Airlines bristle at sale of vouchers
By webmaster | January 6, 2009
By Greg Sandoval
Staff Writer, CNET News.com
March 21, 2002, 6:10 PM PT
eBay is at odds with the nation's airlines as they try to halt the long-standing practice of selling travel credits, just as the busy summer travel season gets under way.
For years, airlines have tried to discourage passengers from selling frequent-flier miles and other incentives. The airlines have made headway in curbing the practice, but the vast reach and popularity of eBay has reinvigorated sales. An Internet marketplace such as eBay allows buyers and sellers to barter more easily than ever before.
Last week, eBay promoted the airline-credit auctions prominently on the front page of its Web site, coinciding with sweeping price cuts announced by most airlines. One example: a round-trip ticket anywhere American Airlines flies in the continental United States for a starting bid of only $49.99. But as the seller observes, "Best if you were to have a destination in mind, because I will have to make the reservation in your name and then deduct the miles from my account."
eBay has allowed the sales despite complaints by airlines. On Wednesday, Delta Air Lines threw down the gauntlet, e-mailing people selling Delta vouchers on eBay to inform them that they were violating the airline's rules.
The sale of vouchers "subjects the violator to liability for damages and litigation and transaction costs," Delta said in its message to Gerry Murphy, who has been selling and trading the vouchers online for more than a year. "Improperly obtained Certificates/Tickets are void and will be confiscated."
"I don't know what I'm going to do," said Murphy, a carpenter from New York who has racked up scores of vouchers because of frequent visits to his sick father. He counts on the income from the vouchers to help pay for more airline tickets.
The airlines say this backdoor exchange hurts their business and customers. Northwest Airlines' incentive programs were "designed to recognize our customers for their loyalty, and not created for third parties to profit on," said spokesman Kurt Ebonoch.
Airlines are in particularly tough times now, posting record losses, locked in fierce price wars and eliminating commissions to travel agents. The airlines cannot afford to lose any sales to this "gray market" online, but their efforts to work with eBay to end them have failed.
eBay: Our hands are tied
In the past, eBay has been contacted by several airlines and asked to shut down the sales, said eBay spokesman Kevin Pursglove. So far, the auction house has refused. eBay says the sales are not illegal, and they don't violate any of the company's selling policies.
"We are not in a position to interpret the policies of each airline," Pursglove said. "Essentially, our hands are tied."
Other airlines besides Delta have contacted customers directly to stop the online bidding for their vouchers.
An eBay search on Thursday for the words "airline tickets" generated more than 50 listings for vouchers good for either a free trip or heavily discounted fare.
One Southwest Airlines voucher for sale on eBay was good for "either a roundtrip flight or two one way flights," according to the description. Other items for sale were the equivalent of cash, such as a $500 Delta Air Lines voucher good on any flight. As of early Wednesday, it had been bid up to $305.
Some people "are machines out there--brokers, travel agents, frequent travelers who spend their entire day buying, selling and swapping these vouchers," Murphy said.
Profits in freebies
People started selling their frequent-flier miles almost as soon as American Airlines popularized the first frequent-flier program two decades ago, said Jared Blank, travel analyst for Jupiter Media Metrix.
"The brokers who offered to buy people's frequent-flier miles would stick ads in USA Today," Blank said. "The paper became famous for them. There were oodles. The brokers would take your miles and then give you money."
Then the airlines sued the brokers and won--and the sales went underground.
Southwest, like most airlines, prohibits sales of its vouchers, but does allow customers to give them away. This loophole makes them among the most trafficked vouchers online. Sellers online will say they are selling Southwest "beverage coupons" or envelopes, and as a freebie they will throw in a free round-trip ticket to wherever Southwest flies. That way, they don't break Southwest rules.
Southwest still frowns on the sales it sees online. "The most effective thing we think we can do is educate the consumer that it's not in their best interest to do it this way," said Beth Harbin, a spokeswoman for Southwest.
Drafting rules is one thing, but enforcing them is another. Without the help of eBay and the other auction sites, the airlines will likely continue to watch as incentive vouchers are exchanged on the Net.
"I bet I could sit in front of my computer six hours a day and make the same money I make as a carpenter," Murphy said.
The airlines maintain that the loser in such sales is often the buyer.
"People sometimes buy expired tickets and they have no cash value, and they look to SWA for help," Harbin said. "Or they might buy a ticket for $300 round-trip and Southwest might have a cheaper fare, so that customer may be paying too much."
Henry Harteveldt, a travel analyst for Forrester Research, says there is likely another reason the airlines don't want the vouchers sold.
"Frankly, they give these vouchers and coupons out hoping that they won't be redeemed," he said. "The airlines want to reward or satisfy or placate the customer, but they know many people will forget about the vouchers."
I guess most people would also say that "at the time of signing up" they did not know, be told or even think to ask if FF miles were able to be sold. Also now that you "know" that coupons cant be sold does the same point hold for the second and subsequent vouchers you get?
I dunno. Maybe not. But I still think there is a difference between miles and vouchers, since vouchers are a more cash-like item. If people could sell miles, it would make it into less of an individual program; people could "top off" the amount of miles they needed for a flight (I know you can do this
Sorry if I'm missing something here. How do the airlines know whether you bought an award ticket or it was given to you by a relative or friend? My brother and I swap
awards all the time, and no one has ever questioned us. He went to OZ using my AA miles, and the ticket had my name and ff# on it as well as his.
>>> It was your brother, family is good, especially with the same last name, easy to transfer.
FYI, just to clarify in all this, I don't and would never sell miles, awards, vouchers, whatever. I checked out the coupon connection on here. Yeah, a hotel upgrade cert or something mabye. How do you know you can trust the person? etc... I don't know the people on E-bay and yes, people do sometimes get screwed on there...
I do swaps with a friend, that is fine. The airlines aren't going to go after that. Plus, my friend always travels with me, they won't question you when you, the member, are with them.
What AA did and may still do. If you have an award ticket for an impacted/full flight and they want your seats:
They will call you and the person who "sold" or whatever the ticket to you. You had better have your story straight and up, otherwise, they pull the seats right there.
I knew of someone who was supposed to fly BA First Class to Africa and yes, the (idiot http://www.flyertalk.com/forum/smile.gif ) bought the award tickets. BA had a list of bad tickets at LAX and when they checked in, they were confiscated, GONE, ZIP, BYE... That would ouch... Also, it was their honeymoon. more ouch...
BA could have been mean and done it in Zimbabwe, then they would have to pay $$$$$$$ to get home, and yes, FYI, airlines sometimes will on purpose let you fly out and then claim to have caught you while on the road... it is nasty... so, if you do this, beware!
I disagree in the case of bump vouchers (or other vouchers given as a customer service gesture), because they are direct and negotiated compensation and they don't tell you that you cannot sell them, at the time they offer them. Yes, it is printed on the back of the voucher in suitably tiny print, but by then you are already off the plane.
Just my opinion.
Doakes
If they make it to difficult to redeem awards, they will kill the golden goose.
He he... I'm trying to redeem an award to Europe in early October (not exactly peak season), and I have come to the conclusion that United has already bludgeoned the Golden Goose to death and eaten it. http://www.flyertalk.com/forum/eek.gif
On this eBay thing: I agree that the airlines have every right to control their own currency (whether it be miles, certificates, or dollar-amount vouchers). Pretty simple concept to me. They created the miles, they set the policies for how they will be used, and I'll decide if I like the policies enough to collect the miles. Airlines are fully aware of the 'gray market', and can tweak their policies accordingly. Note the SWA certs are liberally given away, sold, traded, etc. with little oversight by the airline. Other airlines closely watch their miles. The consumer can decide if that is important enough to influence his purchasing decision.
We all agree that the airlines do a lot of somewhat illogical things that we don't like with their fare structures, policies, fees, etc. I hear a lot of talk about the 'good old days'. In those 'good old days' (more than 5 years ago), I routinely paid $800 for the cheapest coach tickets from the Midwest to Europe. In the past 2 years, I've done three R/T's on AA, earning double miles plus bonuses, for under $400 R/T per trip (one of the trips had so many bonus miles that it was almost like getting a free ticket!). In no other time in history have we been able to travel so far, so easily, and for so little money. Put it in perspective - the quirky policies aren't all that bad.
There's a lot of people flying and earning way more miles than they can use, this is good for the airlines because they aren't going to have to make good on that obligation anytime soon.
If people start reselling the miles, a lot more awards would theoretically get used, and that would cost the airlines money. If it costs them money, it costs us money. They'd end up raising fares or making the FF program more restrictive.
If you want to sell your miles go ahead, but don't complain if you get caught.
d
Since some of the airlines are now selling more miles then they give out (ie AA) they are starting to come around in their thinking. Frequent flyer miles are now being treated as advance seat sales. The airlines are making alot of money selling miles, this allows them to be more generous with their programs, this encourages more people to go after miles, this generates more income for the airlines and so on and so on. This upward spiral has been noted by AA but not everyone, ie CO.
One of the few profitable areas still left with the airlines are their frequent flyer mileage programs. If they make it to difficult to redeem awards, they will kill the golden goose. Some airlines are aware of this while others are still stuck in the old way of thinking.
DOPPY: It is common practice to cite previous court cases to set precedent. The fact that the court in NJ threw the case out is very important becuase Delta is now going to think twice before sueing another mileage broker. In all future law suits brought on by the airlines, this ruling will be brought up.
As the ability to use miles to buy more and more goods and services spreads, it will become more and more difficult for the airlines to justify their rules that prohibit the selling of them.
But I thought it would have been in poor taste so I let it go.
Sold 2 5000 point lots of coupons for over 2 cents a mile. Never understood why people were willing to pay so much on Ebay.
The problem is that when determining the cost of miles and how many they are going to award for certian things, they count on "breakage", a certain number never being used (same applies to upgrades that airlines issue). If the breakage rate goes down, they will either have to increase the price of the awards or decrease the miles awarded for various purposes.
Airline programs are voluntary, if you don't want to follow the rules, don't join ...
You forget one thing in your euqation. The airlines create the miles or currency and tey print them as needed. They also control the inventory of seats that can be used for awards. They also control the rules as to how you can use, spend and earn your miles.
I fail to see how a secondary market could seriously hurt them aside from brokers selling miles cheaper than the airlines do, which I doubt would happen on a consistent basis.
I think what the writer didn't help to make sense out of is that ...
The carpenter sells the miles for more cash than the price of the ticket he would get for free if he used the miles for his own ticket.
For example, dad is sick in LA, son in NY. Son plans to visit every other weekend, and knows (or hopes) he will be making this trip for many months. Therefore, he buys well in advance on fare sales for $250 or less RT. He sells the 25K to someone for $500 who needs a last minute ticket. Therefore he gets two trips to see dad (that also earn more mileage) out of the 25K instead of just one.
Everyone here knows that mileage is only worth about $0.005 per mile if used for advance purchase tickets like this, whereas we all want them to be worth 2 cents or more, therefore we try to maximise them on last minute trips and premium class service.
Of course, reading it I thought the same thing for a second, which is where the writer failed, not explaining that he can get more for the tickets than he pays for the free one he buys.
Having said all that, I certainly hope the carpenter used an alias, or the airline is going to, er, give him some wood.
And why in the hell do people pay so much on Eaby for these things anyway?
[This message has been edited by tummyg (edited 03-25-2002).]
http://iciclesoftware.com/worldplus/WPDelta/WPDeltaJudgment.html
Glad I'm not in his spot!
Viajero - agree entirely with you. http://www.flyertalk.com/forum/wink.gif
On Wednesday, Delta Air Lines threw down the gauntlet, e-mailing people selling Delta vouchers on eBay to inform them that they were violating the airline's rules.
The sale of vouchers "subjects the violator to liability for damages and litigation and transaction costs," Delta said in its message to Gerry Murphy, who has been selling and trading the vouchers online for more than a year. "Improperly obtained Certificates/Tickets are void and will be confiscated."
Oh no!!! The dreaded "Delta Secret Police" is back!!!
[This message has been edited by Andrew14302 (edited 03-23-2002).]
I wouldn't risk my relationship with most airlines by flouting their rules so egregiously, but I think it reflects poorly on their customer realtionships that they see the need to police people so harshly.
Airlines control the inventory which are seats. There are only a finite supply of seats available. The airlines adjust the FF awards accordingly. This does not cost you or I more money. The airlines also have another mechanism aside from inventory control. They have the ability to raise mileager requirements for award travel. I believe it makes very little difference to the airlines revenue if people decide to sell their miles. The only customer they would lose is the guy spending $1700 for a coach seat in economy flying from LAX-LGA with less than a 7 day advance(providing that ther ia an award seat on the flight).
They have capacity controls on upgrades and discounted free tickets. They also have free ticket awards that are not capacity controlled, where the seat comes out of the full fare inventory.
d
I believe this establishes an interesting legal precedent. Those people who purport to be selling only envelopes in the "Airline Tickets" category cannot be selling just envelopes as eBay has ruled that is not permitted.
The White Security Envelope I listed is exactly as described and is of a type which is often sold on eBay under "Airline Tickets" - I was merely offering that item for sale in the same category - but without any "free gifts".
I wonder what the lAAwyers will make of this one http://www.flyertalk.com/forum/smile.gif
PS - if you still want the White Security Envelope I'm sure we can come to some arrangement http://www.flyertalk.com/forum/biggrin.gif
Oh ... interesting point about that ... guess those other envelopes are miscategorized ...
OK - let's see if this really holds true, I have arranged for a "White Security Envelope" without a "free gift" to be listed on eBay.
If the envelope sells for a very low price (or fails to sell at all) then I think it's safe to say that bidders aren't actually buying the envelope, but the contents.
Then again, a fool and his money are easily parted, I may strike lucky http://www.flyertalk.com/forum/biggrin.gif
You can view the auction at http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=1342270766
BUSTED!
As I suspected would happen, Ebay shut down your auction, likely because of your title (keyword spamming they call it) and the category you listed it in (airline tickets) ... it needs to be listed in the proper category for envelopes and you need an accurate title that's not considered keyword spamming.
For everyone else's info, the email Ebay sent me as a bidder:
Please be aware that auction:
1342270766 - *HOT* Airline Tickets White Security Envelope
in which you were a bidding participant, has been ended early by eBay for violating one or more of our listing guidelines.
Because the auction was ended early, you as a bidder are not required to complete the transaction. Since this is a listing
violation, the seller is free to relist the item in the proper format. Should you wish to do so, you are free to bid on the item again if it is relisted.
If you care to review our listing guidelines for a better understanding of our auction policies, they can be found at: http://pages.ebay.com/help/community/png-list.html
Please feel free to contact us with any questions or concerns you may have on our existing policies.
1-The folks who "sell" the drink certs that just happen to include a RT ticket are selling the ticket. This holds true regardless of how much "wink-wink" activity goes on or how they word the transaction. I.e., the substance of a transaction takes precedence over its legal form. Much akin to the purported gifting in the FT venue; when in fact these folks are trading, regardless of the terminology used. -Yes, that having been said I am not against either of the above practices, I am just telling ya that you are selling, trading, etc., regardless of how you word the transaction. -This is a wide paintbrush, but I really don't think the airlines mind the true trading activity all that much. Outright sales are a different matter and I am glad to see that those are pretty much verboten here in the FT venue.
2-As to the high prices on e-bay, that is interesting. Do note this, auctions do not work in a manner that derives a market price. They function to achieve the highest price that any buyer is willing to pay for a specific item. Interesting approach, but think it through. Hence the reason for an auction, to get the highest price you can for an item, not necessarily indicative of market.
Ignorance may not be a defnse in a criminal matter; however, in a contract a meeting of minds is required for enforcement. Especially in a contract of adhesion such as those governing airline programs, ignorance, vaguenss, and ambiguity all enter into it.
I wouldn't risk my relationship with most airlines by flouting their rules so egregiously, but I think it reflects poorly on their customer realtionships that they see the need to police people so harshly.
I'm not quite sure what your point is. I know you're responding to an earlier post, but it's almost as if you're saying that a person couldn't be held to suffer the consequences in the contract unless they were aware of them and purposefully violated the terms.
But, isn't the fact that the person isn't saying that they're selling the miles themselves, but is using a charade of selling a plain white envelope for several thousand dollars will free miles enclosed a very clear indication that they know that selling the miles themselves is prohibited, and is in actuality knowingly violating the terms?
The airlines have rules and we all agree to them by virtue of participating in the program. We're free to take our business elsewhere or not participate in the FF programs.
You're not supposed to sell FF miles, awards, etc. That we know. You can contact the airlines and try to get them to change, but I doubt they would.
If you decide to break the rules, then you can't complain if you get busted. People always complain when they get a speeding ticket; but they don't seem to be as concerned with the fact that they were the ones speeding, it's not the cop's fault for setting up a speed trap.
On Butcher Bird's point, I fully agree. I don't know why anyone wastes their time saying "I'm going to sell a plain white envelope, that happens to have 1 million miles in it." We know what they're selling, the airlines do, and so does the legal system. That defense isn't going to work.
If it did, I'd say, "I'm looking to buy a plain white envelope for $20,000, all you have to do is deliver the envelope, and, by the way, it would be nice if you happened to kill my wife."
d
The, carpenter with the sick dad, needs the income from selling the vouchers to BUY MORE TICKETS??? Hello??? Earth to journalist... WHY DOESN'T he just USE THE VOUCHERS to buy more tickets??? DUH? Perhaps, because he's lying? and is just out to make money?
Hmmmm Sounds reasonable to me, since you can sell the miles for more than the tickets can cost in many markets. Its simple math.... with advance purchase the tickets cost 1 cent a mile, where as most brokers buy them for almost 2 cents a mile.
------------------
AA member since 1981
awards all the time, and no one has ever questioned us. He went to OZ using my AA miles, and the ticket had my name and ff# on it as well as his.
BUSTED!
... it needs to be listed in the proper category for envelopes and you need an accurate title that's not considered keyword spamming.
I believe this establishes an interesting legal precedent. Those people who purport to be selling only envelopes in the "Airline Tickets" category cannot be selling just envelopes as eBay has ruled that is not permitted.
The White Security Envelope I listed is exactly as described and is of a type which is often sold on eBay under "Airline Tickets" - I was merely offering that item for sale in the same category - but without any "free gifts".
I wonder what the lAAwyers will make of this one http://www.flyertalk.com/forum/smile.gif
PS - if you still want the White Security Envelope I'm sure we can come to some arrangement http://www.flyertalk.com/forum/biggrin.gif
[This message has been edited by SarahWest (edited 03-27-2002).]
I do not think, however, that it is in our interest that the airlines have us take this "holier than thou" attitude towards their rules and policies whereas the airlines are free to change the rules on us at their own whim and fancy. How many times have you had the airlines change the rules to make it more difficult to redeem awards or change reservations for award tickets or even to earn miles? Why is it OK to for the airlinews to do that but not OK for us to "give" my miles or voucher to someone?
I guess this guy is still able to sell plain white envelopes on ebay?
500,000 miles for sale! (http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=1340868041)
How many folks do you suppose had activity on 2/6/02, had a balnce of exactly 947,311 on 3/18/02 with 1,532,392 lifetime miles and 42 upgrades on that date and have flown 12 segments and 38,438 YTD as of 3/18/02?
Dumb dumb dumb ... that guy is so busted.
I've heard tales before about people showing up at the airport with frequent flyer tickets they have bought, and being denied boarding. Who does the ticket holder pursue then? They're going to want compensation from someone. I guess it really is a case of "buyer beware" when you decide to market your miles to the highest bidder.
Also, if people are selling an envelope and then giving away something else for free, then technically they are not directly selling an airline coupon or violating any rules.
Airlines bristle at sale of vouchers
By Greg Sandoval
Staff Writer, CNET News.com
March 21, 2002, 6:10 PM PT
....The sale of vouchers "subjects the violator to liability for damages and litigation and transaction costs," Delta said in its message to Gerry Murphy, who has been selling and trading the vouchers online for more than a year.......
....."I don't know what I'm going to do," said Murphy, a carpenter from New York....
I wouldn't want to be in this guy's shoes..... 1. Delta polices so hard; 2. He admitted to selling vouchers for years, and 3. DL has his address, thus his acct. number. It would be interesting to hear a USA Today follow-up on the DL Police's course of action.
Glad I'm not in his spot!
[This message has been edited by Viajero Joven (edited 03-24-2002).]
Most airlines charge you 200k for one first class ticket.
I'm not sure this hyperbole is helping your argument? 200k for an FC award ticket? I know there are a few FC awards that are that high (US to South Africa maybe ... RTW too), but that number is a tad bit unrealistically high ... and that's ignoring domestic FC tickets even ...
Obviously, have different e-mail addresses!!! Don't use the same e-mail that you use on E-bay as your registered address at an airline. Sorry, but that is just plain (stupid) and I will bet that someone does that, then they will find you, for sure.
I have no reason to hide my email address (it is the same here on Flyertalk as it is with all the airliens and every other thing I am registered for). I guess it's stupid if you're doing something against the rules ...
The airline rules pretty clearly state that vouchers are not to be sold, so I don't see what you have to complain about. If you don't like it, don't collect the miles, it's your choice.
If people start reselling the miles, a lot more awards would theoretically get used, and that would cost the airlines money. If it costs them money, it costs us money. They'd end up raising fares or making the FF program more restrictive.
d
Airlines control the inventory which are seats. There are only a finite supply of seats available. The airlines adjust the FF awards accordingly. This does not cost you or I more money. The airlines also have another mechanism aside from inventory control. They have the ability to raise mileager requirements for award travel. I believe it makes very little difference to the airlines revenue if people decide to sell their miles. The only customer they would lose is the guy spending $1700 for a coach seat in economy flying from LAX-LGA with less than a 7 day advance(providing that ther ia an award seat on the flight).
500,000 miles for sale! (http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=1340868041) http://www.flyertalk.com/forum/eek.gif
I especially like the part "I have created a way that generates miles for very little cost, so if you are interested I am also looking for a partner in this regards." Gotta kind of wonder? Now, I would think that the folks here on FT would have figured out every way possible to earn miles. Sometimes you have to remember the old saying, "if it sounds too good to be true, it probably is."
[This message has been edited by onedog (edited 03-28-2002).]
if people are selling an envelope and then giving away something else for free, then technically they are not directly selling an airline coupon or violating any rules.
OK - let's see if this really holds true, I have arranged for a "White Security Envelope" without a "free gift" to be listed on eBay.
If the envelope sells for a very low price (or fails to sell at all) then I think it's safe to say that bidders aren't actually buying the envelope, but the contents.
Then again, a fool and his money are easily parted, I may strike lucky http://www.flyertalk.com/forum/biggrin.gif
You can view the auction at http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=1342270766
I see Ebay as simply allowing an exchange between two people to occur. They should not be held to a higher standard than a local newspaper or any other vehicle of advertising.
Also, if people are selling an envelope and then giving away something else for free, then technically they are not directly selling an airline coupon or violating any rules.
ebay makes a brokerage % of the sale , plus listing fees , i see them more involded in the transaction then just a newspaper listing
As long as the airlines control the number of awards that can be used on any given flight the airlines have nothing to loose.
But a lot of airlines have awards that aren't capacity controlled. They could theoretically loose an entire plane to award seats.
But, the bottom line is that they're counting on a lot of people not cashing in their miles. If everyone started selling miles, more award seats would get used and it would be more difficult to get upgrades or free tickets (either less availability or higher mileage requirements). That's not good for those of us who earn and use their own miles.
d
dallasflyer
Tango, may I ask from where you received your law degee, and in which jurisdiction you are practicing?
The basic principals of ontract law are very clear. And in this situation, when you open a FF account, or accept a voucher, you have entered into a binding contract with the airline in question. Breaking any of the conditions which attend the program or the issuance of the voucher, becomes a civil matter in just about any jurisdiction that recognized contract law. And a criminal one if outright fraud and intent to fraud is determined.
So can you please explain your statement in more detail so we can all understand why no laws have been broken in any jurisdiction?
OK - let's see if this really holds true, I have arranged for a "White Security Envelope" without a "free gift" to be listed on eBay.
If the envelope sells for a very low price (or fails to sell at all) then I think it's safe to say that bidders aren't actually buying the envelope, but the contents.
Then again, a fool and his money are easily parted, I may strike lucky http://www.flyertalk.com/forum/biggrin.gif
You can view the auction at http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=1342270766
Very Cute!
[This message has been edited by yamaka (edited 03-27-2002).]
Beckles: You are still thinking in the Old World way. Airlines are now selling more miles then giving out. Airlines are starting to treat these sales as prepaid seats.
The price they sell the miles for assumes a certain breakage rate though, and if the breakage rate decreases (through the sale of vouchers for example), the price the airlines charge for the miles will go up.
As long as the airlines control the number of awards that can be used on any given flight the airlines have nothing to loose.
I question the court's ruling in Atlanta. They assume that the person who bought those award tickets would have flown on Delta and at those prices if they had not used the award tickets. I find that logic faulty. Just becuase someone is willing to pay for a discounted amount award ticket does not mean they will pay more for a non-award ticket. If award tickets were not available then they might have changed dates, decided not to fly, or have taken a different airline. I also question the cost to Delta since these seats were capacity controlled and these "empty" seats would have been used for other mileage awards or upgrades.
I say if u can get away selling or trading your miles then do it. I think it is a load of crock that the airlines prevent a true secondary market for miles. I mean they sell them by the millions. When they know that a large majority of these miles will go unused. They also control the inventory of award seats, thereby controlling the value of the miles. So what really is the problem of having a secondary market out here?
The problem is that when determining the cost of miles and how many they are going to award for certian things, they count on "breakage", a certain number never being used (same applies to upgrades that airlines issue). If the breakage rate goes down, they will either have to increase the price of the awards or decrease the miles awarded for various purposes.
Airline programs are voluntary, if you don't want to follow the rules, don't join ...
There is a difference between selling miles and pooling miles. Miles in one account can't be pooled with another account for award tickets. If someone has enough miles in one account for an award seat than I would argue that those miles are going to be used, and I do not see the differnce if the account holder uses them or they are sold/given to another passenger. Can anyone cite examples of where people let their miles expire when they could have changed them into a ticket? The airlines count on most people having balances below the thresehold to claim a ticket. It is the bulk of these miles that the airlines count on not being used and the rule that does not allow miles to be pooled ensures this.
I've personally have had a lot of good experiences buying and selling airline awards. I was about to buy $2000 COACH last minute ticket from LAX->BOS and then found out that I could buy an award ticket from www.cheapestfirstclass.com (http://www.cheapestfirstclass.com) for $950 (taxes/security fee included) in F-Class!!!
Why in the world would I pay 2x more to sit in coach? Next time I have an expiring certificate, I'm going to sell it to these guys. I mean why lose money? Ever since AA stopped redepositing certificates, I've been pulling my hair out when I knew I didn't have a trip coming up...
>>> sssssssssshhhhhhhhhhhhhhhhhhhhhhhhhhhh
(quiet http://www.flyertalk.com/forum/smile.gif ) enjoy it, but do it quietly-
there are ears and eyes everywhere...
>>> I know of a Southwest employee who "sells" buddy passes in this manner. It is the drink coupon that she is selling for $200 or whatever. The B/P is free http://www.flyertalk.com/forum/smile.gif.
I am assuming that she knows that she can be fired for doing that. (she is not alone)
Ok, my take, in case anyone is interested.
The airlines do have a right to police their own products. The miles belong to them and they created the program. What scares me more( and I think I would have a heart attack if they did this, not LOL - so many miles!!!)
is that they could always discontinue the programs-FF if they are being abused. A friend of mine has over 800K NW miles.
We should have had a red light go on after 9-11 to not keep such high balances. For some reason, USAirways was my concern, although now that is only 30K. It would still hurt to lose the 30K- a free trip in Business within Europe.
On the other hand, I don't like the airlines, or my employer, my neighbor, the gov't, or anyone else policing what I am doing in my private time. E-bay is a private thing, and I don't want the airlines snooping around in there. In fact, E-Bay and perhaps Flyertalk!? should set up more private screens to protect the customers, posters. Could an airline take revenge on a FT poster for writing a negative post on them?
Obviously, have different e-mail addresses!!! Don't use the same e-mail that you use on E-bay as your registered address at an airline. Sorry, but that is just plain (stupid) and I will bet that someone does that, then they will find you, for sure.
I think that we need to be allowed to have individual rights to buy/sell on the net and not be told what to do by the airlines. It is different if you are an employee, as I have friends who are airline employees and they are very careful what they say/do out there. AA is probably the biggest watchdog out there.
What do you think?
------------------
Michael
AA PLT,1 MLN Miles+
HH GLD, SCI GLD, MM SIL
LE PRESIDENT ETERNEL DE CAMAIR-CAMEROUN AIRLINES :)
www.mrmileage.com (http://www.mrmileage.com)
Thank you for the comments here and I am learning so much. It is like school, thank you.
Again, I will consider "swapping" but the person usually travels with me, have never had any problems.
My personal advice, stay away from mileage brokers, not worth the risk, and use miles(if you have so many to spare) as gifts to loved ones. thanks...
Consider the above statements together. If many miles that would otherwise go unused end up getting sold on the secondary market, this makes it much more difficult for people who want to use their own miles do to so.
What's ur point?
Here's why.
Upgrades are obviously capacity-controlled. As more people sell their vouchers, more of them are used than before. Which in turn makes the upgrade harder to get.
When we reach a point where demand for the upgrades routinely grossly exceeds the supply on the average flight, when having an upgrade certificate rarely gets you the upgrade on the flight you want...that's when the value of these suckers plunges, and perhaps when some people will stop selling them.
And then, at least for a while, with fewer certs being used, it becomes easier to get your upgrade again. Of course, eventually, the pendulum would swing again...
Am I going to pay $100 for an upgrade if I think I have a 95% chance of being able to use it more or less when and where I want? Sure. But if too many people are reselling and using them, and those odds fall to (say) 30%, am I as likely to pay that $100?
Last year Delta sued a mileage broker in NJ. The Judge threw the case out for lack of merit.--end of story.
I think Shareholder's post still applies. I don't know about the case in question, and I don't know why the case was thrown out, there are plenty of possibilities.
Regardless, unless that NJ case was taken up by the US Supreme Court, it's not necessarily applicable to other jurisdictions.
Besides, one case doesn't guarantee that another similar case won't make it to trial and even be won in the same jurisdiction.
d
Similarly, it's not to your benefit to let miles sit, because the value goes down over time as award mileage requirement inflation would reduce their value over time.
Finally, the FF program units at many airlines are profit centers. FF miles are a commodity which airlines sell for cash, and they want to get as much of it out there as possible.
Quite frankly, it seems that some of the strongest opinions about flying, airlines, and FF programs come from people who don't travel often.
they don't tell you that you cannot sell them, at the time they offer them. Yes, it is printed on the back of the voucher in suitably tiny print, but by then you are already off the plane.
I guess most people would also say that "at the time of signing up" they did not know, be told or even think to ask if FF miles were able to be sold. Also now that you "know" that coupons cant be sold does the same point hold for the second and subsequent vouchers you get?
As to private individuals selling some here/there, no court is going to bother with the case. It is just too minor. But, the individual does run the risk of "black death". That would be the case of the airine confiscating the ticket and negating all miles in your ff account, and this has happened before.
As to the answer of how they catch you, software compares your last name of "Smith" who lives in Phoenix against Mr. Abdullah Zimbawe Milajahhumblubber who happens to be flying RT from Zimbawe to Iceland. There are slight discrepancies in the surname, as well as slight discrepancies between the cities you live in.
So, upon check-in Mr. Milajahhumblubber is questionned as to how he acquired his ticket. Of course, a "friend" of his gave it to him, yet he does not know the persons name nor where he lives. End of ticket and potentially end of Mr. Smith's account.
In the event, a number of others pretty well echoed my sentiments from the prior page. In short, have at selling tickets if you want, but if you get caught don't go complaining that somehow you have been wronged. As to trading, strictly speaking that is forbidden too. However, for the most part the airlines turn a blind eye to this. Also, generally speaking you will know the person that you are trading with and hence pass the questions posed.
... they know that a large majority of these miles will go unused. They also control the inventory of award seats, thereby controlling the value of the miles.
Consider the above statements together. If many miles that would otherwise go unused end up getting sold on the secondary market, this makes it much more difficult for people who want to use their own miles do to so.
The capacity awards to Europe range from 80k to 90k in Business and 100k to 125k in First.
I do not think I am wrong in stating that the mileage awards that can "hurt" the airlines the most (ie pulling a seat from F or J) cost more miles than most people are willing to use -- or have in the first place.
Why in the world would I pay 2x more to sit in coach? Next time I have an expiring certificate, I'm going to sell it to these guys. I mean why lose money? Ever since AA stopped redepositing certificates, I've been pulling my hair out when I knew I didn't have a trip coming up...
I'm not sure this hyperbole is helping your argument? 200k for an FC award ticket? I know there are a few FC awards that are that high (US to South Africa maybe ... RTW too), but that number is a tad bit unrealistically high ... and that's ignoring domestic FC tickets even ...
>>> standard US to Europe in First is around 100K... If I had the miles, would do LH First all the time, loved it. 100K is doable...
Speaking of South Africa, as you all know by now http://www.flyertalk.com/forum/smile.gif, flying Cathay First for 140K via Hong Kong. That is the deal of all deals...
I think very few go that way, why it is so low... It is alot of flying...
If there were, I'd post a message on eBay asking to buy a white envelope for $50,000; with a note that I'd like the seller of the envelope to kill my wife when he comes to deliver the white envelope.
Back to the other issue - airlines count on people not redeeming awards. It's similar to those manufacturer mail in rebates offered on merchandise. Research has shown that people will buy the product because of the rebate, but only about 40% of people ever end up mailing it in.
Obivously the airlines have some reason for not allowing miles to be sold; just like most grocery coupons say that you can't sell them. Maybe if you really want to start selling your miles, you should contact the corporate offices or PR people at the airlines in question and see if they'll tell you why they don't like it.
But I think they don't like it because it costs them money. It's much better for them if they're the only source of miles; they control how many are sold. That helps stop inflation (same thing as in the real money economy - if everyone starts claiming awards or spending lots of dollars, prices have to go up to compensate).
Yeah, they could allow it and just raise the "prices" for tickets and/or stop allowing the anytime awards or give less miles away. But it seems that's not what they want to do. I'd be a lot of that is marketing - if it becomes impossible to claim an award or they raise that 25,000 mile magic number to 50,000, a lot of people aren't going to be happy.
d
So how many people read all of those pages of legal stuff when you sign to buy your home, or the flyers your credit card companies send you from time to time? and how many of you really understand what it is trying to tell you?
So is that supposed to be some kind of defense? I didn't read the rules, so I didn't know I wasn't allowed to sell the miles?
Sorry, ignorance isn't a valid defense. If it were, there would be quite a premium on ignoring details, because it would get you out of a lot of hassles.
Anyway, as far as certificates go, they usually have very few restrictions, other than not being sellable.
d
Like I said before, people should just save their time and say exactly what they're selling. Legally, there's no difference.
If there were, I'd post a message on eBay asking to buy a white envelope for $50,000; with a note that I'd like the seller of the envelope to kill my wife when he comes to deliver the white envelope.d
The difference here is that one is an illegal criminal offence and one is a breech of contract. The criminal courts will not see a difference BUT civil courts may make the difference.
American Airlines can cancel your account for "breech of the terms of the program". BUT you COULD argue you did not breech the program rules as you gave away the miles. In a criminal case, you would lose (due to the wording of the statues) but in a civil case (in some jurisdictions) you may get away it.
Any court would understand that when you give away a mileage award ticket, there is always some consideration to the transaction. For example I give away a lot of flights (as I earn millions of point a year - credit card spending). Now if I give a first class flight to a cousin of mine worth say $10,000, I can almost be assured of (but not expect) a great birthday or thank you present (worth maybe $2000). Now am I selling the miles? The distinction is academic.
An important thing to note however is that while the airlines have to be seen to not promoting the sale of points they are quite happy to see it go on in some cases.
The airlines value points internally and only offer seats on flights that they believe are profitable.
For example, if a credit card company (or any other company) pays an airline 1c per mile and the airline charges 20,000 points for a LAX - LAS reward seat. The airline will only release that seat to an award booking IF the expected revenue from that seat is less than $200. Now I just purchased a return LAX - LAS flight on United for $120.00, you will find that it is actually more profitable for the airline to release this seat to a FF than to sell it for revenue. At the end of the day, the airlines are trying to maximize the $ they can get from customers and therefore a customer using 180,000 miles (which internally is actually worth $1800 to the airline) for a First Class SYD - LAX flight (on a flight where they can say with 95% level of confidence that they will not sell the seat) is better for them then getting $800 in revenue for an economy seat on the same flight and awarding 15,000 miles (at an internal cost of $150).
As a result they don’t mind leisure travellers who would otherwise travel in economy using the points of others (even if they pay for them) as they can actually increase revenue from this activity BUT what they do mind is if a person who would pay $10,000 for a First Class seat SYD - LAX buys the miles from someone. Thus if they try to "outlaw" the process they can then turn a blind eye to the people selling tickets to "normally economy flyers" while discouraging the "normally first class" flyers from responding to ads in newspapers offering First Class for half price.
Airlines are starting to think like this and as note that people will pay “agents” 2.5c per mile, while the airline only values the miles @ 1c. Thus again in order to maximise revenue the airlines started selling points to the public at 2.5c each! Externally this seems quite hypocritical but it is all about maximising the revenue for the airline.
It all makes sense once you stop looking at points as a liability and start looking at them as a revenue source. Another tangent is with the bonus miles offered for flying. Currently if an airlines loads drop on a segment that normally costs $1000, they can offer the seats for $800 to increase loads OR they can offer 20,000 bonus miles, which is effectively like giving you a $200 voucher to use on future airline travel. If they offer the miles, they are assured at least that the $200 in future revenue will come to them and as an added bonus the consumer will value the 20,000 at the retail price of 2.5c per mile ($500) so that the promotion will have the effect of dropping the price to $500 (ie the competition will need to decrease prices to $500 in order to get the business). At the end of the day, airlines are smart and they know what they are doing.
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