When is an award flight a good deal?

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 quite 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 the Fair Trading Prices chart, most miles are worth about 1.3 cents, 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.

Notes:

  1. 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.
  2. 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.


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About Greg The Frequent Miler

Greg is the owner, founder, and primary author of the Frequent Miler. He earns millions of points and miles each year, mostly without flying, and dedicates this blog to teaching others how to do the same.

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Pingbacks

  1. […] With respect to airline miles, I think the Fair Trading Price chart has worked out very well.  It’s great to have a benchmark to use before jumping into a scheme for buying miles.  It’s also a great benchmark to help decide whether to use miles or cash for purchasing airline tickets (See: When is an award flight a good deal?).  […]

  2. […] This question comes up on such a regular basis when I plan my travel, I can’t really count anymore.Redeeming miles can be such a pain in the A** as rules are changing etc..  I use my miles regularly, but often struggle to understand if I should use the miles for a free flight or rather for something else. This guy here explains how best to calculate and what to take into consideration: When is an award flight a good deal? […]

Comments

  1. I have a simple rule of thumb, if you are not a frequent traveller, perhaps it is a better idea to burn your miles on short trips, i.e., domestic. That ways you don’t have to work to eternity to get that one big trip unless you are ready to wait for it.

    And yes, if you mint miles all the time, your miles are better used in long-distance travel.

  2. Nice post. I am going to save this to my TopTips section of my blog.

    For me, and those who churn cards, the points are coming at a truly dizzying rate. With that kind of volume for me BIZ or 1st class is the way I burn in the air. For hotels, I like upgrades but really don’t care. I sleep and get out to go play. I do like free wifi and food as they can cost real money. Those kind of “extra” should go into your match for hotel points (or they do for me). – Rene

  3. I think the quantity of miles in the account has a qualitative value. With well over 250K miles in UA, I don’t care if I burn 25K (Note)

    On the other hand, my AA account has about 80K and I use that sparingly. (for example, I recently used *A to PEK in F, then AA to HKG in Y because there was no F availability that day directly to HKG)

    (NOTE: unless I’m close to making the next elite level up and the EQMs would make the difference.)

  4. Thanks for making this so clear–it’s something I’ve often wondered about. I used to love UA for the ability to buy a ticket with a UA Visa and then pay for it with miles, thus getting the best of both worlds-earn miles and fly for free. I don’t have many UA miles anymore, so not sure if they still allow this, but it was perfect for times when the cash and miles price were neck-in-neck.

    Do you know of other airlines and airline cards that allow this?

    I’ve been ignoring the concept of elite status since I got into this game because I’m usually traveling with my family of four-I assume it’s nearly impossible to get status for four people just based on recreational travel 3-4 x per year. Am I wrong?

  5. I look at it a different way. Distance and comfort matter. If the cost of coach is more than $500 for a long domestic flight and I can go first class for 50K miles I will do it all day long. I would never redeem for economy at 2 cpm or less for a long flight. Go first class and maximize the value of your miles. You’ll still have plenty of miles when you die.

  6. Thanks for this great post- its the basics that newbies like me NEED to understand how this all works.
    Question- I have miles in both Continental AND United-I have merged my accounts, but the miles still post seperately on each account. Will they eventually merge, or should i transfer my Co to my United for a trip to Busan i need to book soon? I’m worried about losing those points.

    • Great conversation everyone! I’ll just answer a couple of people who posted questions:

      Summer: generally when an airline allows you to pay with miles it’s not a great deal because they fix the value at 1 cent per mile. Also they might not allow you to earn miles for those flights. A better option is to earn points with a credit card like the Chase Sapphire Preferred. With those points you can either convert them directly to airline miles or pay with points for travel on any airline and each point will have a fixed value of 1.25 cents. When you purchase travel that way you will earn miles flying on the purchased tickets.

      Karen: don’t worry, you won’t lose any miles when Continental and United merge. Just make sure to link your accounts now and everything will be combined.

  7. I plan to fly from Washington DC to Hawaii in October for 7 nights.
    This is my first time and I need advices:

    1. Which island (Honolulu, Maui…) I should visit.
    2. Which airline provide the best deal?
    3. Which hotel I should stay?
    4. I am a Platinum member of Marriott and get benefits for staying here
    * I have enough Marriott Rewards points to exchange for 7 nights & 55,00 to 132,000 miles, depending on which airline.
    I may exchange it for 7 nights & the airline that fly at least required mileage.
    4. Should I select a package (flight+ hotel)

    Thank you.

    • 1. In my experience, all of the major islands are worth visiting. The only one I personally didn’t love was Oahu (where Honolulu is). My favorite is probably Kauai, but Maui and the Big Island are great too.
      2. That depends on so many different factors that its impossible to say here
      3. I’d recommend searching for properties on TripAdvisor. You might do better renting a timeshare (via a site like tug2net) rather than paying for a hotel room
      4. Keep in mind that Marriott doesn’t provide some key Platinum benefits at resort properties so you might be disappointed.
      4b. If you have enough Marriott points, the flight + hotel packages can be a very good deal. You don’t even have to use the miles for that trip. Its just a good way to get valuable airline miles.

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