The Chicago Seminars – a report

Regular readers may recall that at the start of 2012, I flew to Chicago and back ten times over the course of a handful of weekends. I got two different types of reactions to that escapade. “You’re crazy” was the first. “Tell me more” was the second. Regardless of which type you are, this post ought to be interesting.*

In October 2012 (it’s taken me a long time to write this post), I made my 11th trip to Chicago that year (12th, if you count a transit through there on the way to Shanghai) to attend a two-day seminar. It’s a little hard to describe the seminar, other than to characterize it as a convention for people who are passionate – perhaps a little obsessively so – about earning and spending points. Mainly airline frequent flyer program points (or miles), but also hotel program and other types of points. Most of the seminar’s attendees were generating hundreds of thousands, or even millions of points, each year. Most attendees were ordinary people who were just applying a few well-known techniques to generate points they couldn’t hope to earn in the usual way (that is, actually paying for flights and staying in hotels). While my job doesn’t allow me enough time to get as involved as some people do in this hobby, there is a lot of low hanging fruit out there which doesn’t require a lot of time, and which yields value in excess of what the implied hourly wage of my day job is.

The first reason I wanted to attend the seminar was to see if I could pick up a few nuggets of wisdom which I could then go home and implement. A large amount of this is blogged about openly online, but there’s a lot of content out there to sort through. Listening to people present in a lecture format and listening to people ask questions to presenters seemed like a good way to get the lay of the land.

The second reason was that I was curious to see what kind of crowd showed up. During my January Chicago flights, I had come across a dozen or so of these types of people cloistered in the Admiral’s Lounge at SFO. They struck me as intelligent, but somewhat single-minded and cliquey, in the same way you’d regard the stereotypical participant at a sci-fi or comic convention (I’ve been to both, so this is hardly a dig at the points and miles people).

At eight on a Saturday morning, about 300 people from around the country descended upon a nondescript Holiday Inn near Chicago O’Hare International. The first day had about 9 solid hours’ worth of talks, split into two streams by topic. After factoring in lunch and a few coffee breaks, the day ran from 8.30am to 7.30pm. The second day had about 5 hours of talks, with a couple of plenary sessions thrown in. It wasn’t unlike any other conference I’ve been to, except that it was a non-profit event, organized and run by volunteers. Leftover money from ticket sales and raffles was donated to charity.

It was certainly an interesting crowd. Eyeballing the room, I would say it was dominated by the middle-aged people in their 40s and 50s. However, there were still a fair amount of retirees and people in their 20s and early 30s. Maybe three-quarters were men.

Most of the presenters were basically community leaders – bloggers who devoted a large part of their time (some of them full-time) writing posts which attract thousands of loyal readers. The other presenters were people from industry (like representatives from ITA Software, a Google subsidiary, and the legendary pilot for United Airlines, Denny Flanagan).

Each presenter, almost without exception, was quite articulate, intelligent, humorous and engaging. They were patient and rarely patronizing. In hindsight, this shouldn’t have been surprising. As I’ll describe later, the points game requires intelligence, organization, an innate ability to think (and act) outside the box, and an appetite for taking on calculated risks. And of course the points are used to travel, which, by its very nature, I’ve always believed is horizon-expanding.

Expert Flyer

The first presentation I saw was given by a representative from ExpertFlyer, a website that helps you find seat and flight availability. The presentation was mostly a tutorial, and peripherally a sales pitch. ExpertFlyer is a freemium, subscription based SaaS product that has long been a mainstay for people trying to ascertain whether a particular flight has “inventory”. Airline inventory management is a hugely complicated area – airlines don’t simply bucket fares into economy, business, and first class. Instead, there are normally dozens of different fare classes for each flight, each used in a different context. For an economy class ticket, there are various fare classes which reflect various price points – everything from full-fare tickets, to deeply discounted tickets, to tickets people for people redeeming points (i.e. award redemptions). ExpertFlyer has agreements with an array of airlines which allow it to tap into their reservations database for more granular data about a flight that traditionally would only be available to travel agents. By figuring out how many tickets in each fare class is available, you can get more insight into whether a flight is overbooked, or whether there’s any upgrade inventory available.

ITA Matrix

The second presentation was given by an executive and an engineer from ITA Software. ITA is essentially a software engineering house founded by a bunch of people from MIT. The travel industry is probably one of the original “big data” fields, so designing systems to cope with all that data was an interesting, practical engineering problem. The product they were presenting was called Matrix. Matrix is an airfare search engine that provides a level of customization you can’t get with mainstream fare searching site like Kayak or Hipmunk (for example, you can search for very particular routings and also view an entire month of airfares on one screen).

Elite Status

The third presentation I attended was given by Summer Hull, proprietor of the Mommy Points blog. Summer is a young Texan mother who uses points as a cost-effective way to stay connected with the rest of her family, which is spread out across the States. She spoke about attaining elite status on airlines, and offered a more grounded view on things given that she wasn’t one of those people who held top-tier status with multiple airlines, and that she had family responsibilities to attend to.

A few interesting notes from her talk:

• Some status levels let you change the time of your ticket without charge, as long as it’s within 24 hours of your original booking time. This means you can book your ticket at the cheapest timeslot, and then change to another time closer to the day without paying extra (but subject to availability).
• You can essentially buy top-tier status on US Airways by earning at least one mile and spending $3000.
• If you have top-tier status on any airline, Turkish Airways will do a status match to their mid-tier status. Their mid-tier status happens to be at a Star Alliance Gold level, so you can get some real benefits from there, like extra luggage allowance, priority boarding and lounge access. I’ve tried this myself (using my AA Exec Plat status) and it works.
• If you’re a management consultant who’s always on the road, there’s no reason why you can’t get top-tier status in all the different hotel chains if you hotel hop (stay in a different hotel each night).

Mileage Running

Ben Schlappig, aka Lucky, impressively gave two back-to-back 2-hour talks followed by sitting on a 90 minute panel. Ben’s in his early 20s, a recent college grad, and works full time on helping people to make award redemptions, traveling, and travel writing. He physically flies about 300,000 miles a year – most of it in premium cabins – and stays in hotels for most of it. He’s arguably one of the leading figures in the community and runs One Mile at a Time.

Ben’s first talk was about mileage running (MR). One of the ways to generate points is to fly. Most people fly because they have to go somewhere, in which case MR techniques can be used to “optimize” your route. Some people actually fly because they just want to generate points (“the destination is unimportant,” as some in the community snidely remark). In either case, the goal is to find flights which offer the best bang for your buck. The standard metric used to judge this is “cpm” (cents per mile), or the cost of earning a frequent flier mile. Obviously, the lower the number, the better.

There are basically three steps involved with sourcing MRs.

1. Identify a cheap route (if you don’t already have a destination in mind). This is where tools like Matrix come in. Ben walked us through an example on Matrix where he found a cheap fare from Las Vegas (LAS) to Pittsburgh (PIT), assuming you lived in Vegas. If you live in San Francisco, you could ask Matrix to search for all flights leaving from SFO to a major airport on the east coast (e.g. PIT, PHL, EWR, JFK, LGA, MCO, TPA, BOS, PVD, BWI, IAD, MHT, DCA) on United during the month of December. Matrix would then display the cheapest flight for each day in December.

2. Optimize the route. In this context, optimization means lengthening the route without materially increasing the price. There’s a concept called “maximum permitted mileage” which determines how much you can elongate a route without “breaking the fare”. Fares are issued based on a complicated set of routing rules, and it’s often possible add one or more stops on your journey without increasing the cost of the fare. The goal here is to add additional out-of-the-way stops which will increase your mileage. Ben continued with the LAS-PIT example and determined it was possible to fly LAS-SFO-EWR-PIT, and by transiting at San Francisco and Newark, earn an extra thousand miles each way. Of course, most people want to get from point A to point B in the least time possible, but mileage runners are a special breed. As a rule of thumb, flights which price at under 4cpm are good value, and flights for under 3.5cpm are very good value. Anything under 3cpm is increasingly rare and pretty exceptional. International flights do not have cpms as low as domestic flights, but international flights allow you to accrue more miles in one go, instead of having to hop on and off planes every couple of hours. Status bonuses and promotions can sometimes double or triple the miles you earn on a trip.

3. Book the ticket. Matrix doesn’t book tickets, so converting an identified route into a ticket may take a bit of legwork. Sometimes you can enter the route in as a multi-leg itinerary on an airline’s website or with an online travel agent like Travelocity, but sometimes you have to call in to an airline’s reservation hotline and book it manually. Particularly complicated multi-airline itineraries may need a traditional travel agent.

Award Redemption

Ben’s second presentation was on award redemption. The usual raison d’être of the points game. He runs a business on the side where he helps people to redeem their frequent flyer points for a flight in exchange for a $150 fee. While the fee seems steep – especially when you’re trying to book a flight that would otherwise be free or almost free – it’s not as easy to redeem points as you might think because the inventory that airlines make available for redemptions is limited. One complication is that you can use the miles earned on one airline to redeem flights on another airline – usually within the same alliance, but not always. However, the inventory that an airline makes available to members of its own frequent flyer program is usually different to the inventory made available to partner airline members (an airline will obviously look after its own members first). So, locating availability on partner airlines is tricky and you have to know where to look.

Ben had redeemed over 250 million miles for his clients, so he had plenty of experience with navigating the system. One thing that struck me about this presentation (and actually, the community in general) was how willing Ben was to share information about the tricks of his trade. People pepper him with questions on his blog and, within reason, he tries to answer them all.

As a general rule of thumb, if you locate an award you think you might want, book it immediately. Availability fluctuates constantly and may disappear overnight. If you need to cancel an award, the fee to get the miles redeposited into your account is normally relatively cheap (or free, if you have status). Date changes to award tickets are normally free, as long as where you’re going doesn’t change.

The other rule of thumb is to burn your points and don’t hoard them! Most have a fairly pragmatic view towards points and don’t regard them as good “investments”. That is, they don’t appreciate in value. On the contrary, because how points programs are run are largely at the whim of airlines, points tend to devalue over time – sometimes suddenly without advance warning – when airlines increase the cost of award tickets across the board. Ben indicated that he tries to keep his miles at a level which allow two first class redemptions (about 150-200k points for U.S. airlines), so that he can liquidate miles quickly if he gets wind of a change in program rules.

Ben also ran through some tips about where to locate award availability based on the alliance you wanted to fly.

Star Alliance. Star Alliance airlines apparently make the same amount of space available to all of their partners. This means, in theory, that if you want to redeem points on Singapore Airlines, you’ll see the same seat availability whether you have United or Lufthansa points. Singapore Airlines’ own members, of course, have preferential treatment and greater award availability. (There are ways to get miles on Singapore, even if you never fly them – such as by earning American Express Membership Rewards points and transferring them across to KrisFlyer, Singapore’s frequent flyer program).

The first site to try is the award search tool on United’s website (otherwise known as “dot bomb” in the community). If your itinerary has multiple segments (individual flights), and an end-to-end search doesn’t turn up anything, try searching for each segment individually. The latter approach might turn up something, and you will need to make the redemption by doing a multi-city booking and manually typing in each segment. If that doesn’t work, you may need to call into the airline to make a manual booking. Airlines normally charge for this, but you may be able to get the phone booking fee waived if you tell them it wasn’t possible to make the booking online.

The second site that Ben turns to is ANA’s site. You need to have points in an ANA account to use their mileage tool, but it’s useful to supplement and fine tune United’s searches.

Expert Flyer, of course, is an alternative, if you’re willing to pay for a tool designed at helping with finding award availability.

As for airlines to redeem on, United is pretty good value.

OneWorld. American’s site is pretty good for finding availability on certain of its partners, including Alaska, BA, Hawaiian and Qantas. Indeed, it’s apparently better for searching BA availability than BA’s own site. BA’s site is a good second source for finding availability on OneWorld partners where American’s site does not turn up results.

One useful trick that Ben covered when redeeming AA points it that if you’re flying internationally, you are allowed to have one free stopover at what American regards as a “transoceanic North American gateway”, which is basically any airport which has a connection to an international location with American or a partner airline. This can be leveraged to give yourself a free one-way ticket within North America (which includes the Caribbean), valid for up to a year after the main flight.

This is best illustrated with an example. If you want to fly from Hong Kong to San Francisco, instead of booking HKG-SFO, you would book something like HKG-SFO-JFK. The date of the SFO-JFK segment can be up to one year after the HKG-SFO flight, which allows you to pick when you want to visit New York in the future. Remember that changing dates is fairly easy with award tickets (subject to availability), so it’s a ticket with some flexibility. You’ll need to book your own return ticket from JFK. JFK can be somewhere else in North America as well, subject to certain routing restrictions (you’re probably not going to be able to do HKG-JFK-HNL).

Another redemption option that AA offers is the distance based “Explorer” award, which can offer an affordable way to construct a round-the-world ticket (e.g., 14-20k miles of travel for only 130,000 points in business class).

BA points are great for short haul flights (but crap for long-hauls). Chase’s BA credit cards are well known for occasionally coming with 100,000 point sign up bonuses.

Sidebar

Ben’s bookmarks in Chrome:

• Gmail
• Twitter
• FlyerTalk
• Chase
• ANA Tool
• Award Wallet
• ExpertFlyer
• One Mile at a Time
• Facebook
• FlexOffers (affiliate program)
• MilesBuzz!

How to spot a mileage runner:

• They’re sitting up the front
• They only have carry-on luggage
• Their carry-on has a yellow Flyertalk luggage tag
• They wear Bose noise cancelling headphones
• They photograph all their meals
• They get off a plane and then get straight back on it for the return trip

Redemption products

The tail end of Ben’s presentation was about what the best “aspirational products” to redeem on were. “Product” refers to the flight experience on a giving airline, route, cabin class, and aircraft type. “Aspirational” means that it’s not a product you would think of paying real dollars for unless you were a very high net worth individual. Replete with an envy-inducing photo slideshow, some of the noteworthy products Ben flashed up included:

• Intercontinental in a new Lufthansa 747-8 in First. Notable feature: your bed is separate to your chair. (Lufthansa typically releases space in first class space to partners 2 weeks before a flight. Use ExpertFlyer’s flight availability search tool to figure out how likely they will be to release award space – if “F > 3”, then there are more than 3 revenue tickets available and unsold, and a good indication there will be surplus space.)
• Long-haul in an Emirates A380 in First. Notable feature: showers and a personal mini bar.
• Long-haul in a Singapore A380 in Suites. Notable feature: it’s not first class, it’s “Suites” class.
• Europe to Bangkok in a Thai Airways 747 in First. Notable feature: you get a free 1 hour massage if you go to the first class lounge in Bangkok’s airport.

Steve Belkin

Steve Belkin (known online as Beaubo) is practically an elder figure in the community. A full generation older than Ben, Steve gave an engaging presentation on Friday morning. It was basically a story-telling session. Steve had accumulated over 20 years’ worth of experience in the points game, and with it, a boatload of pretty remarkable stories (not to mention about 40 million miles).

A family man and, fittingly, an entrepreneur in the solar energy business, Steve’s motivation for being in the points game was to see the world, to keep in physical contact with his family, to share the experience with his family and friends, and to solve puzzles.

Wait. Solve puzzles?

Steve didn’t earn his points by spending all his time in planes. Steve earned his points through creative schemes which required a great deal of chutzpah. “Scheme” is perhaps a poor choice of word as it conjures up images of Bernie Madoff and Alan Bond, and belies the actual skill and entrepreneurial spirit behind how Steve earned his points.

Steve’s modus operandi is to spot an opportunity, optimize it, and — this is where he diverges from most others — figure out how to scale the shit out of it. It’s pretty easy to take advantage of an opportunity yourself, but it takes a different skill set to figure how to scale up because it usually involves recruiting people to work for you. He operates in a different league to even the most prolific individuals in the community.

His exploits are well publicized on internet forums, but his most famous is the Baht run. I’m not going to recount it here because it would take too long. You can find summaries elsewhere on the web. However, let just say it involved him:

• Taking advantage of a points promotion being run by Air Canada on $8 flights operated by Thai Airways on its new 50 minute Chiang Mai to Chiang Rai route.
• Flying over to Thailand (having never been there before) and recruiting 10 Thai rice farmers and 10 disabled Thais from a massage parlor to each fly 5 round-trip flights for 4 days a week, for a couple months.
• Being flagged by the DEA and having to fly back to Thailand to deal with it (for pretty serious reasons).
• Being flagged by Thai Airways and having to fly back to Thailand to deal with it (for rather amusing reasons).
• Air Canada freezing all his frequent flyer accounts.
• “Convincing” Air Canada to unfreeze his frequent flyer points after he went to the press.
• Ending up with 3 million miles.

Other schemes recounted:

• The Vegas Run, featuring a bunch of out of work actors each taking 20 trips to Vegas in first class for a haul of 750,000 points each and 10 million in total.
• The Chocolate Run, featuring hiring German college students on FlyerTalk to fly for him and earn 1 million miles.
• The Wyndham Promotion, featuring him booking out 60 empty hotel rooms and earning 1.2 million points after cutting a deal with Wyndham’s corporate HQ to allow him to sidestep a no-show, no-points policy.
• The eBay Scheme, featuring Steve taking out a second mortgage on his house to push $200,000 in spend through eBay in collusion with a friend to take advantage of a promotion.

Really fascinating. The blend of skills involved reminded me of the startup world – problem solving, negotiation and social skills, scaling an opportunity, and just getting out there and executing.

The Panel

The seminars took a more philosophical turn here, and the panel session was fascinating. Steve, with the voice of a seasoned veteran, put the brakes on and provided a bit of perspective to the game. In a nutshell, Steve believed the glory days of the points game were gone. Various factors – the restructuring of the airline industry, the growing bank of un-redeemed miles, and the growing number of people getting in on the game due to the free flow of information on the internet all pointed to the whole shebang stacking up like a house of cards. Miles would continue to be devalued, airlines would move to revenue-based mileage programs, and opportunities such as credit card churning would vanish. This caused a great deal of consternation and dismay among the crowd.

For someone who had clearly devoted a lot of his free time to the game over the last decades, I found it interesting that Steve was attempting to inject a dose of reality and perspective into the situation by telling everybody to stop obsessing about things. He was essentially saying that people getting stressed out about what he was saying should take a step back – the whole thing was a First World Problem. He had a point.

Of course, no one likes to hear that their livelihood may be going away, so Ben – a young, enterprising guy with many years ahead of him – offered a vigorous and fairly eloquent counterpoint on these.

One thing they did agree on is that you should never bank miles – inflation will kill them.

Gift Card Churning

Besides flying, the other way to earn miles and point is to spend money on credit cards. The penultimate session was about ways to generate points via credit card spend. I’m not going to go into detail here, but basically there are ways to amplify points generation by the use of gift cards.

The infamous Office Depot / Vanilla Reload / Bluebird “opportunity of the year” that was available for several months in 2012 allowed people to push through substantial spend through a credit card that offered a 5x bonus on spend at office supply stores. People – myself included – were buying thousands of dollars worth of Vanilla Reload cards (stored value cards) at a time from Office Depot. Buying four fully-loaded cards generated 10,000 points at a net outlay of just shy of $16, and you could max out the opportunity at about half a million points… if you could find enough Vanilla Reloads.

Mileage Malls and Product Resale

The final session, which was interrupted halfway through by a tornado warning, also looked at ways to amplify credit card spend. There exist various online shopping malls which, if you go through them to purchase goods from online retailers, give you a points bonus. Sometimes the points bonuses, coupled with a discount in the underlying good, made it profitable to buy the goods (generating spend and points), and then resell the goods for a nominal loss or gain (to recoup the spend) via Amazon Stores. A lot of overhead and a fair amount of risk, but potentially lucrative and somewhat scalable.

Closing Thoughts

The Chicago Seminars were an engrossing, entertaining, informative and fascinating experience. The community has pretty capable “leaders,” if you want to call them that, and despite the apparent nature of the game – the scheming, the arbitraging, the exploiting of loopholes – all of them presented themselves as reasonable, down-to-earth, intelligent and (mostly) ethical people.

The audience was a mixed bag from all walks of life. Some of them had ridiculous egos that you’re bound to find whenever people think they’re part of an “in” group. Some of them were overly obsessive. But most were just trying to find a cheap way to travel. All were bargain hunters at heart – the next generation of coupon cutters. I met a father of a college-aged kid who could now afford to fly his daughter back home every quarter to see her. I met a retiree who could now travel overseas with his wife more than their means would otherwise allow. I met a woman in her early twenties – an accountant from Tampa – who was using the miles to backpack in places around the world. And I’m doing it because I love planes, traveling, the startup-like mentality, and a good challenge.

*As for the results of my self-inflicted 90 hours on planes, I managed to squeeze in 6 international trips last year, all in business, except for 4 segments which were in first and 1 in economy, for a nominal cash outlay. I also gave a pair of upgrades to a friend’s brother to bump him and his wife up while they were on their honeymoon. The Chicago January runs were the only mileage runs I did last year.

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