Do Non-Flight Awards Offer Value?

Can’t find an award seat that’s available to your destination, on your schedule? Just plain tired of air travel and want to redeem your frequent-flyer miles for something other than yet another flight?

The airlines (and the hotels and credit card companies) have you covered. Today the award catalogs of most travel-rewards programs extend well beyond flights, hotel stays, and car rentals. The question is no longer What can I get for my miles; it’s What can’t I get for my miles?

All manner of merchandise, charitable contributions, one-off experiences, upscale services… these are among the many options loyalty-program participants have when it comes time to cash in their miles.

A new study by industry consulting company IdeaWorksCompany argues that such alternative awards are a boon to both loyalty marketers and to consumers, giving program operators a way to differentiate their loyalty schemes and burnish their companies’ brands, and giving consumers more options and better value for their miles.

It’s an argument that the airlines have clearly embraced, as is evident from their extensive offerings of non-travel awards. The study provides, approvingly, a long list of creative awards available from various airline programs, each of which purportedly “provides an example of a reward that can appeal to the imagination of members and seduce them into a loyalty marketing relationship.” A few examples:

• A 90-minute session in a flight simulator for 100,000 EVA Air miles
• Dinner for two at the Lexus Intersect Bistro in Tokyo for 15,000 ANA miles
• One ticket to Mama Mia! on Broadway for 16,900 United miles
• A motorcycle sidecar tour of Beijing and lunch for 35,500 Qantas points

Nice. But Rolexes and Ferraris are nice, too. And in the same “aspirational” way. But how many people act out their lust for pricey watches and exotic autos?

The question that the study glosses over is one of value: How much are my miles worth when redeemed for non-travel awards?

Using the values provided in the study, the Lexus Intersect dinner yields a value of $0.0083 (eighty-three hundredths of a cent) per redeemed mile. The Broadway show ticket comes in at $0.0059 per mile. And the motorcycle tour is $0.0053 per mile.

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On the other hand, the average value of a frequent-flyer mile redeemed for a free domestic coach flight is around 1.2 cents, perhaps a tad more depending on the program.

Bottom line: Miles redeemed for flights are twice as valuable as miles redeemed for alternative awards. So much for aspiration and choice. Even without doing the math, consumers sense the disparity and are skeptical of the airlines’ exhortations to use their miles creatively. Rightly so.

The report suggests that to succeed, loyalty programs must go beyond mere rebates.

Frequent flier programs, when performing at the highest level, must engage individual members in a relationship that is unusual between a warm-bodied human and a cold corporate entity. The member must be convinced that remaining loyal goes beyond the inconvenience of a connecting flight, the pain caused by the occasional lapse of service, and the economic pain of a higher fare.

Perhaps. But it takes more than airy allusions to coolness to engage savvy consumers. In the end, most travelers are looking first and foremost for solid value in exchange for their loyalty. And most non-travel awards simply don’t deliver.

Reader Reality Check

How do you get the most value from your participation in mileage programs?

This article originally appeared on FrequentFlier.com.