Until now, you needed to engage in some sort of activity every 24 months — either by earning or redeeming miles — in order to keep your account alive. If you didn’t, poof!, your miles disappeared.

This move is primarily a change for the better for the infrequent Delta traveler. After all, if you were a regular Delta (or SkyTeam) customer, you weren’t really worried about the expiration date, since you kept racking them up.

Rather, this helps the little guy and is bound to build up a great deal of goodwill.

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But now Points.com, the company that lets you switch miles from one program to another, for a fee, has partnered with Paypal, which effectively converts miles to cash.

Since airlines have to agree to participate in Points.com, those “legal” hurdles are out of the way. It’s perfectly legit now to make the switch to cash.

Participating airlines at this point are few and far between, but a few biggies are in there: American Airlines AAdvantage, Air Canada Aeroplan, and US Airways Dividend Miles are the only players, so far.

The biggest problem is the actual value proposition: They’re terrible. Don’t expect big cash payouts.

If you want to get $100 cash, you’ll need 17,734 Air Canada Aeroplan miles, 24,118 American Airlines AAdvantage miles, or a mind-boggling 120,589 US Airways Dividend Miles.

120,589???! For $100??? Are you freaking kidding me? That’s a business class flight to South Asia. That’s three coach tickets to Hawaii. That’s … worth well more than $100.

The other airlines’ options are not much better. AC miles come to 0.56 cents per mile. AA miles are worth 0.44 cents per mile. And US miles… 0.083 cents per mile. That’s insane.

While, in theory, it’s nice to see more choices for redeeming miles, there’s no way on earth I’m participating in this.

The concept is essentially the same as their e-fares: For last-minute reservations on flights from their hub cities, you pay less than the normal walkup rate. Your travel dates are limited, and you never know more than a week or two in advance which cities will be in the mix. It’s all determined by supply and demand.

For cash fares, this can be a good deal if your travel plans align with the e-fare rules (typically a Saturday departure and a Monday or Tuesday return). But for fares “paid” with miles, the discount isn’t as enthralling. You’re getting a discount on the mileage cost, but the product you’re buying is already discounted.

For example, the e-fare for Chicago to Los Angeles this coming weekend is $135 each way, plus taxes. (That comes to $291.40) The Weekend Saver fare: 19,000 miles, instead of the typical “saver” rate of 25,000 miles. That comes to about 1.5 cents per mile. That’s better than the 1.1 cents per mile you’d be getting if paying 25k miles, but it’s still not great value. But if you’re in a gotta-go, low-on-cash but miles-rich state, this could come in handy.

Nonetheless, it’s nice to see an airline offering discounts.

I opted for a personal Visa card that offered up 75,000 bonus miles after just $1500 in spending. I quickly reached the threshold, and the bonus appears on my current statement (screenshot above). The miles were reflected in my AA account the next day.

Echoing Gary Leff’s comments on this subject, these bonuses are among the best credit card mileage offers that have ever been made available. If you’re feeling particularly frisky, sign up for one personal card and one business card. If you’ve got a partner, have the partner do the same. This is an easy way to rack up a boatload of miles in one of the best programs out there, a program that actually has solid award availability.

The mega-offers run out on October 31, 2010, so act fast.

Here are the links again.

75,000 miles after $1500 in purchases within 6 months, no fee the first year:

• 75,000 mile bonus: Visa
• 75,000 mile bonus: Visa Business
• 75,000 mile bonus: American Express (issued by Citi, not Amex)

100,000 miles: 50,000 miles after $750 in purchases within 4 months, and another 50,000 miles after $10,000 in purchases within 12 months, no fee the first year

• 100,000 mile bonus: Visa
• 100,000 mile bonus: Visa Business
• 100,000 mile bonus: American Express (issued by Citi, not Amex)

A friend of ours doesn’t think she’ll be traveling anymore and wants to give us (insert drumroll here) 300,000 USAir Dividend Miles. I looked on their website and their transfer page has a dropdown that only goes to 50,000 and has a charge of $500 (Plus 7%) for that. That would mean it would cost about $3300 to transfer 300,000 miles, which would be about the same as just buying the tickets in the first place. Surely I’m misunderstanding this. If not, why don’t they just say “you can’t do that”?

You’re not misunderstanding this, Bill. Transferring miles comes with limits, and with high price tags. Airline-internal programs (between friends) and the points exchange offered by Points.com (between strangers) are both pricey.

At those prices, you’re frankly better off buying miles outright from US Airways. (I generally don’t recommend that either, given the high price, but US Airways has a 100% bonus running right now through November 15, 2010, for you to consider. Anyway…)

So what’s the best way to transfer miles to another person for award redemption?

Simple. Don’t do it.

Your very generous friend should just book the tickets for you, rather than transferring miles to your account. This is perfectly legitimate, according to the US Airways Dividend Miles program rules:

Transferring awards

1. You may redeem your miles for award tickets for use by any person you designate. Simply provide the passenger name(s) at the time reservations are made.
2. Name changes are not permitted. If you or the person you designate are unable to travel, you may redeposit your miles into your account for a redeposit fee.

Of course, you’ll want to pay your friend for the cost of any taxes and fees incurred. She will be stuck with those costs when she books the ticket, so stay on her good side and reimburse her quickly.

One other warning/recommendation: There have been reports of travelers being questioned by airline staff when the travelers aren’t the ones whose mileage account paid for the tickets. Some folks with high frequent flier miles balances have sold their awards, which violates the program policies. So, to avoid a hassle, make sure your friend writes a short note on your behalf. The note should simply read something like this:

To whom it may concern,
I have given Bill a gift of this ticket, issued with miles from my account [number]. Bill has not paid me anything for these tickets. If you have any questions, please feel free to contact me at [phone number].
Sincerely,
[Bill's generous friend]

Good luck getting the tickets you want. And consider yourself lucky to have such a generous fiend.

Related:
- Reader mail: Can I transfer points from one airline to another?
- Is a new frequent-flyer point exchange a great opportunity or a new ripoff?

If you’re going to cash in your AA miles for a flight on BA, though, you’re going to pay through the nose. BA slaps fuel surcharges onto the base airfare, which are payable even on frequent flier tickets. Those fuel surcharges can run as high as $500 for a roundtrip ticket in a premium cabin, on top of the miles you cash in. What would cost you $150 cash or so on an AA flight will cost you 5 times as much if booked on BA metal. This is completely and utterly lame.

The logic (and legality) of these fees has always escaped me. When I buy a plane ticket, I’m buying transportation from point A to point B, and the on-ground and in-flight services associated with that transportation. Fuel is part of that transportation equation.

By backing out the “fuel surcharge,” airlines act as if the consumer is just renting space on the plane. But last time I checked, I wasn’t just renting a chair. I also paid for the the movement of that chair across the oceans.

AA has posted an FAQ page related to the changes. It’s worth reviewing. See also Gary’s Friday post on the issue.

Maybe I’m seeing the glass half empty here. I’ve spent much of the weekend (and all of today) in bed, sick as a dog, so I’ve had had plenty to time to get crabby. Yes, this is better than before. Yes, other airlines and airline alliances play similar games. But these discrepancies within an alliance defeat the spirit of cooperation. They insult and dispirit customers, and they embolden the critics who argue that miles are “worthless” because of airline shenanigans.

I am glad they did something to improve the alliance. But I still hoped for better.

I appreciate what these kinds of rankings are trying to do, but this is unfortunately not an exact science. Let’s look at the methodology of the survey (pdf):

IdeaWorks made 6,160 booking queries at the websites of 22 frequent flier programs during February and March 2010. Travel dates spanned June through October 2010; 10 long-haul routes and 10 city pairs under 2,500 miles were checked to assess reward seat availability.
[...]
Notes regarding reward query methodology: Booking queries for a party of 2 travelers were made at frequent flier program websites during February 2010 with minor follow-up work conducted during the first week of March 2010. Some airlines require a Saturday night stay for reward travel; all of the queries used date pairings that included a Saturday night stay. While the city pairs varied for each frequent flier program, the travel dates did not. Specific dates were selected for queries and only reward seat availability for travel on the date specified was recorded; any departure time was acceptable. Furthermore, reward travel had to be available on the outbound and return dates queried. Overly circuitous routings were not allowed. When offered, online reward availability for partner airlines was always requested.

(emphasis added)

A few problems here: If you’re not comparing the same city pair, you’re not comparing apples and oranges. A sub-2500 mile itinerary could be a flight from Los Angeles to Seattle, or a flight from Inyokern, California to Harlingen, Texas. These are very different routes, with very different levels of competition (and subsequently availability).

Another issue is the fact that the survey consisted entirely of website research. Frequent flier mile ticket redemption — if you want to get the good stuff, and not just a domestic flight form Chicago to New York — is going to require a call, 99 out of 100 times. (The good stuff means complex international travel, premium cabins, and partner airlines.) Just relying on the websites is not a fair test.

Finally, what are “reward” seats? Are they the capacity-controlled “saver” awards, or are they last-seat-availability awards that cost double the miles? I’m assuming that the survey involved the former, and not the latter, but there’s no reassurance in the survey release that this was the case.

As a result, I take these results with a grain of salt. But some things aren’t surprising: Southwest has easy redemptions. Delta doesn’t. US Airways coming in dead last is a little more of a surprise, but I don’t have personal experience with their program for domestic flying.

Nonetheless, the survey is an interesting conversation starter. And the conclusions of the consultants who put it together are quite dead-on: “The revenue … comes naturally when members become enthused (and not frustrated) by program participation.” Amen.

See the chart results below.

With United, it’s actually a better proposition, on the whole. Don’t get me wrong: It’s a good news/bad news scenario. But on the whole, it’s better than AA’s offering.

The program changes actually incorporate two new policies: Cash+miles tickets, and one-way awards.

• Good: Cash+miles options
  United is offering a “Miles and Money” option, so a smaller mileage balance can be supplemented with cash. A nice option for flexibility.
• Not so good: Availability and fees
  However, it’s not available on every flight (“select flights”). I ran a few searches, and there was no cash-supplement option.

  Note also that you’ll be responsible for more fees (like airport passenger facility fees) which aren’t typically charged for tickets paid 100% with miles. So the cost for the Miles and Money option will be more than just the cash fare paid.

  The complete rules are here.

• Good: One-way awards
  One way awards are a great feature, especially if you’re traveling to a city that’s serviced by another airline that offers a similar award structure. (Say, fly one-way there on AA, and one-way back on UA.) United is making one-way awards available only via united.com, and you can only book flights operated by UA (no codeshares or partners). The one-way redemption chart is here. (pdf)
• Not so Good: The threat to stopovers
  Booking a ticket on entirely UA metal can no longer include a complimentary stopover. Each leg will need to be booked separately, as a one-way segment. This will drive the number of miles required higher. But this shouldn’t be a big concern for true stopover buffs. For example, if I were to fly from New York to Paris, spend a few days there, then fly on to Istanbul, and eventually return, that would have to be booked using a Star Alliance ticket. Those ticketing rules appear unchanged. But all-UA award itineraries — already less desirable than most Star Alliance partner flights — will be even less desirable. And I worry that Star Alliance tickets are next…

On the whole, this really does strike me as a program enhancement. Perfect? No. But I’m not going to complain.

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Upgraded: Knowing what to do when you’re traveling for the holidays
Before you head to the airport, consider this post on five ways to get an edge on other travelers during the holiday season. The TSA has also published an updated list of do’s and don’t's for bringing items through security, which includes references to the infamous issue of pies. Don’t let anyone say you weren’t warned.

Downgraded: Your health in the sky
Contracted H1N1 or another nasty contagion? Got travel plans? Unless you’ve got good travel insurance, be prepared to pay a fee if you want to change you flights if you’re sick. From several reports (see here and here), it’s clear that being contagious doesn’t make you any less desirable aboard America’s airlines. Medical waivers be damned! Give them your tired, your poor, your huddled masses yearning to cough up a lung onto their seatmates. It guess that’s freedom.

Upgraded: Regulation of frequent flier miles?
Senator Chuck Schumer of New York is pushing for an inquiry into frequent flier programs, with particular attention to the phenomenon of expiring miles. Airlines, of course, argue that an inquiry is unnecessary by the government in the affairs of private business. Much like Congress is looking to regulate credit card fees and other business practices of the banks, this could get interesting.

Downgraded: Lufthansa intra-European economy seating
Lufthansa is shrinking the legroom in its economy cabin on shorter flights within Europe, to jam in more people. Thankfully, they’re leaving the big birds that fly across the oceans as they are, for now.

Upgraded: Communing with animals while you travel
A man with 15 lizards strapped to his chest was caught at LAX. For those keeping score, it was two geckos, two monitor lizards (!) and 11 skinks.

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United must have gotten a lot of complaints, as they’re reinstating the so-called “regional” upgrades:

1K® members will continue to earn Regional Upgrades
Sometimes no change is good news. After our last announcement, we heard from our 1K members how much they value their Regional Upgrades. To thank them for their ongoing loyalty, we’ve decided to continue issuing Regional Upgrades to 1Ks, even after the Unlimited Domestic Upgrades program launches.

That gives top-tier elites the best of both worlds: A reserved upgrade if booked in advance (and if United releases seats for upgrade early…) and the top of the free-upgrade list if they’re sweating it out at the gate.

And entry-level elites don’t really lose anything here. The 1Ks would be ahead of them in line, anyway.

—

Separately, United and Continental announced that reciprocal “unlimited” upgrade privileges will roll out in mid-2010. No word yet on what the hierarchy will be; I assume that, in a tie, UA 1Ks will still outrank CO platinums…

And on the semi-upgrade front: Continental elites will also have free access to the Economy Plus section on United flights — a privilege which United hasn’t been extending to other Star Alliance partner travelers.