United Mileage Plus continues to push new buttons for members, this time for their elite members with credit card partner Chase bank. If you are a Mileage Plus Visa cardmember and a Mileage Plus elite member a new offer (with registration) allows you a special 20% mileage rebate on your next qualifying Saver Award. I like the math, I like the offer (it certainly leaves those drooling OnePass members wondering what’s ahead for them and when with the frequent flyer merger get going.)

To be eligible, you must have the Mileage Plus Visa card and be an elite member and look for a special invite in your email inbox soon. You pre-register for this at united.com/mpf940. Once all that is done, when you book a Saver Award in any class of service between October 11, 2010 and December 15, 2010 your 20% miles rebate will be posted to your account four to six weeks after you fly. AND you can get the mileage rebate for up to two people traveling on the same award reservation.

A few caveats: Roundtrip travel is required, and stopovers or open-jaws are not permitted. Miles & Money Awards and One-Way Awards are not eligible.

Here’s some rebate ideas:

This is the type of legal case that normally would go unnoticed by most. However, I think it may be one of the most significant cases involving frequent flyer miles that I’ve ever examined. Here’s why. A recent appeals case in the Tax Court of Canada has ruled that a taxpayer can claim medical expenses of $2,060—the value of Aeroplan points used to purchase an award flight for the purpose of obtaining medical treatment. The implications from this case are less about the medical expenses claim as they are about the exact definition for and value of something being “paid.”

In 2007, the taxpayer traveled from Thunder Bay, Canada to Chicago for medical treatment. He flew on an Aeroplan award ticket using points and paying $220 taxes on the ticket. He calculated that the flight would have cost him $2,060 if he’d paid in cash and he claimed that amount as a medical expense on his income tax. The Minister of National Revenue only allowed the taxpayer to claim the cash portion of the cost of the ticket as medical expense, the $220. The Honourable Justice Brent Paris in the recent ruling stated, in part, “In this case, I find that the points given up by the Appellant for the ticket were a right, since they were exchangeable for air transportation services at his request, and that they had a value that could be expressed in money since the services for which they could be exchanged was offered for sale to arm’s length parties at a fixed price. Also, the points could be purchased for three cents apiece. By redeeming his points, the Appellant gave what was due for the services and therefore “paid” for them within the ordinary meaning of that word. It follows that the amount paid by the Appellant included 76,000 Aeroplan points.” He concluded, “For these reasons, the appeal is allowed, and the Appellant is entitled to additional medical expenses of $2,060 in computing his medical expense credit for his 2007 taxation year.”

The actual value of the Aeroplan points is of less importance to this case than whether the Aeroplan points used by the taxpayer constituted an amount “paid” for the ticket. At the hearing, counsel for the National Revenue argued that the value of the points that were used to obtain the ticket could not be determined and, therefore, that it could not be said that an amount was “paid” by the taxpayer for the ticket.

In court, the taxpayer testified that he redeemed 76,000 Aeroplan points in order to travel to Chicago and back. He booked the tickets only a few weeks before he traveled, once he had made the appointments for the medical treatment. When he filed his tax return, he checked on the Air Canada website, and found that an equivalent fare for the trip was $2,280 at that time. He produced two printouts of airfares from the Air Canada website showing that the full return airfare for a Thunder Bay to Chicago trip would have been $2,678.78 for travel in September 2008 and $2,932.18 for travel in March 2009. The former was for a “Latitude” fare type and the latter was for a “Tango Plus” fare type. Both are economy class fares. The Aeroplan redemption was similar in that it was for an economy award. As part of his defense for the medical claim and use of Aeroplan points, he stated that one could buy Aeroplan points at a cost of three cents per point and provided a printout from the Aeroplan website to confirm this rate.

National Revenue took the position that there was no amount paid by the taxpayer within the meaning of subsection 118.2(2) of the Act because no money was paid by him for the ticket. Counsel for the National Revenue said that a transfer of “money’s worth” did not constitute an “amount paid.” The word “paid” is not defined in the Act. According to the Canadian Oxford Dictionary (2nd Ed.) “pay” means:

1. Give (a person, etc.) what is due for services done, goods received, debts incurred, etc.

The definition of “payment” in Black’s Law Dictionary (9^th Ed.) refers to:

performance of an obligation by the delivery of money or some other valuable thing accepted in partial or full discharge of the obligation.

The word “amount” which precedes “paid” in subsection 118.2(2) is defined in subsection 248(1) of the Act as follows:

248(1) In this Act, “amount” means money, rights or things expressed in terms of the amount of money or the value in terms of money of the right or thing, …

The judge found that the points redeemed by the taxpayer for the ticket were a right, since they were exchangeable for airline services at his request, and that they had a value that could be expressed in money since the services for which they could be exchanged was offered for sale to arm’s length parties at a fixed price. Also, the points could be purchased for three cents apiece. By redeeming his points, the taxpayer gave what was due for the services and therefore “paid” for them within the ordinary meaning of that word.

The actual value given to the Aeroplan points actually played no part in this case, given that the Reply to the Notice of Appeal which set in place the actual appeal, did not mention that the value of the frequent flyer points used by the taxpayer was in dispute, and therefore, the onus was on National Revenue to show that the value of the points was less than the amount claimed by the taxpayer. Since there was no challenge to the taxpayers printout of the Aeroplan’s Web site the value of the points were accepted as claimed.

So, what’s the big deal? Well, for the first time ever in any legal proceeding worldwide, a precedent was set that the use of frequent flyer miles can and does have the very same rights and privileges as cash or any other currency when it comes to being recognized as payment. This case and the fact that it was uphold on an appeal sets in place a basis for many frequent flyers to have their use of miles as payment actually amount to something. Now, whether this case will hold up in situations whereby a person can claim a tax deduction when using their miles for a charity or other cause remains to be seen. But the importance of this particular case and how the definitions of what payment can consist of certainly can’t be overlooked. I applaud the judge’s ruling. Now let the implications of this case move forward.

If like others that travel for business, you have recently been entertained by the seemingly sudden turn of events in rumors of a United/US Airways merger. Seems to have come out of the blue considering all the constant speculation of an earlier merger between United and Continental (which has its own sudden turn of rumors). While we hate to see airlines brands disappear, we have long been proponents of an industry that does no harm to the frequent flyer mileage savings account that most travelers have. For some of you, this latest merger talk is nothing new – you likely read my Twitter post dated February 19, 2010 where I posted the following, “Just saw more airline merger comments by UAL CEO and everyone is thinking w/ Continental. I may be alone, but my money is on UA/US Airways.” At that point no one was talking US Airways, but then again, you pay a subscription to InsideFlyer for a reason.

Here’s my take on this one since it seems to now have the highest buzz and the timing is rumored to be on/off by months end. Driven by United, it is clear that United Airlines would be the surviving brand and no doubt in my mind, that Mileage Plus would be the surviving frequent flyer program. This means – all your miles would be safe, no worries, no dilution and no problems.

This potential merger has made sense to be in recent times because I think United has been posturing themselves just for this. I don’t think they can afford Continental Airlines (known as the best run major airline in the business) and it would allow them to get comfortable in remaining relative to the industry since United does still smart by the merger of DL/NWA and there is only so much low hanging fruit (read that as “being affordable”). Yes, egos still remain in this industry. I also think that CEO Glen Tilton would like to see something of a legacy left from his time in the industry and a merger is likely the only thing left for him to hang his hat on since leading an airline from bankruptcy is hardly legend, especially since he also lead them into bankruptcy. Mr. Tilton is not a public facing CEO and I have no doubts that the power struggle of John Tague/Doug Parker would be interesting since of these three (John Tague is currently the President of United Airlines), Doug Parker is easily the most public facing and seems to feel comfortable with the public, the media and the analysts – something that I actually think would benefit UAL and give way to Mr. Tilton able to leave the industry on an upbeat note. This leaves Mr. Tague (one of my very favorite executives in the entire industry) to actually continue doing what he does best – run the business.

Of the merger of these two airlines, it is likely that no one gains more than the members of US Airways Dividend Miles. While members may miss the aggressive manner in which Dividend Miles has promoted earning Preferred status the last few years, they won’t miss the attempts by Dividend Miles to dilute those very same benefits. We’ve seen Save Dividend Miles and we’ve seen Save SkyMiles, but to date, no express effort or need to Save Mileage Plus (though, I stand by to support that effort if necessary). With the recent changes in Mileage Plus relative to upgrades, members of both programs will be comfortable with the current policies of both airlines. The biggest plus for Dividend Miles members might be that finally all the United award inventory will be shared in easy to access, something that has not been true in the past.

Overall, given that these two airlines are members of the Star Alliance and share similar partnership benefits already, this is as close to being a keeper and sleeper as they come with just the smaller hurdles to be adapted to. Smaller hurdles I might add than the recent WorldPerks/SkyMiles merger. The downside is that Barclays would be out as a credit card provider over time (Chase simply would not let this go).

Bottom line: I’m all in on this possible merger.

Now a few words about Continental and United Airlines. It was reported that Continental would make a bid for United Airlines. Frankly, I don’t think that Continental could afford United unless there was some unbundling of United before such a bid or as part of the deal. The reason is simple, the value of United’s Mileage Plus program adds a few billion dollars into the equation, a value that Continental doesn’t currently have or can calculate with their own frequent flyer program. United has for nearly ten years prepared the spinoff of Mileage Plan to the public market, a la Air Canada’s Aeroplan. Frankly, if it had not been for the dot.com meltdown starting in 2000, Mileage Plus easily would be where Aeroplan is right now and perhaps even farther along. But that story is for another day and as we all now know, the dot.com crash did happen. The point being that Continental can ill afford to pay the acquisition cost of United when United is holding this huge, though untapped, trump card in the value of United. Anyway, that’s my basic view of that situation.

Bottom line: I would not be happy with this merger.