When American Airlines stripped 43,000 miles from Peter DeForest’s frequent flier account because of “inactivity” it offered to return them if he signed up for one of its email offers.
It seemed like a reasonable deal. But the miles never came, and when DeForest checked the American Web site to see how he could reclaim his lost award points, he was shocked to find the airline driving a much harder bargain with some of its customers.
Here it is:
Now, you can reactivate some or all of your expired AAdvantage miles and use them to claim awards. Through this special offer, you can extend the life of expired miles and quickly boost your available mileage balance.
* Miles that expired on or after December 31, 2002 are eligible for reactivation
* There’s no limit to the number of expired miles you can reactivate
* The price to reactivate miles is $50 for every 5,000 miles (subject to 7.5% Federal excise tax), plus a $30 processing charge per transaction, per account
* This offer is available through December 31, 2009
* Contact AAdvantage Customer Service at 1-800-882-8880
* Reactivate rates are $50 for every 5,000 miles (or any portion thereof), plus 7.5% Federal excise tax
* Fees apply to all mileage reactivations – a $30 processing charge per transaction, per account
* See examples below or view some frequently asked questions – FAQs
Reactivate 24,500 miles from one account for a cost of $298.75. That’s a $268.75 mileage reactivation charge, including tax, and a $30 transaction charge.
Reactivate 5,000 AAdvantage miles for $83.75. That’s a $53.75 mileage reactivation charge, including tax, and a $30 transaction charge.
You have until December 31, 2009 to reactivate expired miles and make them available for award redemption. If you’re looking to increase your account balance or quickly gain miles needed for an award, then reactivateAAmiles may be the way to go!
Reactivated AAdvantage miles will be credited to your account as a mileage bonus and do not count toward elite status qualification. Please allow 72 hours for the miles to post to your account. You will have at least 18 months in which to redeem reactivated miles for an award. Reactivated miles will not expire as long as your account has qualifying activity in any 18-month period.
That’s a lot of charges and fees.
The cost: $50 per 5,000 miles, plus 7.5% tax, plus $30 per transaction, or more than 1 cent per mile to reinstate them.
I believe you wrote something about airline revenue generation scams a while ago, and this sure sounds like a creative one to me. They shorten their expiration timeframe, with limited or no notification, take away your miles, and then offer to sell them back to you.
Interestingly, most experts say a frequent flier mile is worth no more than one cent. So basically, American is selling you the mile at the going rate.
“By the way,” added DeForest, “when the miles they owe me appear in my account, I plan to use them immediately and never fly American again.”
That’s not what a loyalty program is supposed to do, is it?
I just interviewed Mike Simonetto, a pricing expert at Deloitte (the full Q&A will be published on Friday) and he says airlines like American are engaged in customer segmentation — separating their passengers based on how profitable they are. Is American segmenting customers like DeForest, offering him more lenient terms for getting his miles back, while the rest of us have to pay the going rate? Probably. And are its best customers, the quadruple-Platinum fliers who are always on the road, even affected by this reactivation? I would bet not.
So why are people like DeForest abandoning American?
Maybe it’s the perception that the system isn’t fair, or even that it’s exploiting some of its customers, that irks people like him. I don’t think American and other airlines who are making changes to their loyalty program meant for it to go like this.
(Photo: Jim Frazier/Flickr Creative Commons)