19

Very often, I'm torn between taking a cheaper flight, and taking a slightly more expensive one where I will accumulate airline mile and loyalty status. I'm torn about how to decide in these situations, because I'm not sure how much an airline miles are actually worth.

It seems to me that there should be a set of steps one can take for any given loyalty program—an algorithm of sorts— to figure out what the points are worth, since they can in some cases be exchanged for real world goods. I'm not sure what exactly these steps are. Obviously the result of this calculation will vary depending on the airline, but it seems logical that the process of calculation would be applicable to many different, if not all, airlines.

  • 1
    Typically you'll get the most out of points when using them to book a flight instead of redeeming them for e.g. gift cards. So, what you can do is check how much you could save when booking with points if you had the required amount of points. – Count Iblis Aug 30 '17 at 21:58
  • 6
    Way too broad. Every program needs to be constantly evaluated carefully, changes are frequent -- and the value is not objective. You will probably put a very different value on your miles if you are flying USA to Asia or Australia frequently vs flying inside Europe mostly. Time matters too, for example AirBerlin topbonus just went pear shaped this week. Also, the future of Aeroplan past 2020 is not certain so if you are doing a pudding run ;) you might end up with lots of completely worthless miles. – chx Aug 30 '17 at 22:21
  • 2
    Excellent answer to this very question has been provided here: travel.stackexchange.com/a/62345/9009 – JonathanReez Aug 31 '17 at 6:15
  • 1
    It's a bit late now, but if I had seen this when just posted, I would have suggested asking on money.stackexchange.com OR, there might possibly be an app for it, which you could enquire about at softwarerecs.stackexchange.com To be honest, asking here is just fine, but I do like to cross promote our sister sites :-) – Mawg Aug 31 '17 at 8:01
  • Best way is to let someone else do the work: thepointsguy.com/category/points-valuations – Johns-305 Aug 31 '17 at 19:12
15

It depends, but a really rough rule of thumb is that a mile is worth one cent. This means that you really shouldn't be paying more than $10 more to get 1000 miles.

That said, there's massive variance between programs, how you value them and how you use them. If you use your points to pay for economy class travel and could have used heavily discounted advance purchase tickets instead, your points are worth a lot less than a cent. If you use points to avoid a walk-up full fare, they're worth a lot more. Many frequent flyer mavens redeem their points for business or first class travel, making them "worth" anywhere from 4 to 10 cents compared to the cost of paying the flight... but would you really have forked out $10,000 in cold hard cash for that 100,000 mile first class redemption?

Some thoughts and more specific (but still IMHO fairly arbitrary) valuations from an expert here:

http://onemileatatime.boardingarea.com/value-miles-points/

  • You got the decimal point wrong--it's $1000 for a 100,000-mile redemption, and on a transoceanic flight, that's a serious proposition. – chrylis -on strike- Aug 31 '17 at 20:50
  • 2
    @chrylis No, that's an example of a notional 10 cent per mile valuation. ($1000 won't get you very far in first class!) – jpatokal Aug 31 '17 at 21:31
6

That depends a lot on the airline, and when and how you use them.

You easily make your own estimates, for example UNITED or DELTA take 30000 to 35000 miles for the cheapest round-trip between US and Europe, which costs you about 700 to 1500 USD in cash - depending on the time of year, the weekday, the route, and the number of hops (and maybe the weather in Tokyo, who knows). That results in 50 to 200 miles per USD, or 0.5 to 2.0 cent per 'mile'.
SOUTHWEST makes no secret of the fact that 70 'miles' equal 1 USD, which means they value them at 1.4 cent.

Note that miles from one airline are not identical with miles from another airline, not even if you know the internally used value - different marketing strategies call for different scales and numbers. One airline might be proudly claim that you 'only' need so many miles to fly somewhere, while another advertises the fact that you get 'so much more' miles for a flight than with the competition.

  • Actually, the thing about Southwest is no longer true. It's still approximately 70 points/dollar, but it's no longer fixed and varies somewhat from route to route. Also, taxes and fees that would otherwise have been charged aren't counted for purposes of redemption, so the actual value can be more when the base fare represents a smaller portion of the total cash ticket price. – reirab Aug 31 '17 at 2:49
5

One cent for a mile or point is a good baseline estimate, as @jpatokal mentions. By planning very carefully though you can get 4X that but it can go the other way.

The value of points differs by airlines and is even revised regularly. So the value of your mile when you accrue it can be different by the time you spend it. That is why some people were calling Delta's points, SkyMiles, SkyPeso, due to devaluation by Delta.

Another important point is that there is no one value per point in one airline. It depends you redeeming points for rewards. In general, higher class rewards give you more value per point. For instance, an Economy reward from the US to Europe is 35K AAdvantage points, a business class one is 57.5K. Now if you search for NYC to Paris one month from now, the price is $774 for Economy and $7155 to go in Business class. So higher value rewards usually get per per-point value.

This is the American Airline AAdvantage reward chart. Notice they offer different values depending on seasons. If you fly more often during the right period, you can get more for your miles. Note that I said about the different classes. Business is about twice Economy but the ticket difference can be greater than 2X. Another crucial thing is that AAdvantage reward flights work by zones - like many others but not all - that makes certain flights very advantageous. It is the same number of points to fly anywhere in the same zone but there can be huge difference in price when purchasing flights. From Air Canada for example, their Aeroplan program requires 50K points to travel from Canada or the USA to South America, meaning it's the same number of points going from Miami to Bogota or from Anchorage to Galapagos! Two months from today the former costs $459 CAD, while the latter $1870 CAD. Almost a 4X difference in value-per-point.

The value of points therefore depends on your flying habits and your ability to use the points you accumulate. There are several things to consider:

  1. Point expiry: Most do after between 12 and 24 months, although some like Delta Skymiles never expire. If you cannot use it before it expires, you lose value.
  2. Award availability: There is an unspecified number of award seats available on each flight. Those tend to run out before the flight fills up. This means that you must be ready to book much ahead of time to get chances of using an award.
  3. Your flight habits: Some routes are highly competitive and you can get cheap tickets that make points worth less. Other destinations, especially remote ones can be very advantageous to get using points.
  • Regarding expiration, at least on the North American carriers, the 'expiration' period doesn't mean that the points actually expire within x months of earning them, but rather than you must have some activity on your account within x months in order for your points to not expire. If you earn (or, in some cases, redeem) any points within that time period, none of your points expire. On many carriers outside of North America, though, the points do indeed expire at some set time after they're earned, regardless of other activity on the account. – reirab Aug 31 '17 at 17:57
2

It is really variable -- some airlines are more generous than others, both on the accumulation and spending sides. Also, while the cost of tickets can go slightly up and down during on- and off-peak seasons, you have some anomalies. Example:

I recently went to Tokyo, August 22 to 25. The cost for a ticket HKG-TYO in economy was about 3,500 HKD, and 11,500 HKD for Economy Premium. However the cost in miles for both Eco and Eco+ was the same, 36,000 miles. Needless to say, I booked an Eco+ ticket (HKG-NRT, HND-HKG, and even got upgraded to Business class on HKG-NRT). Obviously, in this case, buying a ticket with miles was more than beneficial.

I made a quick calculation, and buying a 11,500 HKD ticket with 36,000 miles put the mileage value at 3.14 HKD, about 0.40 USD. However, most of these miles don't come out of thin air (although I do get quite a bit of mileage from my credit cards). From my own travel (and I fly A LOT), I estimate the cost of acquisition of my miles to be about 0.77 HKD, about 0.10 USD. So the total value of a mile, in the case of my last "free" flight to Japan, is about 0.50 USD.

However, the most important thing is the price difference between a ticket with 0 miles, and a ticket with 25%, 50%, 100% mileage accrual. This has to be combined with your travel frequency. It doesn't make sense to go for mileage if you fly 5 times a year. If, however, you fly a few times a month, then definitely go for it...

  • 3
    When you mentioned, that you fly A LOT my first thought was en.wikipedia.org/wiki/LOT_Polish_Airlines ;) – Mark Aug 31 '17 at 6:46
  • Hahaha. Nofankyee ;-) – user67108 Aug 31 '17 at 9:10
  • Do you mean redeeming miles for an award ticket on your HK-Tokyo trip? Which airline offers economy and economy+ on the same amount of miles? – Blaszard Aug 31 '17 at 14:59
  • Cathay Pacific. I think it was because of the summer peak season. – user67108 Aug 31 '17 at 15:23
  • I see. It's 30k on economy and 36k on economy+, usually. – Blaszard Aug 31 '17 at 15:52
1

The short answer, as others have mentioned, is that it really varies a lot by airline, by where you live, and by your personal travel pattern. The value of a given airline's (or hotel's or credit card's, etc.) points to one person will not be the same as the value of those same points to another person. Indeed, to some people, they may be completely worthless (e.g. on an airline in a region where you will not fly again before the points expire.)

Questions you need to answer

In order to determine the value to you of a given airline's points, you'll need to answer the following questions:

  • Which routes can these points be redeemed to fly that I actually intend to fly?

  • How much would I otherwise have paid for these tickets?

  • Do these points expire?

  • If the points do expire, do I fly this airline often enough to accrue enough points to redeem before the points expire?

  • If the points don't expire, do I fly this airline often enough to ever accrue enough points to redeem for a flight I plan to take?

  • How frequently and by how much has this airline historically devalued their points? In particular, how much will the value of the points change before I plan to redeem them?

  • How does this airline price award flight redemptions? Do they use a more or less constant dollar/point conversion (like Southwest,) a region-based award chart (like Singapore or Korean Air,) a distance-based award chart (like British Airways or Cathay Pacific,) or a dynamic point cost based on route demand (like Delta?) In most (but definitely not all) cases, the points can be redeemed for a higher dollar value on long-haul flights than for short-haul ones and in higher classes of service, rather than in economy.

  • Based on the above, which route(s) that I intend to fly on would yield the best point redemption value compared to the cost that I'd have otherwise paid for that route and class of service?

Determining the value to you

If the airline's points cannot be redeemed to fly on a route that you plan to fly on, then their points will probably be worth little or nothing to you (sometimes you could redeem them for things other than flights, but usually at bad values, well under 1 cent/point.)

If you will not earn enough of these points before they expire to redeem them, then they are worthless to you. If you will not ever earn enough of these points to redeem them, then they are worthless to you.

If you will earn enough of the points to redeem them for a flight, by the definition of value, the value of the points to you is the amount that you'd have otherwise been willing to pay for the route and class of service for which you choose to redeem the points.

Examples

In an answer to a question regarding whether airline loyalty programs can have value for casual (not business) travelers, I provided a couple of examples of point value to me. Note that this answer was written some time ago and both programs have devalued somewhat since then, so I wouldn't arrive at those same valuations today.

Some travel bloggers keep running lists of their valuations of several different airline, hotel, and credit card loyalty programs. For example, The Points Guy updates their valuations monthly, which also then allows for comparison of change over time. Note, though, that these valuations are how the guy who runs that site values the points based on his situation, not necessarily how you should value them based on your situation. In particular, if you never fly long-haul flights, you'll probably find his valuations to be more than what the points are actually worth to you.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy