There was a very interesting article yesterday by Scott McCartney of the Wall Street Journal, discussing just how much money airlines are making from selling miles. And we’re not even talking about airlines selling miles to credit card companies, which is a multi-billion dollar industry, but rather just the direct sale of miles to consumers. Some of the statistics are exactly what I expected, while others are shocking.
US Airways says about 5% of its customers are opting to pay to double or triple their miles when they buy tickets, and that revenue from mileage sales was up 236% in the first six months of this year compared to the same period of 2009.
The first statistic is shocking. 5% of customers are opting to double or triple their miles when buying tickets? That seems insanely high. On the other hand, it’s no surprise that revenue from mileage sales is up 236% for the first six months of this year compared to last year. US Airways has been insanely aggressive when it comes to selling miles at very reasonable costs over the past 12 months, as I’ve probably blogged about a dozen times.
Compared to US Airways, which apparently has 5% of their customers opting for double or triple miles, here’s United’s info:
United says it’s doing 700 double- or triple-mileage transactions per day.
That’s more in line with what I expected. I’m not sure how many passengers United carries a day, but 700 is definitely way less than 5% of their customers. While this is substantial revenue for United, most likely, they do aggravate a lot of customers with their constant efforts at upselling during check-in, especially since they try to trick customers into buying things by making the bigger button the one to select miles, while they make the “no thanks” button much smaller and place it on the side. Still, assuming each of the 700 customers is spending an average of $50 on extra miles, that’s $35,000 a day, or over 12 million dollars per year.