Buried between the airport concession fee and fuel charge was a 6-cent per day frequent-flier "tax recovery" surcharge. "That's insane," says the Elgin, Ill., homemaker and freelance writer. "How can they charge me to collect my miles?"
They can. Under the deceptively named Taxpayer Relief Act of 1997, car rental companies must pay a 7.5% tax on miles they offer through an airline partnership — a charge that's passed along to you if you want to claim your miles. Karl had violated one of the five commandments of mileage-collecting: Know when to say when.
There's a reason for the rules. Industry experts generally value each frequent-flier mile at between 1.5 and 2 cents. But the airlines themselves aren't so generous. If you check a carrier's earnings reports and run a few calculations, then you'll discover that a mile may actually be worth only .000572 cents.
Why the discrepancy? It's complicated, believe me. But the bottom line is that a mile isn't always worth as much as you think. And factors such as whether you are at the elite level or not make a difference in how much each mile is worth. So Karl just might have paid more for her points in taxes than they were valued.
Here, then, are the five commandments for mileage collecting:
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Focus your efforts. It's easy to collect frequent-flier miles. Too easy. But pay attention to which program the miles are concentrated in. Having a few thousand miles here and a few thousand miles there won't do you much good. Frequent-flier programs were designed to promote customer loyalty, so the big rewards — upgrades, preferential treatment, fee waivers — kick in at the elite levels, when you've given the airline or hotel in question a considerable amount of your business. Jim Bunch, a hotel consultant in Council Bluffs, Iowa, stockpiles the miles with American Airlines for that reason. His loyalty paid off: On a recent flight to Frankfurt, Germany, he and his wife got bumped to business class, even though he'd only paid for two steerage-class seats.
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Distinguish between quality and quantity. Airlines draw a distinction between the kind of miles you collect from sides of cereal boxes and the kind you collect by actually flying. To reach top-tier elite levels — in order to really matter to the airlines — you have to travel. Take a look at the fine print in the program rules and look for phrases like "qualifying miles" — then zero in on amassing the important points. The rewards can be considerable. For example, American Airlines' AAdvantage Gold program (for travelers who rack up at least 25,000 qualifying miles) offers a special reservations hotline or preferred check-in. And if you fly 100,000 qualifying miles and reach AA's Executive Platinum membership level, you've hit the jackpot. The upgrades are very generous, there's a discounted airline club membership and many of the fees that ordinary mortals are saddled with are waived.
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Leverage your loyalty. Frequent travelers often lose sight of what these programs are designed to do, which is to increase the amount of money you spend with a given airline or hotel. But it's a two-way street. You should reasonably expect a company to offer something in exchange — something that goes beyond an airline seat or a hotel room. Delta Air Lines' Platinum Medallion members, for example, get priority on a waiting list when the class of service they want is not available when they make their reservation. Also available: unlimited upgrades, access to international airport lounges and a special in-flight VIP number.
The best thing about these perks is that you don't have to spend any miles or money to get them. They're yours for the asking once you've qualified. And that's not all. There are any number of "off-the-book" concessions that a company will make to a frequent flier. I've heard of travelers, faced with surcharges they didn't approve of, flashing a frequent-guest card and — poof! — the annoying fees disappear from the bill. Now that airlines are fighting for their lives, they're also more likely to bend backwards for their best customers.
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Read the fine print. This commandment can't be overemphasized. Miles expire. And there are fees for various transactions relating to your points, particularly when you try to turn your miles into a ticket or room night. In other words, don't assume that because the flight is free that redeeming your miles will cost nothing. Consider Brad Power, who clicked the "buy" button on the American Airlines Web site recently, only to find the price of his airline ticket increase by $50. The reason? Power, a Boston management consultant, made a reservation less than 21 days in advance, for which American Airlines charges an extra fee.
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Know when to say when. This is the rule that Lisa Karl broke, but it goes beyond collecting miles for your rental car. Thinking of making a big purchase on your credit card in order to rack up miles? It could get expensive. One favorite mile-collection strategy is to charge the down payment on a car. However, most car dealers now impose a surcharge of between $75 and $100 for using a credit card that lets you collect rewards points. And they're not always upfront about the fee, waiting until the paperwork is done and hoping you don't read the fine print. "You really have to watch out for these hidden fees. It makes you think twice before using your credit card," says Randy Petersen of Inside Flyer magazine.
How I use these rules
If you can't remember any of these commandments, just keep this in mind: Frequent-flier miles are designed by marketers to manipulate your buying habits. It's fine to take the points, but don't let them dictate your behavior.
Christopher Elliott is the editor of Elliott's E-mail, a free weekly newsletter for travelers. You can e-mail him or visit his Web site.