3.5 Trillion Miles ... and Counting

By: Ron LieberWed Dec 19, 2007 at 12:29 AM

They are the world's most powerful promotional currency -- a medium of exchange that people manage almost as carefully as cash. So what does the future hold for frequent-flier miles? Answers to seven high-flying questions.

4. Will the IRS ever try to tax me for cashing in all of my miles?

The IRS has spent a lot of time studying this issue, but it's very hard to put a value on the miles without knowing how you earned them and what you spent them on. As more people have earned more miles, the IRS has wisely concluded that any attempt to tax the miles would cause rioting in the streets. It's just not worth the trouble.

5. Will the airlines ever customize the programs so that I can tailor-make my own award system?

Diners Club already has. If you have earned more than 100,000 points using your Diners Club card, you can suggest something that you'd like to do or buy, and then the company will respond with a price in points. One customer took a flight to the Arctic Circle, while others have paid for their kids' braces and for country-club memberships. American Airlines has also been quietly testing a customized program with its most frequent travelers where they could elect to receive more bonus miles and fewer upgrades or vice versa.

6. Will it ever get easier to redeem amounts smaller than, say, 25,000 miles?

It's already happening. In fact, one of Robert Crandall's many retirement hobbies is sitting on the board of MilePoint.com, an Internet-based service that allows users to take a small number of their miles from certain frequent-flier programs and trade them for magazine subscriptions or savings at various stores and shopping sites.

7. Will I ever be able to trade miles from one program for miles from another?

This is the holy grail for mileage fanatics, and while some hotel programs and a new site called points.com make this possible on a limited basis, don't expect it to take hold in any kind of meaningful way. Frequent-flier programs are loyalty programs that are designed to keep you flying on the same carrier, even when it's free. Ever wonder why people still fly United after the mess its labor problems caused its customers last summer? The airline threw well over a billion bonus miles at them as a salve, and most of them are still flying the "friendly" skies one year later.

Ron Lieber (rlieber@fastcompany.com) is a Fast Company senior writer based in New York. He has 350,000 unredeemed frequent-flier miles.