In the February issue of InsideFlyer magazine, I mention a few thoughts on what I think will be the next big thing for frequent flyer programs - the capitalization of them. Capitalization as in market value, as in public offerings.

In the capital markets, we’ve seen some revitalization of the IPO market, though it’s not nearly as rampant as it was during the dot.com “free money” days. This should come as great news to the likes of airlines still struggling along financially. Case in point: Before the dot.com crash of a few years back, I commented that I felt the positioning of the UAL Loyalty Services was perfect for a public offering of that part of UAL and would be worth hundrds of millions of dollars. Well, those hopes died with the market crash and perhaps also of the in-fighting that would likely have occured as the e-commerce guys became ‘darlings’ in most companies.

But the day is different now, and seriously, I think the time would be right for UAL to consider calls to Wall Street for a valuation of UAL Loyalty Services, or really just the Mileage Plus part. It would allow UAL to truly be an airline again and yet capitalize a few of their assets at a much-needed time.

Granted, I may be entirely off-base here, but let’s take a look at what makes this idea work: Early in 2004, they brought on board an experienced leader as president, Arnold Lewis, in the hope that he could run a public company should the need arise. His entrepreneurial experience as well as his years at financial giant American Express surely hold more promise than most other executives considering the same. They would likely be able to give Bank One/Chase a piece of the action to thank them for the financial support they have given in the past and likely will need into the future. As well, they could even re-spin off MyPoints.com to add even more power to this punch.

As for a value of Mileage Plus, well, how about $2.4 to $2.7 billion to UAL’s gain? It is estimated that Air Canada’s Aeroplan program might bring $800 to $900 million (USD) in market value should they be the first to do so. With the other assets that UAL Loyalty Services has, and frankly just the multiple that Mileage Plus has in comparison to Aeroplan, there could be easy support for this idea.

And like the industry’s initial investment in Priceline - they stand to profit even more as the spinoff returns value to the shareholders. In some respects, I don’t like the scenario I’ve just written about, since it may make decisions on member benefits and award redemption more in tune to a ROI. However, having said that. the public outcry of any dilution of the program and exposure of “Johhny can never redeem his miles…” might mean that the executives would pour even more into making the members count first.

Any of you want to call Glen Tilton and tell him what I think he needs to do with United? I haven’t bothered him for the past two years, but maybe now is the right time.