Just bump into this interessant piece

Playing Markets That Trade Miles

by Michelle Higgins
Thursday, July 3, 2008
provided by The New York Times


Any traveler who has tried to redeem frequent flier miles for an award seat, only to be thwarted by blackout dates or limited availability, knows that attractive alternatives are hard to come by. You could spend miles for magazine subscriptions, donate them to charity or, in a few cases, purchase merchandise in an exchange that often doesn’t quite add up (17,000 miles for a coffee maker?).

Now imagine a virtual stock market for the eBay generation where the miles and points are currency, and the free market — rather than the airlines — determines the exchange rates. That’s the general idea behind some new online services that have quietly begun testing ways for travelers to leverage unused miles.


Such mileage matchmaking services have popped up as airlines, including American, Continental, Delta and United, have been announcing significant capacity cutbacks — reductions that are expected to make frequent flier awards even harder to use when the cuts begin to take effect this fall.

One of the sites, Points.com, has introduced a service called Global Points Exchange that allows travelers to barter miles with one another and set their own exchange ratios (I’ll give you 8,000 American miles for 10,000 of your Delta miles).

It can sometimes be a rough calculus. But for Andy Simmons, a software solutions consultant from Chicago, trading was worth it.

“I was stuck with these 16,000 Delta miles I’d probably never use unless I bought more, so I had to make an economic decision,” he said. Mr. Simmons made three trades — two at an even swap of 4,000 miles each and another trading 8,000 of his Delta miles for 7,000 American miles. Total transaction fees: $250.

“I realized I’ll lose some miles, but I had to make a decision: Is something better than nothing?” he said. “My answer is yes.”

Another site that is letting travelers set their own trading terms is LoyaltyMatch.com, which started in February. It’s the brainchild of Brad Ball, a technology executive who had accumulated piles of miles after several years of heavy business travel. Like so many other fliers in the same situation, Mr. Ball was having trouble using them for something he really wanted. Though he had enough miles for a number of award tickets, he said, “As you spend more time on planes, the last thing you want to do when you have some down time is get back on.”

LoyaltyMatch, based in Waterloo, Ontario, offers an alternative, he said, by letting travelers convert those unused points and miles into merchandise that they can then sell online for cash or swap for other items, services and activities.

Sellers register and enter their loyalty programs and account totals, which LoyaltyMatch uses to automatically list the items those miles and points can buy. For example, my test account (with a measly 16,309 American Airlines miles and 15,000 American Express points) immediately triggered four Exchange Alerts from other users willing to pay cash or trade miles or points for the merchandise that LoyaltyMatch said my miles and points could buy.

One user, “big_tall” from Canada, was willing to pay $35 for a Cuisinart popcorn maker that would cost me 10,000 AmEx points. Another, “airmileguy,” also from Canada, proposed a trade for a Wired magazine subscription that 400 of my American Airlines miles would buy. (I could click on “make an offer” to suggest a suitable swap.) Similarly, “dangerfield” from Australia wanted to trade for some Callaway golf balls.

Buyers simply browse the site for items they want and submit a cash or trade offer. The site then matches you up with potential sellers, who can choose to accept your offer and use their points or miles to buy that popcorn maker for you and have it mailed to your door. You in turn, pay the seller through PayPal or order the item you agreed to trade from your loyalty program. For its services, LoyaltyMatch charges $1.99 a transaction.

It takes a calculator and a certain amount of patience to figure out how good an offer really is — and whether it makes sense to unload miles that might otherwise have languished. And while LoyaltyMatch.com and Points.com seem to hold a lot of promise, they still have a long way to go. As is common with any test site, technological glitches are still being worked out. And while each strives to offer travelers more options, they are bound by the various rules and regulations of the loyalty programs themselves.

AT Points.com, along with a $6.95 transaction charge, you still have to pay the airlines’ traditional mileage-transfer fees. Delta, for instance, charges a $30 transfer fee and 1 cent per mile. American charges $80 for up to 5,000 miles, $130 for 6,000 to 10,000 miles and $180 for 11,000 to 15,000 miles.

Points.com also has very limited trading options. Alaska, American, Delta, Frontier, IcelandAir and Aeroplan, the frequent flier program spun off by Air Canada, are the only participants. The company says it expects participants to grow as the site develops. In partnership with the online agency Travelocity, Points.com has also branched out with a service that lets travelers book hotel rooms with miles. So far, though, only a few airlines — including Frontier, Midwest and US Airways — are participating.

A big drawback of LoyaltyMatch is that not many of the major domestic airlines have merchandise programs that allow travelers to redeem miles for retail items. So a traveler looking to unload American miles, for example, can really only sell magazines — a small-ticket item — for cash. “In my opinion, it is only a matter of time until most of the frequent flier programs add merchandise to their members rewards offerings,” said Mr. Ball of LoyaltyMatch.

If all you’re really interested in is scoring that “free” ticket, there’s help on that front as well. ExpertFlyer.com, a subscription site that charges $4.99 a month for basic service, lets frequent fliers see how many award tickets or upgrades are available for a given flight by listing airline fare codes. The site, once favored only by hard-core frequent fliers, is now easier to navigate, with codes translated into lay terms. Travelers searching for tickets can also set up an alert to receive e-mail when award seats are released for a specific flight.

“The main draw of loyalty programs “is that allure of being able to earn and use miles and sit at the front of the bus,” said Chris Lopinto, a founding member of ExpertFlyer.com. “We’re trying to take the pain out of the process, to try to make it easy again.”