Sunday, April 5, 2009

04/04: The concept of Mileage Running

It's a Saturday night, I'm enjoying a glass of an earthy and nutty Bordeaux, and though an early morning alarm awaits, I'm quite in the mood to describe an endeavor that is simultaneously an important component of how I've spent my free time over the past few years, yet also seemingly illogical, boring and just-plain misguided (in the eyes of some illogical, boring and just-plain misguided critics, at least). I'm talking of the humble Mileage Run (MR).

What is the MR? A general definition might assert that it's a trip whose sole raison d'etre is the accumulation of frequent flier program benefits (chiefly redeemable miles and elite qualifying miles; more on the difference between these later). Yet oftentimes a MR may also be influenced by the actor's enjoyment of the flying experience or -- and this is anathema to some MR purists -- by a desire to enjoy the traveled-to destination for some days (or hours, or sometimes even minutes).

Illustration of my first-ever MR serves as an insightful example. The time was December 2004 -- n.b. December is the prime month for MRing, as airline elite-status-qualification periods typically end at the end of the year. A relatively heavy travel schedule over the preceding eleven months (keep in mind that I was a student at this point, not a consultant or Fortune 500 executive) had my United Mileage Plus account quite close to the first elite status level, Premier. To my youthful eyes, of course, Premier represented a hallowed flying achievement, which set my mind scheming: how could I earn this status in the few weeks remaining in the year?

And then it dawned on me. Just fly, stupid; somewhere, anywhere. So, I booked a trip from Washington to Fort Lauderdale, via Chicago to increase the mileage. Being a complete novice, I arrived at FLL in the late evening without plans for how to spend the night (I was to leave on a 6am flight the next morning). Naively, I hopped a bus into the city centre, but the area unto which I stumbled started closing down at the too-early hour of midnight. Desperate times call for desperate measures, so I dashed to another bus, this time bound for Miami, an area that surely never sleeps. But fate intervened; this being the night's last run for this particular route, the bus journeyed no further than the intermediate point of Hollywood, FL. Everyone off!

Terrified of how I'd spend the remaining hours of the night, I wandered to an area of town with some nightlife, but soon felt too awkward sitting on the public benches around the bars, settling instead for sitting on the curb before a 24-hour convenience store. I was periodically joined there by an assorted coterie of the homeless. Could I have actually revealed that I was foolishly spending the night in vagabond style because of ridiculous motivations for frequent flier status? No, I must have fabricated some lie when confronted with the obvious question: what's a guy like you doing here?

The experience thankfully ended without instances of violence, theft or other examples of gross discomfort. I made it home, and I was now Premier.


The concept of the MR does not, however, revolve around the imagined consequence of a label. It is a value-maximization scheme at its core. In essence, the value a frequent flier program provides is tangible, and once someone figures out what that value is in her unique case, she can determine whether she can create value by taking extra trips that, while costly, also increase her frequent flier program benefits.

For example, I have a need for periodic transatlantic travel. Suppose such a ticket might cost $600. I can instead get a ticket for 50,000 United Mileage Plus miles, but this ticket contains concrete benefits vis-a-vis the $600 revenue ticket:
  1. The mileage ticket is fully refundable and can oftentimes be acquired with little or no advance purchase. (I once booked a ticket for Warsaw in the morning and flew the same evening.)
  2. The mileage ticket allows for complicated itineraries that include a stopover or open jaw, and that can include multiple destinations so long as one stays for less than 24 hours at stops other than the final destination or stopover point. (I personally enjoy short visits to a succession of cities.)
  3. The mileage ticket allows for the inclusion of exciting, more service-oriented airlines that are part of the same airline alliance.
  4. The mileage ticket opens up the possibility of travel in international business or international first classes of service, options that are prohibitively expensive if acquired by cash.
As such, $600 does not equal a 50,000 mile ticket. Some simple trips might, indeed, be better served by the plain-vanilla cheap revenue ticket, but other, more ambitious trips pair very well with award travel. Suppose I value the 50,000 mile ticket at $1300.

If I was to pay $1300 for a revenue ticket, I'd accrue about 10,000 miles. If I was to pay 50,000 miles for an award ticket, I'd have to pay about $100 in taxes (and accrue no miles during the trip). Thus, in this stylized example, 50,000 miles is equal to $1000, or 1 mile is equal to 2 cents.

Now, suppose that I love to fly and can think of few more enjoyable ways to spend a free Saturday than flying to San Francisco, Los Angeles or Seattle and, straight away (to minimize incidental costs), back. With a creative routing (i.e. multiple connections in out-of-the-way places), I can earn 12,000 miles on the roundtrip (assume I'm earning a 100% bonus over actual flown miles, typical for most airlines' higher frequent flier status levels) and pay $200 for the ticket. Thus, I'm earning miles at the rate of 1.67 cents a pop, a true arbitrage opportunity when I'm redeeming the miles at 2 cents each.

The above example is, of course, grossly simplified. In reality, the appeal of MRing can be much greater. For one, frequent flier programs offer more than redeemable miles (RDM). One extra is the elite-qualifying mile (EQM). With EQMs, one qualifies for the upcoming year's status level, and as such, accruing enough of these in a calendar year is to some people an obsession. Furthermore, some airlines dole-out upgrade certificates in proportion to one's amount of flying, opening up the possibility for roomy seats, decent meals, and the chance for real sleep on MRs. Finally, most MRers will enthusiastically agree that they love flying -- the experience of scrutinizing an airline's product and operation in minute detail; the thrill of the take-off roll and of flying through turbulence; (on United) the option of following live a flight's play-by-play communications with Air Traffic Control (via the proprietary Channel Nine of the in-flight audio); the chance to stumble upon exciting places and people in far-flung cities -- or even just in the airports of these cities; the chance to wine and dine like a rockstar in international premium cabins; even the simple occasion to get away -- legs stretched out, drinks and hot nuts served by an attentive flight attendant, brilliant sunrise occurring on cue over a majestic cloud layer just outside the window, Bose noise-canceling headset engaged, the crisp Weekend Financial Times just begging for perusal -- for some "me" time; the list goes on-and-on.

This post has sought to scratch the surface of the MR. An excellent resource for further information is the online message-board Flyertalk. In my personal experience, MRing has brought me into intimate closeness with both travel and with the airlines, an industry about which I've been fascinated from long before I ever pondered the concept of MRing. I've flown well over 100,000 miles each year for the last four years running, and this year I'm on track for 200,000. I've this year also expanded my airline relationships beyond United and its Star Alliance: I requested a status match with Northwest, and have since taken several journeys with Skyteam airlines.

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