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Buy A Car, Get Air Miles

27 January 2000

    LOS ANGELES-- A new airline-automotive alliance has been formed that rewards 
car buyers with up to 15,000 miles on their choice of airlines.  The alliance, 
called the CarMiles Rewards Program, is the latest effort in the battle to 
attract car buyers using non-traditional marketing.

    Today, consumers get airline miles with everything from flowers to long
distance service.  Perhaps it was only a matter of time before airlines and
auto dealers discovered that airline miles work just as well to promote cars.
CarMiles was launched early last year through Delta Airlines.  TWA, America
West, Northwest, and Alaska Airlines joined the alliance later in the year,
and American Airlines, with the largest frequent flyer club in the industry,
is slated to add its support early this spring.  In January, the CarMiles
Rewards Program expanded into Canada through an affiliation with Canadian
Airlines.

    Unlike most car-buying systems, consumers can access CarMiles online,
through Web sites customized for each airline or offline, though the
CarMiles 24-hour call center.  Either way, they are directed to a local car
dealership where they are rewarded with airline miles for buying or leasing a
vehicle, having their car repaired, or taking out an auto loan or extended
warranty.  The best part of the system may be that the buyer remains anonymous
to the dealer, maintaining all of his or her leverage in negotiating the best
deal.

    Airlines operate CarMiles through their frequent flyer programs, tapping
directly into the largest group of pre-disposed mileage "junkies."  The
airline industry counts over 57 million frequent flyers in the U.S., and a
recent OAG survey pegs their average household income at over $122,000 per
year.  For car dealers, that puts frequent flyers at the very top of the
hierarchy of buyers.

    CarMiles is operated by Los Angeles-based ADM, the nation's largest
car-buying company for affinity groups.  "Getting 15,000 airline miles for
buying the same car you were going to buy anyway is a pretty powerful
incentive," said Leonard Fenton, ADM's CEO.  "For car buyers with miles
already in their account, that could mean the big chunk they need for a free
roundtrip vacation."

    ADM's contractual relationships with literally thousands of auto
dealerships is what gives the CarMiles airline partners the ability to offer
CarMiles across North America.  And, ultimately, the auto dealers in the
alliance are the ones paying for the mileage awards.

    "We see airline miles as free merchandise we give you for buying your car
or truck from us.  And considering how many cars we've already sold through
CarMiles, it's been worth the cost," said Jim Carlton, sales manager of
Stephen Vincel Honda in St. Louis, Missouri.

    Mileage awards for new vehicles are based on the price of the purchase or
lease.  Consumers earn 5,000 miles for vehicles costing up to $20,000, 10,000
miles between $20,000 and $40,000, and 15,000 miles over $40,000.  Buying a
used vehicle of any kind earns an award of 10,000, no matter what the selling
price.  That kind of sheer mileage bulk puts car buying awards at the very top
of the award pyramid, surpassed only by home buying and home loans.