10/25/2011

More on Who Owns Those Frequent Flyer Miles

Following is an article that was in the Wall Street Journal Blog on October
13, 2011:

•       October 13, 2011, 11:36 AM ET

"Think You Own Your Frequent-Flier Miles? Think Again.

"You “earn’’ your frequent-flier miles through travel or spending. They
are held in “your’’ account; you think of them as cash in a bank account.
You spend them as you see fit. They are your asset, and airlines record
your future award travel as a liability on their books.

"And yet, many airlines write into the “terms and conditions’’ of their
frequent-flier programs that the miles are actually owned by the airline,
not the consumer. Surprised? Those aren’t really your miles after all.
(This issue is explored in this Middle Seat column.)


You actually shouldn’t be surprised. Because airlines claim they own
the miles, they get to exert control—and that control frustrates
consumers all the time. Airlines set expiration dates on miles, for
example, and wipe out accounts that haven’t been active in as little as
18 months. They set very restrictive terms — you can’t sell your miles,
trade them or donate them to a school auction. In some cases you can’t
leave them to heirs in your estate or split them in a divorce settlement.
If you really owned the asset, why couldn’t you do whatever you wanted
with it?

"Not every airline has such restrictive rules -– you might want to check
the terms and conditions of your program. United’s MileagePlus rules,
for example, state: Accrued mileage and certificates do not constitute
property of the member. Neither accrued mileage nor certificates are
transferable (i) upon death, (ii) as part of a domestic-relations matter,
or (iii) otherwise by operation of law. But Delta doesn’t include such
language, and a spokeswoman said “miles are owned by the member
and can be inherited, willed or used as part of a settlement.’’ Still,
Delta doesn’t allow selling, transferring or bartering miles.

"American’s AAdvantage program has language almost identical to
United’s but adds, “However, American Airlines, in its sole discretion,
may credit accrued mileage to persons specifically identified in court
approved divorce decrees and wills upon receipt of documentation
satisfactory to American Airlines and upon payment of any applicable
fees.’’ A spokeswoman said the fees are $50 for dispersing miles from a
deceased members account or $100 in the case of a divorce. (Turns out,
divorce really is more expensive than death.)

"I’ve long argued that the airlines’ love of complex rules turns
consumers against companies that they really do want to love. Flying
can be a joy and a thrill, and yet it has been turned into a major
hassle. Complicated fare rules and frequent price changes are
maddening and seem so often punitive. Fees and expensive penalties
anger customers. Rules are so often one-sided –- consumers get
penalized for being late, changing flights and making mistakes, but
when it’s the airline that’s late, unreliable or wrong, the consumer gets
a snarly sorry, if that.

"Frequent-flier miles are an asset, and consumers who have them ought
to be able to use them as they want, not as their airline wants."

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