Tuesday, December 08, 2009

Mileage Addicts

I know Andrew is a mileage addict, and I could be too - nice perks! - if I could ever understand the system!:
Enthusiasts of frequent-flier mileage have all kinds of crazy strategies for racking up credits, but few have been as quick and easy as turning coins into miles.

At least several hundred mile-junkies discovered that a free shipping offer on presidential and Native American $1 coins, sold at face value by the U.S. Mint, amounted to printing free frequent-flier miles. Mileage lovers ordered more than $1 million in coins until the Mint started identifying them and cutting them off.

Coin buyers charged the purchases, sold in boxes of 250 coins, to a credit card that offers frequent-flier mile awards, then took the shipments straight to the bank. They then used the coins they deposited to pay their credit-card bills. Their only cost: the car trip to make the deposit.

Richard Baum, a software-company consultant who lives in New Jersey, ordered 15,000 coins. "I never unrolled them," he says. "The UPS guy put them directly in my trunk."

Patricia Hansen, a San Diego retiree who loves to travel, ordered $10,000 in coins from the Mint. "My husband took them to the bank," Ms. Hansen says, and she earned 10,000 miles toward free or upgraded travel.

That's small change compared with what some mile collectors did. The coin program was a popular play on FlyerTalk.com, an online community where frequent travelers and mileage mavens share travel tips and profitable mileage plays. One FlyerTalker, identified by his online moniker, Mr. Pickles, claims to have bought $800,000 in coins. He posted pictures of the loot on FlyerTalk.

He says his largest single deposit was $70,000 in $1 coins. He used several banks and numerous credit cards. He earned enough miles to put him over two million total at AMR Corp.'s American Airlines, giving him lifetime platinum-elite status -- early availability of upgrades for life and other perks on American and its partners around the world. He also pumped miles into his account at UAL Corp.'s United Airlines and points into his Starwood Preferred Guest program account.

...The allure of frequent-flier miles, which were introduced by American in 1981, was that they offered something for nothing. The miles rewarded loyalty and proved to be an extremely powerful marketing tool.

Now, airlines have turned miles into more than a competitive device; they have become a currency that airlines can sell, usually at less than a penny a mile, to other merchants to generate revenue. More miles are put into circulation by companies -- including credit-card issuers, hotels, mortgage servicers, and florists -- than are given to travelers for flights.

The mile is such a cherished commodity that airlines have even bolstered their balance sheets by preselling billions of miles. Citigroup Inc., which gives away American AAdvantage miles to credit-card customers, agreed to lend American $1 billion in September. The loan is to be repaid between 2012 and 2016 -- not in cash but in miles.

Pushing miles into everyday commerce has created unique opportunities for mileage addicts. For many, chasing miles is a way to vastly improve their travel. Accumulate enough miles to land elite status, and you get early boarding, better seat selection, access to upgrades, premium check-in and security lines, and sometimes use of fancy airport lounges on international trips. It goes far beyond just tallying miles for free tickets.

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