Bill Hanifin
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United Airlines is creating new ways for its 95 million Mileage Plus members to spend their hard-earned miles. Starting at United’s massive Newark, New Jersey terminal, 6,000 iPads are being deployed to improve the travel experience, whether scanning a boarding pass to receive vital flight information or paying for a soda using miles.
“By 2016, a traveler will be able to use miles to purchase everything for sale at Newark’s largest terminal,” Rick Blatstein, founder and CEO of OTG, the company behind the operation of the concession terminals, said in a Bloomberg article, “The same payment options will roll out to the terminal’s retail and duty-free shops over the next 12-18 months, as part of a $120 million renovation.”
According to this Bloomberg article, “The payment scheme is a natural progression for airline loyalty programs. Member balances have ballooned with the popularity of mileage-linked credit cards and the proliferation of other schemes by which one can amass airline miles. At the same time, airlines cannot afford to give away too many free flights, which is partly why booking award travel can be less fun than going through airport security. Airlines would love for those otherwise-disgruntled frequent flyers to use their miles for something, anything else. Thus, the virtual currency of airline miles is migrating into the real world of food, drink, and duty-free shopping.”
Bloomberg noted, the conversion rate for miles used in the terminal is not fixed, but comes out roughly to 143 miles per $1. “For Newark travelers dining at Saison, a French bistro in Terminal C, a $29 seared salmon entrée costs 4,150 miles, and a $14 sidecar runs 2,000 miles,” according to Bloomberg, “A bottle of Fiji water ($2.99) is 430 miles. Whether travelers will think this is a good deal will most likely depend on how many miles they have to burn in the first place.”
Consumers may be less likely to debate the value of their miles when making purchases using miles in the terminal. Enabling travelers to spend miles in a terminal adds a convenience and experience factor that probably will offset any degradation in mileage value. In the end, consumers will make clear where the balance lies in this equation.
This isn’t entirely a new concept as airlines and partners provide hundreds of opportunities to cash in miles for merchandise and services. But it is the first time miles can be burned in the retail concourse and Blatstein added the company is reportedly talking to other airlines about the miles-as-payment option.
