American and KTLA LA Television Promoting the Devaluation of AAdvantage

American Airlines and Los Angeles television station KTLA are running a giveaway. It’s a trip to New York ‘like an A-Lister’ and my first thought was they’re encouraging Southwest Rapid Rewards status challenges.

In fact they’re giving away an American Airlines business class flight (don’t A-Listers at least fly first?) and a host of other items in the overall package. The flights, though, are really AAdvantage miles.

The winner will receive 390,000 American Airlines AAdvantage® miles redeemable for 2 round-trip Business Class tickets to New York, two nights at a luxury hotel in New York, two tickets to a Broadway show playing at any Shubert Organization theatre, and a $1,000 gift card for dining and other expenses.

American Airlines Airbus A321T at New York JFK

American Airlines is highlighting — in conjunction with a media promotion — that transcon business class costs 195,000 miles per person roundtrip.

Furthermore the rules of the prize declare that the actual retail value of the miles (for IRS form 1099 reporting purposes) is $7,761 or 2 cents per mile, closer to what American regularly sells miles for, rather than the 3.5 cent value they’ve historically used.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. If this giveaway generates a 1099 for the miles prize, then how come we don’t receive a 1099 for each of the sign-up bonuses we get with credit cards?

  2. The wording is not very clear, but I think 390k is likely the total for the entire package, not just the flights.

  3. @tommyleo because is not a giveaway miles prize. You don’t get it for free, you have to open a credit card a meet a criteria, you are getting something in exchange of something and the miles you receive for use a credit card is considered a rebate which is not taxable.

  4. So, Gary, when’s the next post telling us “act now, great sign-up bonus on AA credit card?”

    The credit cards you love so much are a direct factor in the devaluation of RDMs.

  5. @Bob: “The credit cards you love so much are a direct factor in the devaluation of RDMs.”

    Actually, I think the most direct devaluation came from AA’s elimination of saver award availability. After all, the 390,000 miles they are giving away pretty well approximates the cost for two AAnytime J awards on the transcon.

  6. @tommyleo IRS has ruled that any miles received from credit cards is considered as a rebate, therefore it would not be treated as income.

  7. Lost in the devaluation discussion is that this is KTLA we’re talking about; an unaffiliated LA tv network best know for hours long broadcasts of high speed car chases in the LA area. And this isn’t a new thing, either, they’ve been doing this for 25+ years now! If it’s not enough to avoid AA then the alarms should go off because it’s KTLA.

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