Selling frequent flyer miles
Frequent Flyer Jun 26, 2008
Ed Perkins
A nationally recognized reporter, writer, and consumer advocate, Ed Perkins focuses on how travelers can find the best deals and avoid scams.
He is the author of "Online Travel" (2000) and "Business Travel: When It's Your Money" (2004), the first step-by-step guide specifically written for small business and self-employed professional travelers. He was also the co-author of the annual "Best Travel Deals" series from Consumers Union.
Perkins' advice for business travelers is featured on MyBusinessTravel.com, a website devoted to helping small business and self-employed professional travelers find the best value for their travel dollars.
Perkins was founding editor of Consumer Reports Travel Letter, one of the country's most influential travel publications, from which he retired in 1998. He has also written for Business Traveller magazine (London).
Perkins' travel expertise has led to frequent television appearances, including ABC's "Good Morning America" and "This Week with David Brinkley," "The CBS Evening News with Dan Rather," CNN, and numerous local TV and radio stations.
Before editing Consumer Reports Travel Letter, Perkins spent 25 years in travel research and consulting with assignments ranging from national tourism development strategies to the design of computer-based tourism models.
Born in Evanston, Illinois, Perkins lives in Ashland, Oregon with his wife.
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Many travelers, frustrated by their inability to score frequent flyer seats, are asking how they might recover the value of their frequent flyer credit some other way. Obviously, one way to dispose anything of value is to sell it, and a reader recently asked just that: "I would like to sell some miles, legally; what is the procedure?" The short answer is that there is no easy way to sell airline miles, but you can find some other ways besides flying to use at least some miles.
Coupon brokers
There never has been an attractive way to sell miles. At best, you can transfer small increments of airline credit to other travelers' accounts, but the cost of such transfers is generally higher than the value of the miles.
On the other hand, you can transfer free-trip or upgrade awards. In fact, some airlines once permitted an open secondary market in frequent flyer awards.
Now, however, buying and selling awards violates the rules of all major airlines. Nevertheless, you can still sell awards if you're willing to take the risks. Although the buy-sell market in frequent flyer awards has shriveled to a shadow of what it was 20 years ago, a few agencies still make a market.
Those agencies are called "coupon brokers," a name that stuck from the earliest days when they traded mainly in the upgrade and discount coupons airlines once issued as enticements when recovering from crippling strikes. Here's how coupon brokers presently work with frequent flyer awards:
Travelers with miles to sell register with the broker, specifying the number of miles available, airline(s), and an asking price.
When a buyer contacts the broker for a specific trip, the broker determines the miles required, the price, and identifies one or more sellers with the required mileage. For obvious reasons, almost all coupon broker action has been—and still is—in business and first class tickets.
When the deal is made, the broker asks the seller to request the desired award in the buyer's name from the airline; the broker pays the seller and forwards the award certificate to the buyer, who arranges the trip. Note that, contrary to some legends, the buyer travels under his/her own name.
Airlines have been vigilant enough about policing their no-buy, no-sell rules that only a few brokers remain in the business. When an airline detects someone traveling on a purchased award, the line claims the right to (1) confiscate the ticket, (2) cancel the traveler's reservations, and (3) wipe out both the buyer's and seller's frequent flyer accounts. I have no idea how often this happens, but it's enough of a risk than very few travelers to it any more.
Beyond the risk element, the steady decline in available frequent flyer seats has severely eroded the value of miles. My guess is that you'd be lucky to get one cent per mile— I wouldn't pay a broker any more than that, and the broker would pay you even less.
If you're still interested, despite the risks and uncertainties, at least two coupon brokers appear to remain active: Award Traveler and Frequent Flyer Points; MileageBrokers.com seems to be the same outfit).
My comments on coupon brokers are designed strictly to answer a reader's question. Neither SmarterTravel.com nor I endorse in any way the practice of buying and selling awards, nor do we recommend any brokers that deal in them.
Although airlines prohibit buying and selling awards, most of them allow giving awards to family members, business associates, or friends. And if you give someone an award, who's to say whether those grateful recipients might or might not decide to give you something of equal value—or even a check—to recognize your generosity. The main problem is that after trying for months to get a seat with the award you "give" them, they might not be very grateful.
Clearly, airlines can't police such transactions. And equally clearly, you don't need a coupon broker to make the deal.
Apparently in response to growing traveler frustration with lack of frequent flyer seats, the big airlines have recently started to offer other options for use of miles. Most are either travel services—hotel accommodations, rental cars, and such—or exchanges with other programs. Several lines also allow you to donate miles to charities.
In general, the "exchange rates" you get with redemption partners are pretty poor. But you still might net out to somewhere in the vicinity of one cent per mile—pretty good, under the circumstances.
Point exchange
Points.com has contracts with several major airlines (and other travel suppliers) to exchange points. When I looked at the program in detail late last year, however, I found that you lose between 90 and 97 percent of the value of your miles when you swap them through that program. Clearly, that's a losing proposition.
Ditto those ploys where you can convert points from airline A to a hotel chain, then back to points in airline B. Again, the problem is that you lose half the value in each transaction—if you start with 1,000 points in airline A, you wind up with 250 points in airline B.
Unless you're really desperate, forget swapping. You're better off buying something else with any miles you can't use.
Bank miles
These comments deal strictly with airline miles—the credit you build up in programs run by the airlines. Miles or points you build up through your credit card in a program with a bank are completely different. In many ways, they're equivalent to cash. Although you can't sell them, you can generally redeem them through the program for all sorts of merchandise and services at about one cent per mile.