United exchanges frequent flier miles for unused gift cards
— -- United-Continental Airlines has an unusual proposition for gift card holders: If you've got at least $25 in unused credit, you may be able to trade it in for frequent-flier miles.
United-Continental frequent-flier members will be eligible for the MileagePlus Gift Card Exchange program if they've got a gift card from one of more than 60 major retailers on the airline's approved list, such as Starbucks, Target and Home Depot.
United will determine how many miles the remaining dollars on the cards are worth.
Airlines increasingly are competing for loyal customers, especially business travelers. And rewards programs are a way to entice them.
"We are always looking for new and innovative ways for our members to engage with the MileagePlus loyalty program," says Charles Hobart, a spokesman for United.
Websites such as Points.com and PlasticJungle.com facilitate the buying, selling and swapping of gift cards between people now. But analysts say it's unusual for airlines to break into the market in such a direct way.
"Usually this works the other way around," says Randy Petersen, founder of Milepoint.com and who monitors frequent-flier programs. "You use miles and you convert them to gift cards. And this is just the opposite of that."
The amount consumers bought in U.S. gift cards surpassed $100 billion last year for the first time, according to research from CEB's TowerGroup.
Until two years ago, when a new federal law regulating gift cards took effect, the amount of gift card money that went unused reached the billions. In 2009, consumers lost about $6 billion in gift card money. The new law extends the expiration date on gift cards to at least five years from the date of purchase. It also requires disclosure of fees and places a cap on them.
In 2010, the amount of gift card money that went unused dropped to $3.6 billion. Last year, it declined even more to $2 billion, according to CEB TowerGroup.
Brian Riley, a senior research director at CEB TowerGroup, says the gift card exchange business is a fledgling one, but "there is potential."
"Airline programs have been kind of stuck in this funk for the last couple of years," he says. "There hasn't been much creative play in the airline reward business."
He says it's too soon to tell how much consumers will benefit from United's program.
To participate, frequent-flier members must log into their accounts, select the retailer, then enter their gift card information. United will then convert the gift card to miles and deposit them into members' accounts.
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