By Joe Brancatelli
December 9, 2009 -- George Clooney and Vera Farmiga make attractive frequent fliers, and film buffs are raving about Up in the Air. Yet while Clooney is being lauded for his performance as the consummate road warrior who gets grounded, there are precious few original insights about business travel in the movie based on the bestselling Walter Kirn novel.

But you don't come here for film reviews—and you probably shouldn't trust a guy who rarely sees new flicks unless they pop up on an in-flight video monitor. So let's go right to the topic of frequent-travel plans, the supposed pot of gold at the end of the very warped rainbows in Up in the Air.

The best way to describe frequent-travel plans these days is to suggest that they are The Godfather Part III. There's still plenty to love, but you have to be selective and skeptical, and you have to accept that the glory days are over. So here are some essential truths about frequent-travel plans from a frequent traveler who looks a lot more like Luca Brasi than George Clooney.

Frequent-Flier Programs Aren't Actually About Airlines
When they were initially introduced in the early 1980s, frequent-flier programs were all about building loyalty to the airline sponsoring the plan. These days, however, fewer than half of the estimated 15 trillion miles in frequent-flier accounts were earned are from flying. The airlines have turned the plans into massive marketing vehicles for peddling everything from credit cards and wireless phones to dental plans and mortgages. Their goal today is not to win your loyalty for a particular carrier, but to change your buying patterns and sell you stuff in exchange for a private meta currency called miles.

You Don't Own the Miles You Earn
For many years, airline marketing types and talking-head experts (including, unfortunately, your bobble-headed Luca Brasi here) would blithely call frequent-flier miles "the nation's second currency." They most definitely are not currency in any financially acceptable sense. If anything, they resemble scrip at a company store. You may "earn" the miles with your flying and buying, but you do not own the fruits of your labor. You can only use the scrip how, when, where, and at the exchange rates set by airline sponsors. And they are not freely convertible. Courts—including a federal district court late in October—have consistently ruled over the last 25 years that the miles belong to the airlines, and you have no legal right to resell or barter the ones you hold or use them in any manner not specifically permitted by the airlines.

You're Not the Primary Customer
Airlines don't really consider you the prime customers of frequent-flier programs anymore. The big players are the businesses, especially banks, that purchase miles in bulk. As they have burned through billions of dollars in capital in recent years, airlines have essentially turned their frequency programs into cash-generating machines. In exchange for dollars to keep their operations afloat, they have presold tens of billions of miles to the financial institutions that issue the programs' affinity credit and charge cards. For example, American Express has advanced Delta hundreds of millions of dollars by buying a stockpile of Delta SkyMiles to issue with various flavors of Amex cards. Citibank has done the same with miles in the American AAdvantage [sic] program. And United Airlines is essentially a vassal of Chase. Chase not only issues United Mileage Plus cards (reportedly the most profitable ones in its vast portfolio of branded affinity cards), it is the airline's lead lender, the major purchaser of its miles, and the carrier's credit-card processor.

Hyperinflation Is the New Normal
While miles are not currency, they are subject to the same economic realities. Frequent-flier miles are constantly being devalued because of a hyperinflationary cycle that seems unbreakable. Desperate for hard cash, airlines print more miles to sell to clients like banks. Awash in miles, banks offer gigantic incentives for taking an airline's affinity credit card. (Chase has lately been offering bonuses of as much as 100,000 miles in the British Airways Executive Club.) With so many miles chasing so few airline seats, the carriers raise the cost of awards, thus devaluing the buying power of a frequent-flier mile.

Frequent-Flier Programs Aren't Bank Accounts
Another glib old fallacy from the early days is that business travelers should "bank" miles to claim awards when it suits you—or even when you retire. For starters, frequent-flier accounts are not bank accounts; there are no federal agencies insuring your "deposits," and you don't earn interest. In fact, in this hyperinflationary cycle, the value of your miles continues to deteriorate as you hold on to them. One painful recent example: US Airways has been raising small amounts of cash throughout this year by selling miles to frequent fliers for about half their usual retail price. A 100 percent bonus scheme reduced the effective cost to about 1.25 cents a mile from 2.5 cents. Gullible frequent fliers lapped up the miles and were then shocked to learn that US Airways was instituting a new award chart for 2010 that more than doubles the price of many of the most desirable award seats. Word to the wise flier: Cash your miles for awards as soon as you qualify and can secure the seats.

Frequent-Flier Programs Are Unregulated Lotteries
More than any other business-to-consumer promotion, frequent-flier plans are unregulated. Airlines are almost completely free to change the rules, prices, partnerships, and payouts without regard to what would normally be considered fair play. An example: Continental Airlines switched to the Star Alliance from SkyTeam in late October. So out went frequent-flier awards on SkyTeam partners such as Delta and Air France and in came awards (and new prices with different restrictions) on United Airlines and Lufthansa. Members of Continental's OnePass program had no choice but to adjust to the new realities, take it or leave it.

There Is No 'Best' Program
The gamers, navel-gazers, and other posters at sites like FlyerTalk are constantly and creatively assessing the programs in search of the "best" award plan or affinity card or the "richest" promotion. (The current trick is buying coins in bulk and postage-free from the U.S. Mint with an airline credit card, then using the coins to pay the credit-card bill, thus yielding a bonanza of "free" miles.) But that is wag-the-dog doggerel for the average businessperson. Most business travelers should pick their frequent-flier program only after weighing more important factors such as schedule, price, and quality of the airlines. After you've chosen an airline based on those logical factors, then join that carrier's frequency plan.

There Is No 'Minimum' Payout
I just scored two business-class seats to Rome on Continental Airlines for 105,000 miles each. (Fees cost about $50 a ticket.) That's a very nice payout, but not the bonanza it seems. Walk-up business-class seats to Rome on Continental cost $7,700 roundtrip, but since I was booking for travel in February, Continental's advance-purchase price in cash would have been a more modest $3,340 roundtrip. In other words, I'm getting about 3 cents a mile in real-world value for my award, not 7 cents. That's still about twice the payout you can expect for most awards these days since miles are now so easy to earn, so heavily devalued, and so difficult to cash. A 1-to-1.5-cent-a-mile payout is acceptable, assuming you didn't do anything silly to earn the miles and didn't allow the airline or its partners to warp your buying habits.

The Fine Print…
The last bastion of true "loyalty programs" are the elite levels of the frequent-flier programs. Once you fly about 25,000 miles each year with a carrier (and sometimes its alliance partners), you get more perks and privileges. These days, however, you must be a "super elite" flying about 75,000 miles (and sometimes more) to earn top-tier status. That is where the real rewards for airline loyalty—"free" upgrades, special services, reduced-price awards—kick in. Unfortunately, even these Clooneyesque super-elite levels have been diluted in recent years as airlines have sold so-called "qualifying" miles or offered other fast-track ways to reach the status. Still, if you actually fly 25,000 miles a year or more, concentrate your business on as few carriers as possible in order to reach the higher elite tiers.
ABOUT JOE BRANCATELLI Joe Brancatelli is a publication consultant, which means that he helps media companies start, fix and reposition newspapers, magazines and Web sites. He's also the former executive editor of Frequent Flyer and has been a consultant to or columnist for more business-travel and leisure-travel publishing operations than he can remember. He started his career as a business journalist and created JoeSentMe in the dark days after 9/11 while he was stranded in a hotel room in San Francisco. He lives on the Hudson River in the tourist town of Cold Spring.

THE FINE PRINT This column is Copyright © 2009 Condé Nast Inc. All rights reserved. Reprinted with permission. JoeSentMe.com is Copyright © 2009 by Joe Brancatelli. All rights reserved.