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The other day, I booked myself a direct flight from Tampa to Charlotte with 4,500 British Airways Avios and $5.60. Avios are the best miles when American Airlines, US Airways, or Alaska Airlines has a short, direct flight where you want to go.
The same flight costs $481 cash.
I would never pay $481 for the one-and-a-half-hour flight. I would book a one stop flight for $166 or use hidden-city ticketing to get the Tampa-to-Charlotte leg as part of a cheaper, larger ticket.
I basically got a $166 ticket for 4,500 Avios in my mind, which is less than 4 cents per mile of value–still awesome!
Interestingly, though, if I were rich, I could definitely say I got 10 cents of value from my Avios. If I had millions of dollars, I wouldn’t flinch at paying $481 for the most convenient, direct flight. If I were willing to pay that for the flight, then redeeming 4,500 Avios would really have saved me $481, meaning I really would have gotten 10 cents of value from each mile.
That’s why, in some senses, the richer you are, the more your miles are worth.
The Other, Big Application of This Idea
The main time I see outlandish valuations of awards is on international First Class tickets. Someone will say something like: “I spent 67,500 American Airlines miles and $40 on a one way First Class ticket in Cathay Pacific First Class that costs $10,000, so I got 15 cents of vlaue per mile.”
I would suggest you only got that much value if you would have spent the $10,000 on the ticket in the absence of miles. That is, if you were really, really rich. If you’d only be willing to pay $1,500 for the ticket, adjust your valuation of your award accordingly.
Of course, none of this is new. I expounded on this exact point in the first ever post on this blog.
Back to My Avios Award
I’m hoping I need the flight I booked from Tampa to Charlotte, but I actually might need to fly to Louisville or Seattle or Pittsburgh that day. In that case, I can cancel my Avios award. I’ll get back my 4,500 Avios and lose only the $5.60 in taxes I paid. I have no qualms booking awards speculatively with these miles because of free or cheap cancellations.
Am I right to call people out who would describe my award as 10 cents of value per mile? Are miles worth more in the frequent flyer accounts of rich people?