Why no bulk purchase of miles/points?

Discussion in 'General Discussion | Miles/Points' started by dotorg, Apr 7, 2011.  |  Print Topic

  1. dotorg
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    dotorg Silver Member

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    Many companies are able to offer miles/points as a bonus. Obviously they purchase miles/points at a lower price than the value given by participating in their programs. I haven't been able to find it, but it seems that someone would be able to just cut out the middle activity.

    Is there a group that buys miles/points in bulk and then basically sells them at some reasonable markup from the wholesale price?
     
  2. Aktchi
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    Aktchi Silver Member

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    Moreover, can we form such a "FF cooperative" here?
     
  3. deant
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    deant Milepoint Guide

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    If there was a company where you could buy miles / points at a significant discount you can be sure that it would make headlines on FT and MP.
     
  4. Aktchi
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    Aktchi Silver Member

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    Sure. What I am thinking about, could we form one? How many miles would it take? Capital 1 promo was capped at 1 billion miles. That's only 1000 people who want a million each. By FT/MP standards, that should be a manageable number.
     
  5. sobore
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    sobore Gold Member

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    The loyalty programs love to sell miles and points in bulk as this is a very lucrative business.
    Here is a link to an AA page where you can make a bulk purchase of at least 250,000 miles: https://www.orderaamiles.com/popup/pricing.jsp
    I’m not sure what other criteria they require, maybe just a tax number?
     
  6. Jaimito Cartero
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    Jaimito Cartero Silver Member

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    That's interesting, but I doubt worthwhile for most MP folk, unless they really want to get to 1MM or 2MM. Cost is 2.4-cpm, more or less.

    Big companies get it for much less, I'd guess from .7-1.4 cpm, depending on the airline.
     
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  7. viguera
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    viguera Gold Member

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    Yeah that cpm is pretty vicious... the minimum 250k miles cost $6,162. I'm sure someone here can come up with one or two MRs that will net you close to that mileage for about the same price, plus you get to enjoy it more. :)
     
  8. Jaimito Cartero
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    Jaimito Cartero Silver Member

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    I'm much more interested in other deals that will get me miles cheaper than this. That's why some of the shopping deals can be very good, if you can find the right promo.

    For the mileage plans I'm involved in, I'd look to buy miles outright at these levels:

    AA - 1.5 cpm
    UA/CO 1.2 cpm
    AS 1.2 cpm
    US 1.1 cpm

    DL .75 cpm
     
  9. prometheusg
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    prometheusg Silver Member

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    There's a section on the main page of the orderaamiles site that says if you purchase over $250k in miles, your company is eligible for special marketing campaigns. Nothing about special pricing. Makes me wonder how much you've got to spend before they give you a better deal. I can't really believe Capital One spent $25 million on a billion miles.
     
  10. Wandering Aramean
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    Wandering Aramean Gold Member

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    Why not? They easily spent way more than that on the advertisements for the "match" program; why not spend the cash to actually have the offer to make? I'm sure they got a discount, but it is still a high dollar transaction that absolutely makes sense when you're looking at the potential income that they are from the deal.
     
  11. prometheusg
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    prometheusg Silver Member

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    I'm not saying that they wouldn't spend that much for miles. I'm saying I don't believe they bought them at the price quoted on the site. 1 billion miles would cost $25 million. I doubt they made that large of a purchase at that price is what I'm saying. It goes with my previous sentence in that comment. How large a purchase does a company have to make before they give you a better deal? 50 million miles? 100 million miles?
     
  12. Mileage Update

    Mileage Update Active Member

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    Capital One's miles arent really miles at all. Its basically 1 CapOne mile = .01. No actual miles
     
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  13. prometheusg
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    prometheusg Silver Member

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    Oh yeah, I see what you're saying now. I'm mixing programs in my head. Sorry. In my mind, I was calculating based on if they bought 1 billion AA miles, which of course they didn't.
     
  14. deant
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    deant Milepoint Guide

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    You have to remember that C1 is not giving you miles. They are giving you points that can become, for the most part, 1 cent per point. This equates to approximately $10M more or less. Think of what advertising sold for during the final four. The $10M is a drop in the bucket compared to all the TV and print advertising they spent the campaign. Also, remember that the $10M is an expense that reduces profit. It is not like an individual that spends the money for points - there is no "profit" to reduce.
     
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  15. Andyandy
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    Andyandy Gold Member

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    This thread brings the US/Trackitback promo of 2009 to mind (what a great one that was!). Trackitback was offering 40 miles per dollar and if they were paying anything like 2cpm, then little room for profit was left. Of course, TIB's product is essentially a very low value insurance policy coupled with a bit of plastic (the customs declaration for my tags actually described them as bits of plastic), so they presumably had a comfortable profit margin even after paying for the miles.

    Still, I'd wager that they were paying well under 2cpm, but probably more than the .7cpm that miles "cost" when US's 250% bonus was figured in. I imagine that the airlines have a financial interest in keeping the cost of miles purchased directly by the consumer high. They have likely calculated that companies will be more likely to offer miles as a promotion for their good/service if consumers aren't able to buy the miles directly at a "wholesale" price. All purely speculation on my part, of course.

    Andyandy
     
  16. techboyds
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    techboyds Silver Member

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    It is unlikely anybody can pull this off at what most of us would find an acceptable rate without some serious shennanigans, because any mileage program that knowingly allowed this would simultaneously undercut:

    1. The customer's incentive to actually pay for flights
    2. Their own more expensive mileage sale programs
    3. The customer's incentive to make use of partners, therefore undercutting the mileage program's ability to sell miles to partners.

    Bad for business all around.
     
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