New E-tail Currency in the Air

Backed by powerhouses in both the travel and e-tail sectors, Web startup MilePoint.com is set to unveil a program that will allow more than 45 million frequent flyer program members to exchange their miles and points for discounts on purchases from online merchants.

Delta Air Lines, Northwest Airlines, Continental Airlines, US Airways, America West and TWA have all agreed to participate in the program, as has Hilton HHonors Worldwide.

For the October launch, MilePoint has teamed with the Web’s largest e-tailer, Amazon.com, and airline merchandise catalog company SkyMall. Amazon customers will be able to use miles for gift certificates, but not for merchandise.

Other initial retailers include the Sharper Image, Orvis, The Wine Enthusiast, Hammacher Schlemmer and Frontgate. Other Web merchants are expected to sign on before the launch, MilePoint said.

Airline Pros Play Key Roles

MilePoint is the brainchild of prominent airline executives. Former American Airlines chief executive Robert Crandall, who oversaw the introduction of the AAdvantage program for frequent travelers, is chairman of the MilePoint board, and former Northwest Airlines marketing executive Mark Lacek is president of the Minneapolis, Minnesota-based company.

“Airlines and hotels have been looking for new ways to create more value for their customers’ accumulated miles. This is the natural and logical evolution of the current frequent flyer programs,” Crandall said.

MilePoint ‘Money’

MilePoint will award “MilePoint Money” at the rate of 2 cents per mile, equating to what the company says is more than $32 billion (US$) in online purchasing power among members of participating programs.

Lacek pointed to statistics showing that frequent flyer members have a median household income of $74,000, and that 88 percent shop online.

The demographics of frequent flyer members will allow online merchants to target a desirable audience, according to Lacek.

Point and Click

To use MilePoint, frequent flyers will register airline and hotel account numbers on the secure MilePoint.com site, then shop at the “MilePoint Mall.” MilePoint Money will be used to pay part of the bill with participating merchants.

MilePoint predicts that an average of 10 percent of a purchase could be paid for with converted miles, but said that proportion might be higher.