Mileage Redemptions - The Good, the Bad and the Ugly
September 4, 2016
I HAVE MILES!!!!!!!
Good. Now don't blow them.
When you spend so much time accruing miles, it's crucial that you don't waste them.
Not all redemptions are created equal.
You need to be disciplined in adhering to a plan based on your goals. If you want aspirational awards for international first class travel, you don't want to waste your miles until you can redeem them for the big prize.
How do I know what a good redemption is?
Regardless of what your goal is (free domestic flights or big aspirational awards) you still want to get maximum value for your miles. For instance:
Say you have a wedding coming up and you have 50,000 miles in your American Airlines AAdvantage account. The flight costs you $200 RT, or you can redeem 25,000 miles for a round trip economy ticket. That's $0.008/mile, or less than a penny per mile in redemption value.
This is not good.
Remember, you want the highest value out of your redemptions, or the highest cents per mile value of your redemption.
Now, say you're that same flight is $350. Now you're at $0.014/mile, almost double. Now we're getting somewhere.
In general, and this is not a one-size-fits-all rule, if I don't get at least 2 cents per mile out of my redemption or the flight is under $400, I won't consider a redemption because usually my value is not being maximized.
Remember, also, that you do not earn miles on an award (mileage) ticket. This is also a reason I do not like redeeming miles for domestic tickets. I would rather get the miles from cheaper fares than get bad redemption value AND not earn miles on top of it.
However, not all domestic flights are bad redemptions. When you're flying to a smaller city or a difficult city to get to, like Charleston, SC for example, miles can be a better decision as fares can often top $400 for a coach ticket.
Obviously, if you're strapped for cash at the moment, take advantage of your miles to save some coin.
To drive the point home, let's look at an international award redemption.
Let's look at using those American Airlines miles again on a flight from Dallas/Ft. Worth (DFW) to Tokyo Narita International (NRT).
Coach revenue tickets booking through American on flight 175 leaving DFW to NRT nonstop on a Monday in April costs $1,215 one way in economy.
Coach award tickets right now for the same flight cost 35,000 miles. That's a redemption value of 3.47 cents per miles. See the difference?
To go even further, let's look at a first class redemption:
Taking the same destination of Tokyo Narita, let's fly Singapore Airlines Suites Class (it's epic and top of my list of products I want to try):
Right now you can wait-list for a first class seat on a Monday in May for 74,375 Krisflyer miles. That's an 11 hour nonstop flight. That's one of the best redemptions out there thanks to Singapore giving you a 15% discount on mileage redemptions using their own Krisflyer miles.
The cost of that ticket if you paid? $7,279.90. The redemption value?
9.79 cents per mile
If you want to maximize your miles, you need patience. It's easy to cash in your miles with whatever flight you're about to take, but start doing the math to see what your miles actually bring you in value.
This game is about value maximization.
It's no different than a business investing in equipment. You want to make sure your purchase will provide the maximum value for your investment. Same with your miles. Not all equipment is created equal, and not all redemptions are created equal.
Remember, it's mayhem out there. Make sure you maximize it.