lines and Southwest stopped their miles from expiring, a move which was widely applauded by their customers. But other carriers see mileage rescue fees as a goldmine and they’re stepping up their efforts to monetize their expiration policies.

True, there are probably easier and cheaper ways of getting miles than forking over money for your old miles at an above-market rate. But if there’s a market for this scheme, then why shouldn’t airlines take advantage of it? Isn’t that what free enterprise is all about?

At the same time, these mileage rescue offers are almost always a bad deal for consumers. They leverage their ignorance and compulsion, inviting them to pay for something that they might not even use. Shouldn’t there be a law against that kind of predatory behavior?

21 thoughts on “Ridiculous or not? Paying a ransom to rescue your frequent flier miles

  1. These programs are called frequent flyer programs…if you are not taking a flight in 18 months, you are not a frequent flyer.

    More importantly, you can keep your miles active by several non-flying activities. For no money just your time, you can earn airline miles from e-Miles and e-Rewards from taking surveys. Earn miles from getting an insurance quote. Earn miles from an airline branded credit card. Keep your miles active by redeeming as little as 400 miles for a magazine subscription. Shop at 200+ online stores at the airline website. Earn an airline mile by buying a $ 1.00 soft drink at a restaurant with a credit card (it can be a non-airline credit card).

    The reality is that there are several ways outside of taking a flight to keep your miles active. If you can’t do a single transaction (flying or non-flying) in 18 months then you shouldn’t join the airline FF program.

    1. “These programs are called frequent flyer programs…if you are not taking a flight in 18 months, you are not a frequent flyer.”

      I respectfully disagree and can show its demonstrably untrue. If you are a season travel and miss a travel season, you can easily not fly for 18 months although by all other accounts you are in general a road warrior.

      My parents are principals. They can rack up 75,000+ miles during the summer with their amazing travel schedule. They’ve been doing this for over fifteen years. However, the rest of the year they may or may not travel. One year, Dad required knee surgery. No flying that summer. As a result they missed the summer travel frenzy which resulted in almost no flights for an 20 months. Yet, the next year, they were back at it.

      Most of my friends are teachers with the same type of travel schedule.

      1. If they were member of the US Dividend Miles program, they could spend a $ 1.00 for a soft drink at a local restaurant; download an iTunes; buy a B&NWal-MartHome DepotSearsetc. gift card; a subscription to the USA Today; invest $ 5.00 a month at ShareBuilder; etc. to keep their miles active if they go 18 months without having a single activity on their account. There are so many ways to earn miles at little or no costs.

  2. “…she could either apply for an affinity debit card that charged an annual fee…”

    The annual fee for the affinity debit card is $ 30.

  3. I’m in the same boat as Cricket. If I want my 7,300+ back, I have to: 1) Sign up and use one of their credit or debit cards by 1/30/12 or 2) Pay a $100 reactivation fee by 3/30/12. But since I rarely fly US Airways any more, it probably makes sense to let it go.

  4. Seems to me that US Air was offering 25,000 miles to sign up for a Visa credit card and 1 mile for every $ purchased and 2 miles for every $ in airline charges. If that is still the case, this debit card a real rip-off . Most miles are not earned from frequent flying, they are earned from frequent buying. That being the case they should never expire considering how much airlines make from selling miles to credit card companies and charging most of us outrageous fees for everything except using the bathrooms on planes (that’s coming next I’m sure..Ryan Air has threatened it). Airliners are now simply buses with wings, or more correctly cattle cars with wings. They have taken away my comfort, pillows, blankets, free snacks, in-flight entertainment, electrical power for my computer, free-meal. Instead I now sit in over crowded equipment crammed into smaller spaced seats, I’m charged for my luggage or need fighting for overhead space for all the extra carry-on’s, pay inflated prices for poor food (if it hasn’t run out) forced to listen to a commercial promoting the airlines credit card, have no in-flight entertainment except the screaming child in seat 26B and have the pleasure of being felt-up and groped by a 240 Lbs. guy with a blue shirt after standing in line for 30 minutes. Air travel has sure come a long way.

    The only real progress I see is that planes are getting quieter. This is good because the loud ones tend to wake up the flight controllers!

  5. With cards that pay you cash back for your purchases miles rewards programs are really just for people who rack up hundreds of thousands of miles each year. It makes no sense to get a credit card for miles anymore. Between what you have to pay annually and the restrictions they’re just garbage.

    I make about $800 a year just paying for my bills with my cash back credit card, pay it off every month, and no annual fee.

    1. It depends upon the traveler and their travel preference.

      I have cashed in 120,000 miles for a FC ticket with a value of $ 15,000. I would had to charge $ 750,000 (at 2% cash back) to earn $ 15,000 and I would have to charge $ 2,250,000 to earn enough money to pay for three tickets.

  6. How are these programs any different than the grocery/department store coupons received in the mail everyday that offer discounts on products and have an expiration date? If you cannot manage to do any of the things Arizona Road Warrior mentioned then of course your miles can and should expire.

    posted by Arizona Road Warrior:
    “These programs are called frequent flyer programs…if you are not taking a flight in 18 months, you are not a frequent flyer.

    More importantly, you can keep your miles active by several non-flying activities. For no money just your time, you can earn airline miles from e-Miles and e-Rewards from taking surveys. Earn miles from getting an insurance quote. Earn miles from an airline branded credit card. Keep your miles active by redeeming as little as 400 miles for a magazine subscription. Shop at 200+ online stores at the airline website. Earn an airline mile by buying a $ 1.00 soft drink at a restaurant with a credit card (it can be a non-airline credit card).

    The reality is that there are several ways outside of taking a flight to keep your miles active. If you can’t do a single transaction (flying or non-flying) in 18 months then you shouldn’t join the airline FF program”

  7. If you notice it before the miles actually expire, there’s often a very cheap way to keep them — US Airways has (or at least did as of a few months ago) an online shopping setup with links to a number of “normal” stores — I ordered a $2.99 box of pens from Staples that I needed anyway, and those few miles were enough to keep the whole account active.

    I mention this because I dismissed the “shopping” links at first, assuming they were all Airmall-style things, like $400 golf ball washers, but it turned out to be much more reasonable.

    1. For the past few years, you can make a $ 2.00 donation at Gaiam where a tree will be planted in your name and you can get US Airways miles for that $ 2 donation.

      Also, you can join points.com and can get airline miles…plus, you can trade hotel points, airline miles, other reward program credits which will count as a transaction. A person can trade 4 US miles for 1 CO mile. There are so many different ways with few costing nothing and several costing very little to keep your miles active.

      1. Even if you do these things, you generally have to remember to do it at least 3 or 4 months before your miles expire or you will lose access to your miles at least temporarily.

        Officially, you usually need to allow 6 to 8 weeks for most partner mileage credits to post. In practice, my experience is that (perhaps especially when your miles are expiring) it can take much longer than even that, and you may need to follow-up with customer service.

        During the time that you wait for the mileage credits to post, you cannot redeem any miles without paying the aforementioned ransom.

  8. I voted yes. But I do think that someone should only do it if they have a plan for those miles that would make it financially adventageous. Of course not everything thinks that hard about the decision.

  9. Sorry, but I don’t see what’s so egregious about this. I do agree that it’s ridiculous to have airline miles expire in the first place, but giving people options to reactivate those miles hardly makes things worse. If it doesn’t make sense to you to pay to reactivate your miles, then don’t do it.

    The offer that was extended to Ms. Moore doesn’t sound too bad to me. I’m assuming she could cancel the debit card after a year or less and only pay the annual fee once; that means she could obtain 21,688 miles (her expired balance, plus the 6,000 bonus miles from the offer) for $30. It sounds like US Airways miles are almost worthless to her, so she didn’t do it. That’s fine. But 21k miles for $30 isn’t bad.

    All that said, I do want to stress that I don’t agree with the airlines’ practice of expiring the miles in the first place. But giving customers options to reactivate them is better than taking them away with no recourse at all.

  10. I wonder if the vote would be different if the question were, “Is it okay to have frequent flyer miles expire?” For all intents and purposes, these are the same questions, but I think my formation would get a lot more “yes” responses.

    1. Actually, I would answer “no” to Chris’s question and “yes” to yours. I have always said that it’s ridiculous for frequent flier miles to expire; logically, miles tend to be worth less and less as time goes on, so it’s to the airline’s advantage and not the customer’s if they wait longer to use them. Plus it generates goodwill and avoids customer unhappiness.

      The question of whether or not it’s okay to provide a way for customers to recover expired miles for a fee is entirely dependent on the fact that on most airlines, miles do expire. Given that, I think it’s better to provide a way to recover them (which may make sense to some customers, and be a bad idea for others) than not.

  11. Last year my US airways miles were expiring. I found out I could keep them active by purchasing a $10 Home Depot gift card through the US Airways website. Since I need to buy things at Home Depot anyway, I didn’t feel like it was a rip off.

  12. About five years ago I lost 25,000 miles when they expired a week before I tried redeeming them. A US Airways rep rejected my appeal, so I rejected US Airways. I haven’t flown US Air since then.

  13. A better deal for this person would have been to take the offer I heard on last night’s US Airways flight — sign up for the US Airways MasterCard and get 30,000 “bonus” miles. No cost for the first year of the card plus more miles than she would “recover.”

    But the whole issue of miles or points expiring does seem stupid — and so I applaud Delta for removing expiration from their FF program. As others have noted, all expiration does (for the most part) is alienate your customers. Note the comments where people stopped flying US Airways in response to their policy.

    That being said, others have noted that just a simple purchase via the US Airways website or (as I’ve done) participation in the frequent diner program of many airlines which rewards you with miles for eating out, will keep your miles “alive.”

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: