Program turns miles to money

The new shopping Web site was brought online Tuesday and is a new spin on the brand loyalty programs Mr. Crandall helped develop during his three decades in the airline industry.

"All those miles that people out there have can be added together and turned into real money," said Mr. Crandall, who is a minority investor in the Minneapolis-based company and chairman of the Web site's board of advisers. "From an airline point of view, this is a much more economical way of attracting customers. You've got great benefits for everybody."

MilePoint will allow the nation's 45 million frequent fliers to trade their miles for discounts on such items as clothing, electronics and toys. Travelers will be able to convert their miles to "MilePoint money" at the rate of 2 cents a mile for discounts that will range from 5 percent to 25 percent.

Mark Lacek, one of the company's founders, said the site will help frequent-flier members who never accumulate enough miles for a free ticket. That's about half of all frequent-flier accounts. "They may eventually get there, but a lot of them won't," said Mr. Lacek, a former Northwest Airlines marketing chief. "Now they can use every mile."

MilePoint also offers retailers a new way to reach customers. And it helps the airlines burn off some of the 3.7 trillion frequent-flier miles that consumers are hoarding in their accounts, said Mr. Crandall, who still owns a home in the Dallas area.

"This is an economical way to liquidate their liability and at the same time make their program more attractive," he said.

Members of the Delta Air Lines, Northwest Airlines, Continental Airlines, US Airways, America West Airlines, TWA and Hilton Hotels programs will be able to participate in MilePoint.

But American Airlines has declined Mr. Crandall's invitation. The Fort Worth-based carrier opted instead for an America Online program that will launch this fall.

Under that option, American's frequent fliers will be able to redeem miles for merchandise and AOL service.

"We offered this to American early on," Mr. Crandall said. "They decided for whatever reason to go off and sign with AOL. We'd still love to have them."

Dallas-based Southwest Airlines has also declined to join.

"As a general policy, we don't participate in online ventures such as this," said spokeswoman Linda Burke Rutherford. "We don't want to confuse the consumer on where they should go to earn their frequent-flier credits and where they should go to spend them."

MilePoint expects to offer products from more than 140 retailers, including Sharper Image, the Hammacher Schlemmer catalog and Amazon.com.

Although MilePoint.com went online Tuesday, merchandise won't be available until October.

The Web site will be compensated by the airlines and hotels and will get sales commissions from retailers involved. Limited advertising will also be available on the site.