Over 20 million people in the Britain and the US collect air miles – many significantly distorting their consumption patterns to increase the rate of accumulation. You can now earn and spend air miles without ever stepping foot on an airplane, and air miles from the more popular scheme have begun to take on the status of a "pseudo-currency." The importance has attracted the widespread attention of governments (worried about how they should most appropriately be incorporated into the tax base) and financial regulators (worried about how the associated liabilities should be dealt with under accounting and financial reporting legislation). To both groups a key hurdle has been knowing how to value an air mile. The paper outlines the characteristics of air miles that make them peculiarly well suited to use as a "shadow" currency. The perceived value of air miles in a panel of UK consumers is assessed (using the contingent valuation method) and compared to the actual value. The former is shown to be substantially larger than the latter – consumers systematically overestimate the purchasing power of air miles. These findings explain why air mile programmes are, and are likely to continue to be, popular promotional tools with businesses but are potentially harmful to consumers.