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A Swiss company has come up with an interesting alternative for spending your frequent flyer miles. Loylogic is pitching a redemption system they call Loypay. If a frequent flyer program adopts the Loypay system, then you use your points toward the purchase of products.

The innovation kicks in when you see how points are valued. The system assumes that you will use some combination of cash and points to buy the item, but the proportion is up to you. The points are valued on a sliding scale, inversely proportional to the amount of cash you’re kicking in. Visuals will help. Here’s what it looks like, in buying a hypothetical iPod.

If you use a lot of points, and very little cash, the points are valued very little. The opposite holds true as well: If you use a lot of cash, and just a few points, then you get a lot of value for those points. Here, I roughly aimed to knock $100 off using miles, which generated a solid cents-per-mile value.

You can take it even further on a cents-per-mile basis if you only cash in a very tiny number of miles. Only cashing in a single mile? You’ll get $5.04 for that mile, according to the example.

This sounds like a good feature to have in a loyalty program. (Remember, though, that these examples are using hypothetical miles from an imaginary account. It would be up to the program that implements such a sliding scale to determine the value.)

The program is thusfar being testing by Etihad Airways of the United Arab Emirates. The airline is offering things like rafting trips, hotel stays, newspaper subscriptions, etc., using the Loypay system. Value of a mile starts at around 1 cent, and goes up as you are willing to spend more cash.

It seems the real benefit would be for users with small balances, with no hopes of getting a 25,000 mile award or the like. But it’s an interesting twist.