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When - and When Not - to Use Your Frequent Flier Miles

When - and When Not - to Use Your Frequent Flier Miles

By Tim Winship, SmarterTravel.com | USAToday

Another way of looking at it is to determine how much the miles would have to be worth in order to justify paying a $290 premium ($588 minus $298) over the price of the United ticket to earn them. Dividing the price difference by the number of miles in question yields the answer: 5.9 cents. If you’re the type of disciplined consumer who follows my advice and conscientiously redeems miles for high-priced flights and upgrades, then a case can be made for paying more to fly US Airways. Otherwise, the United or American flights make better economic sense.

In the preceding discussion, I focused on those aspects of the decision-making process that can be easily quantified. There may of course be less tangible factors that would take precedence over the financial considerations. This US Airways customer might, for example, have a strong preference for that airline’s service over United or American’s, or need the miles to qualify for elite status, making them extra-valuable.

Miles-for-merchandise

As frequent-flier programs have evolved into frequent-buyer programs, the opportunities to earn miles-for-merchandise have multiplied. And with those expanded opportunities comes the need to assess them from a return-on-investment standpoint.

Often, frequent flier program members can earn miles for purchases at the same online retailers they would have purchased from even if miles were not on offer. Since both the price and the merchandise are identical in both the with- and without-miles scenarios, there is absolutely no reason to forego the miles.

Where consumers need to unsheathe their pocket calculators is in cases where there’s a price difference, depending on whether the item to be purchased is bundled with miles or not.

Example:

Let’s say you’re a member of American’s AAdvantage program and plan to purchase a Nikon D-60 10.2 megapixel SLR camera. First stop: the AAdvantage eShopping mall. Among the merchants in the consumer electronics category is Crutchfield, which awards two miles per $1 spent and sells the camera for $699.99.

According to PriceGrabber.com, the camera is available from many online retailers, at prices ranging from $595 to $699.99. So the Crutchfield price is at the high end. Which should raise the question: Is it worth it to spend an extra $104.99 to earn 1,400 AAdvantage miles? Possibly. But you’d have to redeem the miles at an effective value of 7.5 cents apiece just to break even. Most consumers would do better to simply purchase the Nikon for $595 and forego the miles. It’s worth noting, however, that the very worst case scenario would be buying the camera for $699.99 from Crutchfield or another high-priced retailer without earning any miles.

Mileage runs

A mileage run is a trip whose sole purpose is to earn miles. They are typically taken for one of two reasons, either to earn miles for an award, or to reach elite status. The standard analysis, comparing the cost to earn the miles with their eventual value, is applicable in the former case. Bottom line: If you’re paying more to earn the miles than their redemption value, then you’re paying too much.

If the goal is to reach elite, the analysis is less straightforward. Elite status is, after all, a basket of benefits, some of which are hard to put a price on. Flight upgrades. Bonus miles. Recognition. How much are they worth to you?


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