Can I Redeem Miles for Non-Travel Awards?

Dear Tim,

I have a question I hope you can help me with. I have 41,000 Dividend Miles from US Airways. I have been saving them up for about three years now, and I don’t want to lose them. How can I use them without traveling? Can I sell them? Or get gift cards or merchandise for them?

Anonymous

I have received several questions with this common theme: how to redeem miles for non-travel awards.

Before discussing the very few options available when redeeming miles, it’s worth considering just why it is that non-travel awards are as limited as they are.

It’s not that airlines wouldn’t be happy to offer alternatives to free tickets and upgrades. In fact, they’d like nothing better than to give program members redemption options that didn’t potentially displace revenue passengers. The problem is on the cost side of the equation.

Because very sophisticated capacity controls minimize the chances of giving away a seat for miles that might otherwise be sold for cash, award tickets effectively cost the airlines a pittance—the direct costs of transporting one extra passenger. Those direct costs—an award passenger’s meal (if one is even served), some extra jet fuel, and perhaps some processing overhead for award bookings and ticketing—add up to less than $15. So the airline can offer a free domestic ticket, with a perceived value of $300, for 25,000 miles. The program member is receiving more than $0.01 per mile in value ($300/25,000), while the per-mile cost to the airline is a mere $0.0006 ($15/25,000).

The economics of offering merchandise or other non-travel awards are much less favorable for the airlines. For purposes of comparison, let’s assume that a digital camera has a retail price of $300, approximately the same as the average price of a domestic air ticket. Even at a negotiated wholesale price, the camera’s cost to the airline would be around $150.

That’s 10 times the cost to deliver a free ticket. The airline is now forced to make a choice: maintain the ratio of cost to mileage and offer the digital camera for 250,000 miles; or maintain the ratio of value to mileage and offer the camera at 25,000 miles. The former would be unappetizing to program members; the latter would be too expensive for the airlines.

The economic disconnect between free tickets and gift certificates is even greater, since the cost to the airline of a gift certificate is its face value. Looking at some hypothetical award options in table form accentuates the dilemma facing the airlines.

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Award	Airline’s cost	Perceived value	Miles required
Domestic ticket	$15	$300	25,000
Camera	$150	$300	?
Gift certificate	$300	$300	?

For those who may have been put off by the numbers, suffice it to say that non-travel awards are either too expensive or would have to be offered at ridiculously high mileage levels.

So, what can US Airways Dividend Miles members do to unload their miles?

Through Points.com, Dividend Miles members may exchange their miles for miles and points in other participating programs. But as I always caution, Points.com conversions leave consumers with very few of their original miles. For example, exchanging 10,000 US Airways miles only nets 581 miles in American’s AAdvantage program.

Looking for non-travel awards? Again through Points.com, 10,000 US Airways miles can be exchanged for $22 worth of Starbucks coffee, or for 7,500 GoldPoints, a thousand too few to redeem for a $10 gift certificate from Barnes & Noble. Better than a poke in the eye with a sharp stick, but hardly momentous values.

(Note that only Dividend Miles Visa cardholders can exchange miles from US Airways to another program with Points.com.)

Another option is to use MilePoint’s Magazines for Miles program, where as few as 400 miles may be redeemed for a magazine subscription. Miles-for-magazines is a pretty good deal, value-wise. And since subscriptions may be given to others, they make handy gifts.

For those with a charitable bent, miles may be donated to charity through US Airways’ Dividend Miles Charity Program.

And finally, for those who want to travel but are short of the 25,000 miles for a free domestic ticket, US Airways offers a restricted domestic coach award for travel between September 15, 2004, and February 28, 2005, for 20,000 miles, if it’s booked online at usairways.com. Also available for 20,000 miles: round-trip upgrades from most discounted coach fares (M, H, Q, V, L, W, S, T, or N). And for 15,000 miles, Dividend Miles members can travel round-trip within the Caribbean on one of US Airways’ Caribbean airline partners.

While some other carriers are slightly more prolific in this area, US Airways is pretty typical in the paucity of its non-travel award offerings. Customers who don’t want to use miles for their true purpose—award travel—unfortunately are left with a dearth of choices for unloading their unused miles.