Suppose you are looking for a good deal for a flight and you find that you can either buy a ticket for $400 or redeem 25,000 miles for an award flight. Which should you do? The decision can be complicated. You need to know how much those 25,000 miles are worth to you. Plus, if you redeem miles, you won’t earn miles from either the purchase of tickets or the flight itself. And if you’re looking to earn elite status, you need to consider that you won’t earn elite qualifying miles from an award flight.
In order to try to wipe away most of that confusion, I’ve put together a three step guide to help you figure things out. The formulas are far from perfect and they won’t match everyone’s needs or beliefs about miles, but I know that I need something like this so maybe you do to. As much as possible, I’ve kept to nice round numbers and easy formulas. Here goes:
Step 1) Take the # of miles you would need to redeem, chop off the final two zeros, and add a dollar sign in front. Example:
25000 Miles -> $250
This is the value of your miles if each mile was only worth a penny. However, according to our Reasonable Redemption Values (RRVs), most miles are worth about 1.4 cents each, so this is just a starting point. Also, don’t forget that by redeeming miles for a flight, you will lose out on earning new miles. So, go on to step 2:
Step 2) Answer the question: do elite qualifying miles matter to you?
When you fly on a regular purchased ticket, you earn both redeemable miles and elite qualifying miles. Redeemable miles are used for award flights. Elite qualifying miles are used for gaining airline elite status. You generally need to earn at least 25,000 elite qualifying miles on an airline in a calendar year in order to earn the lowest level of elite status.
If you are unlikely to earn elite status, then your answer should be “No”. Or, if you simply don’t understand the question, go with the answer “No”.
Step 3A) Use this formula if your answer to step 2 was “no, elite miles don’t matter”:
$250 x 1.5 = $375
This is your estimated loss for redeeming miles and forfeiting new bonus miles.
Step 3B) Use this formula if your answer to step 2 was “yes, elite miles matter”:
$250 x 2 = $500
This is your estimated loss for redeeming miles and forfeiting new bonus and elite miles.
Step 4: Compare
Take the value you computed above (either $375 or $500 in the examples) and compare to the paid flight option. If the calculated amount is less than the paid flight option, then redeem your miles. Otherwise buy the ticket.
Example A: The estimated loss from redeeming miles ($375) is less than the cost of a ticket ($400), so: redeem miles
Example B: The estimated loss from redeeming miles ($500) is more than the cost of a ticket ($400), so: buy the ticket.
Step 5: If your answer in step 4 was “buy the ticket” then consider paying with points
Many types of bank points let you buy airfare while getting good value from your points. For example, both the Chase Sapphire Reserve card and the US Bank Altitude Reserve let you buy airfare with points for 50% more value. In other words, you get 1.5 cents per point value in this way. Plus, when you buy airfare with bank points, you do earn redeemable miles and elite miles from your flight.
Notes:
- Don’t forget to use your own common sense here. If you’re low on cash, or you don’t think you’ll ever be able to use your miles for a high value redemption, or you simply don’t value your miles, then by all means use the miles despite what the formula says! Conversely, you may value elite miles more than the formula allows, or you may be holding onto your miles for much higher value redemptions. In those cases, it would make sense to err towards buying flights.
- The factor of 2 used in step 3B to compensate for the loss of elite miles is a very rough approximation. If you really want to be rigorous you can determine the number of elite miles that would have been earned for the flight and multiply by $.03 (3 cents per elite mile). Then, use formula 3A and add in the result of your extra calculation.
Love your emails and advice….really spot-on and helpful. However, I don’t try very hard to maximize everything I do, I just try to get business-class airline seats on mileage when my wife and I travel. I don’t make it my life’s work, but I’m retired and have some time, so it’s a fun challenge for me, and advice like yours has been indispensable. I just wanted to share with you a victory from a small-timer who isn’t nearly as sharp or savvy as you.
I had a recent adventure trying to navigate the frequent-flyer bazar. My wife and I planned to go from Miami to Santiago, Chile to board a cruise next year in January. Using your advice, I signed up for 2 different AAdvantage credit cards to get miles ready – had approx 150,000 miles in the bank (my wife had about 150,000 previously-earned AA miles). We needed a one-way flight MIA-SCL so I thought we were in fantastic shape with plenty of miles. First stop – AAdvantage online mileage award booking site. Long before the first available day for booking I researched how many miles AA might charge – saw 150,000 miles ONE-WAY for a business-class ticket because no business-class SAAver tickets were available for any dates at all. WHAT??? 150,000 miles for a one-way ticket? Merely because AA decided they didn’t have to offer SAAver tickets? I balked.
I then turned to Chase Ultimate Rewards program, where we each have about 107,000 points. One-way business-class tickets were available, on overnight flights only, for about 109,000 points. This worked out to a bit worse than $1,100 for each ticket – which also seemed astronomical, but in reality was probably the best cash price we could get for purchasing business-class one-way.
I then learned that AA’s partner LATAM also offered the flights we wanted, but they were not visible within AA’s online booking engine – you have to find the reward seats on LATAM’s website, then call AA and ask if mileage seats are available through them. After signing up for LATAM’s frequent-flyer program, a quick survey of LATAM’s online mileage-booking engine showed the one-way flights we might want were indeed available on a different, earlier date …… for 186,000 LATAM miles!! What now?
What to do? I researched, planned and prayed for the better part of a month before our first available booking date. My research didn’t turn up any better alternatives to the paths I had already found.
D-Day came. I had a plan before I ever spoke to American’s AAdvantage desk. I had researched the flights on LATAM with mileage seats available for our date. I would first ask them if those were available, ask for the number of miles required, then make a decision. I could fall back on Chase Ultimate Rewards booking, which I decided was preferable to forking over 150,000 miles apiece for AA seats. I gave the AAdvantage desk the LATAM flight numbers we wanted (a same-day non-stop), only to be told that that flight was not available for booking through them for mileage. I began to feel that AA was conspiring against us. I was about to say goodbye, when the person on the phone offered a different overnight flight with lie-flat beds. I asked about the mileage cost and was told……. 57,500 miles. I asked him to please confirm what I thought I heard….57,500 AA miles for a business-class lie-flat seat on an overnight flight. He confirmed it, it was not a mistake or an oversight. I was floored.
It got better. After we booked it and I called AA back, wanting to change again (for no charge) to a different overnight flight, I asked AAdvantage again, just for giggles, if that same-day non-stop was available for booking. Oh yes, I was told….for the same 57,500 miles. We booked it.
Moral of the story….never, ever, ever take the first answer you are given when doing this type of research. There is often a better, cheaper alternative if you just work at it a bit. We got …..a BETTER FLIGHT (same-day) on a BETTER PLANE (a 787) FOR ABOUT 1/3 THE MILES I HAD ORIGINALLY BEEN QUOTED BY AA. I love this country!
Great story. Thanks for sharing!