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Deceptively Worthless Miles
Joel Widzer · October 13, 2004

Why go for the miles when loyalty is what really counts?

Face it: miles are all but worthless. In 1999, I wrote how air miles have become akin to a second national currency.

Today, they are a global currency that has become passé. The value of air-miles and other incentive-based points have fallen quicker than the Dollar to the Euro.

Why? Blame it on supply-side economics. The sheer barge of outstanding miles and points, which many experts estimate exceed 9 trillion, have been devalued from 2 cents to .05 cents. Going for the miles seems foolish, at best.

In a quest for points, many ignore high fees, pay steep interests rates, or spend needlessly, for deceptively worthless miles.

Consider the actual cost of the most popular source of miles: credit cards. When given the choice between earning miles on my new U.S. Bank Visa Business Card paying an annual fee of $75, or no annual fee and no miles, the choice was easy.

To earn a non-upgradeable-free ticket, with a maximum value of $300, I would first have to spend $25,000 and pay $75 a year for this privilege. It doesn't take a Ph.D. in economics to see the fallacy in this deal.

No, real rewards come from loyalty.

The travel game is not about miles, but elite membership. Building loyalty provides consumers leverage. Without this leverage you risk having an average travel experience. In essence, you relinquish control of your travels to your providers.

A little loyalty takes you a long way. I've always emphasized building a mutually-beneficial relationship with a travel provider. The reason for this is obvious: it makes my travels easier and more comfortable. Not only that, it makes me a valuable consumer to the airline, hotel or car rental company.

Over the next few months I have a number of trips scheduled between Orange County, San Francisco, and Seattle. It's a market not well served by Delta Air Lines. I called Alaska Airlines to request a MVP-Gold membership, their highest elite level.

No problem. Within a day I was an MVP-Gold. More importantly, when I booked my flights-pesto-I was upgraded to first class. All for the price of an economy ticket on a lesser airline.

By the same token, Hertz Rental Car recently offered me their Five-Star membership-even though I lacked the required number of rentals. When I went to use my new Five-Star membership, I was automatically upgraded to a car with a GPS system. (That's a big benefit since I can't read a map.)

Managing miles has become so complicated that enterprising Web sites offer insights and special software to help navigate this complex task. In today's time-strapped society, it's much easier to consolidate your purchases among a few select quality providers, build loyalty, and gain leverage.

The incentives and rewards far exceed the diminishing value of miles.
Joel Widzer is author of "The Penny Pincher's Passport to Luxury Travel," a guidebook on traveling in high style at budget-friendly prices.