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In May of 1981, American Airlines (AA) started a loyalty program called AAdvantage . AA’s goal was to retain their frequent customers by offering them rewards for flying with AA. AA’s program was so successful that later the same year Delta and TWA introduced their own loyalty programs. These loyalty programs became known as frequent flyer programs (FFP) because the airline tracked the miles a customer flew and rewarded them based on those miles. Therefore, the more miles a customer flew under an airlines frequent flyer program, the greater their reward.
Hotels and rental car companies started participating as “partners” in the successful airline programs. Even though the major hotels now have their own frequent-stay programs, they still remain partners with all the major airline FFPs because of the great marketing benefit they receive. FrequentFlier.com states there are more than 70 FFPs worldwide with over 100 million members receiving 100 million awards per year. Tickets to Hawaii and London are the most popular rewards used by members of the US FFPs. Wikipedia says fourteen trillion frequent-flyer miles had been accumulated by people worldwide as of January 2005. This corresponds to 700 billion US dollars.
In the US, programs have elite qualifying miles (EQM) or number of flight segments, not redeemable miles. Typically one EQM is earned for each mile flown on a paid ticket, but there may be a percentage bonus for flying full-fare economy, business or first class. Airlines also offer other opportunities to earn EQMs such as charging purchases on the airline’s specific brand of credit card and through special promotions.
There are a couple of issues for customers to be aware of. First, it is illegal to buy or sell FFP awards. The cost of litigation, fines and replacement tickets can be substantial if caught doing this. Secondly, watch for mileage expiration dates. This has been an on-again and off-again issue since the beginning. Currently most US programs allow miles to “live” indefinitely if a member has some account activity during a three year period, but programs outside the US typically expire miles three years after they are earned.
If you travel and are not a member of a FFP, sign up today and start accumulating miles to earn an award.
By Dean Cox
“The views expressed are those of the author and do not reflect any position of the Government or my agency.”