US Airways Cuts Price to Transfer Frequent Flyer Miles

Got US Airways frequent flyer miles? Wanna give them to someone else?

Between April 1 and May 31, Dividend Miles members can earn a 100 percent bonus when transferring miles form their accounts to someone else’s account. So, for every mile transferred at the normal rate of 1 cent per mile, plus a $30 processing fee, two miles will be transferred.

Up to 50,000 miles may be transferred, which would amount to 100,000 miles with the bonus.

Transfers must be made in multiples of 1,000. So the cost to transfer 25,000 miles, enough for a free domestic ticket, would normally be $280, including the processing fee. With the bonus, you’d have to transfer 13,000 miles, but the cost will drop to a more manageable $160.

“Manageable” is relative, of course. There’s a school of thought that says any cost to transfer your own miles is too much. You already paid to earn the miles once, right? That’s a discussion for another time.

Deal or No Deal

Until the end of last month, US Airways had a similar offer in place for miles purchased for the member’s own account, or purchased as a gift for another member. It was the third time that offer had been deployed, and I’d given the promotion generally favorable reviews.

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Similarly, half-priced mileage transfers are potentially game-changers—at a half-cent each, it begins to make financial sense to at least consider sharing some miles.

But there’s a dark side to these cheaper miles that needs to be discussed.

I was rooting around in US Airways’ financial statements for 2009 and came across the following: “The number of travel award redemptions during the year ended December 31, 2009, was approximately 0.8 million, representing approximately 4 percent of US Airways’ mainline RPMs during that period.”

As a point of comparison, American gave away 8.9 percent of its seats as frequent flyer awards during the same period, and both Southwest and United gave away 8.3 percent of theirs.

In other words, when it comes to making frequent flyer awards available, US Airways is less than half as generous as three of the airlines it competes with.

As US Airways’ annual report points out, “The use of inventory management techniques minimizes the displacement of revenue passengers by passengers traveling on award tickets.” Indeed!

While these US Airways offers look good on their face, this may be a case of getting exactly what you pay for. That 50 percent discount may reflect the real value of US Airways miles.