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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.

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Because the flight is under 651 miles flow, it costs only 4,500 Avios (from gcmap.com)


The same flight costs $481 cash.

Screen Shot 2015-01-06 at 6.18.08 PMI could pat myself on the back and say I got more than 10 cents per mile of value, but those outlandish valuations are one of my big pet peeves.

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.

Your Take

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?

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I earn a commission for some links on this blog. Citi is a MileValue partner.

Yesterday I wrote about the death of the Guam-in-United-States mistake on the Avianca LifeMiles award chart. Until yesterday, we could book awards to Hawaii, Japan, or Guam for 12,500 miles or less than $200 each way.

I thought that Avianca finally realized their mistake after months of it being openly discussed online, but the real cause might have been a Department of Transportation complaint filed by a miles blogger. Either way, a blogger probably killed the deal.

It got me thinking of other deals that were possibly killed by the blogs, and a few other deals that might be killed by the blogs.

  • Which deals did the blogs kill?
  • Which deals might have already been poisoned by the blogs?
  • Is killing a deal bad?

I earn a commission for some links on this blog. Citi is a MileValue partner.

According to the Wall Street Journal, airlines are opening up more award space this year compared to last year because of pressure from banks, accounting rules, and consultant studies.

In the short term, that’s good for us. More award space: woohoo!

But in the long run, these pressures could cause more airlines to move to revenue-based frequent flyer programs. Revenue-based redemptions: boohoo!

Every year IdeaWorks comes out with one of the worst-conceived studies imaginable in an attempt to quantify which frequent flyer programs make redemptions the easiest. Every year, Gary Leff makes correct points about why the study is so dumb.

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The yearly IdeaWorks study makes no sense because it compares all frequent flyer programs without differentiating which offer revenue-based redemptions, distance-based redemptions, and chart-based redemptions.

It ignores prices on the award chart, international flights by United States carriers, partner award availability, and the imposition of fuel surcharges.

Even with all those flaws, the study gets picked up in the Wall Street Journal and parroted as gospel about which programs are better for consumers.

That’s why it’s dangerous for us.

  • Why is the IdeaWorks study producing positive changes in the short run?
  • Why might the IdeaWorks study produce negative changes in the long run?
  • What pressures are on airlines to increase award availability and how can we increase those pressures?

I earn a commission for some links on this blog. Citi is a MileValue partner.

Yesterday I wrote that The Best Value Flight Across the Atlantic Has Almost No Premium Award Space. I was referring to American Airlines’ Los Angeles <-> London route as the best value flight across the Atlantic.

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The 11 hour flight features fully flat business class for 50k American Airlines miles each way and fully flat first class for 62,500 American Airlines miles each way.

The plane is brand new and features American’s best hard products as well as an onboard bar.

Compare the prices on this flight to what Delta and United charge for transatlantic premium cabins:

  • In business, United wants 57,500 miles each way on its own flights to Europe and 70k miles for partner flights. For United Global First, the cost is 80k miles, and they want 110k miles each way for a First Class flight on partners like Lufthansa.
  • Delta charges 125k miles roundtrip in business class. Delta miles can’t be redeemed for three-cabin first class.

Because the product and price is right, I called MileSAAver award space on the Los Angeles to London flight on American Airlines the best value transatlantically.

Twitter wasn’t having any of that:

Let me give you three reasons why I think Los Angeles to London is a better value than their candidate Boston to Dublin on Aer Lingus with Avios.

I earn a commission for some links on this blog. Citi is a MileValue partner.

The New York Times just ran a really bad article about Delta’s move to a revenue-based frequent flyer program in 2015.

I’m going to delve into the Times article since many MileValue readers discovered the blog from a New York Times article (“How to Get a Seat Out of Your Award Miles“) in which I was quoted extensively. Bill was also quoted extensively in a recent New York Times article about frequent flyer miles: “Elite Status on Airlines Loses Some of Its Appeal.

It seems when the Times doesn’t quote us, they get the story about frequent-flier miles wrong in some really obvious ways.

The central premise of the guilty article is its headline: Now May Be a Good Time to Bail on Frequent-Flier Programs.

Let me refute that in four sentences:

  1. Frequent-flier programs are a way to earn miles, which are a rebate good toward future flights.
  2. Delta slashed how many miles people will earn on almost all flights, but not to zero.
  3. You still will earn at least a 6% rebate toward future flights.
  4. Ditching a small rebate like 6% toward future travel is just burning money, and there’s no reason to do it.

Why is now not a good time to bail on frequent-flier programs? Why else does the article get dead wrong? How does this all affect what rewards card to use?

I earn a commission for some links on this blog. Citi is a MileValue partner.

Today (9/12/12) only, American Express is doing one of its once-every-few-months, one-day-only 75k Membership Rewards sign up bonuses for the American Express Gold Business card.

I won’t give a full rundown of the rules and benefits of the card–you can get that from thepointsguy–but I will answer the following question: should you get the 75k sign up bonus on this card or the 50k sign up bonus?

If the answer seems obvious, it is not. In my post, “The Two Ways to Value Credit Card Sign Up Bonuses,” I described both the absolute-value method and rebate-percentage method.

The absolute-value method is what most people are probably more familiar with. Add up the benefits of the sign up bonus and subtract the first-year annual fee if any. Right now I value 75k MR at $1,785 (75k * 2.38 cents per MR).

There is no annual fee the first year on the AMEX Gold business card and no other value to signing up meaning the absolute value of the 75k MR card, $1,785, dwarfs the absolute value of the 50k MR sign up card, $1,190.

Stop reading here and get the AMEX Gold business card today if you spend tons of money per year on credit cards ($100k+) or you are only getting 1-2 cards this year because of an upcoming mortgage application. The absolute value of the sign up is mouthwatering.

But if you, like me, spend very little on cards each year ($30k), then this is not the best AMEX Gold business offer.

Instead the best offer is the 50k MR sign up bonus. The reason is that the 75k MR sign up bonus has a $10k minimum spend to unlock the bonus. The 50k MR card has only a $5k minimum spend requirement.

People who don’t spend enough to clear all the minimum-spending requirements for all the cards they want should use the rebate-percentage method to order cards on their wish list.

The rebate-percentage method takes the absolute value and divides by the spending requirement to get the percentage of the minimum spend that is rebated in the form of points or other benefits.

The 50k MR card’s rebate percentage is an impressive 23.8%. The 75k MR card’s rebate percentage is only 17.9%.

That means, if you are looking at the most bang for your small buck like me, you should get the 50k MR card.


75k MR American Express Gold Business, Application Link

Issuing bank: American Express

Rebate percentage of sign up bonus: 17.9%

Absolute value of sign up bonus: $1,785

50k MR American Express Gold Business, Application Link

Issuing bank: American Express

Rebate percentage of sign up bonus: 23.8%

Absolute value of sign up bonus: $1,190

I can’t say exactly where the annual-card-spending cutoff is where you can move from the rebate-percentage method to the absolute-value method. But I do know that the 50k MR sign up bonus is right for me.



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There’s an ongoing discussion in the miles-sphere about the value of a mile started when Gary and Ben disagreed about the value of a Hilton Point. Yesterday, Frequent Miler weighed in.

I thought I’d say something since I started this blog (MileValue) about the value of frequent flier miles, and my first post was titled How Much are Frequent Flier Miles Worth? A Guide.

What I want to say is that frequent flier miles are weird. Let’s look at the difficulty in deciding how much my map is worth and how much harder it is to value a frequent flier mile.

This 36″ by 24″ inch map of South America is useful for bragging about past trips to houseguests, planning future trips, and makes an attractive decoration.

It costs $25 on Amazon. We know it’s worth at least that much to me because I bought it for $25. That’s called a revealed preference. I value the map at $50.

But what does that mean? That’s not the price you would have to offer me to buy the map. I’d sell it for $26. I could buy a new one for $25 and pocket the profit.

Nor is $50 the price I’d pay for the map. Remember, they are for sale for $25. So I wouldn’t buy one for $50 unless I didn’t have this one and $50 was the best price out there.

Nor is $50 or $25 or any other amount the amount I would pay for infinite quantities of this map. I would pay the cheapest price up to $50 for my first South America map this size, but for the second I would pay $5. For the third, I would pay $1. After that, I would have one in every room, and I wouldn’t pay anything for a fourth map.

So how much do I value a South America map? $50, $25, $5, $1, some other amount that involves averaging?

Now replace South America map with 1 United mile or 5,000 AA miles.

Except that the market for miles adds new problems. Namely miles themselves are worthless.

They can’t be sold.

They can’t be enjoyed as miles. Miles must be exchanged for experiences (and in some cases goods) that have cash prices.

Putting all that info together, what you need to know is that my mile valuations on the Mile Value Leaderboard are based on the value of the awards that the miles are used to book.

I did those valuations in a series of articles on several major mileage currencies. In each series, I considered the value of the miles on several awards, took the best several awards, averaged the value of the miles for those awards, and finally made adjustments based on the program’s rules and how those rules compared to buying a cash ticket.

When valuing individual awards, for the value of the ticket, I take the lesser of the cash price of the ticket and the subjective value of the flyer. The reason is that it’s unfair to plug in an astronomical cash price if you would never buy the ticket with cash. And it’s silly to use your subjective value if you could simply purchase the same flights for less cash.

Using this system, I get good estimated for the value of the miles for “reasonable balances” of the mile. Let’s look at United miles, which I value at 1.81 cents each.

That 1.81 cents is how much I value United miles over reasonable balances. Reasonable balances differ for different people but should be something like the number of miles you could use in the next two years.

That means I don’t value the first mile in my United account at 1.81 cents. A balance of one mile is, instead, worthless. Nor would I value my 50,000,001th miles at 1.81 cents. That mile is probably worth 0.1 cents since I would value the ability to give away business class awards to Europe to friends at $100 ($100 divided by 100k miles is 0.1 cents per mile).

But for United miles 25k to 500k, I would value them at 1.81 cents each.

Does that mean I would buy them at 1.8 cents each? No, the Frequent Miler often writes about ways to “buy” Ultimate Rewards for less than that, so why would I buy for higher than the market rate?

Does that mean I would only sell them for 1.82 cents each or more? (Miles can’t be sold, but if they could…) I would sell them for much less–any amount greater than the amount I can buy them back for using Frequent Miler’s tricks assuming those could generate infinite miles. It would be a great arbitrage opportunity.

Then what does 1.81 cents mean? It’s just my value for my United miles. It’s the amount I would multiply by my mileage balance when figuring out my net worth. It’s stored travel value.

What you should take away from this

You should have a value in mind for your miles and points. You shouldn’t use that value to determine when to buy and sell miles. You should use the values for ratios between the miles and points to determine what the best miles/points deal is.

You should use mile values to determine which awards to book–40k United miles or 65k Delta or $700 cash ticket?

You should use mile values to determine which card to get–30k SPG points or 40k Ultimate Rewards (don’t forget about rebate percentages here though)?

And you should read all the bloggers mentioned in this post. They’ll help you earn the most miles and redeem them for the most value. Whatever miles are worth, that’s obviously the best strategy.

I hope I’ve thoroughly confused you and opened myself up to interesting offers for my South America map.

PS- This all started with what a Hilton point is worth. Gary says 0.5 cents. Ben says 0.8 cents. I don’t value hotels highly, so I recently got 0.38 cents per point on an award, and I was happy.


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Which is a better use of a five dollar bill: burning it or cutting it into confetti? Between burning it or cutting it, one probably is better. But if you asked me that question, I would answer: its best use is spending it or saving it or donating it. How is this relevant to collecting miles?

There is one clearly superior way to earn miles from your spending: Open up cards that have a big sign up bonus, meet the minimum spend required to unlock that bonus, repeat.

Let’s look at some of the recent cards I’ve opened to see what effective rebate I’ve gotten from this method:

  • American Airlines Citi Visa: 75,000 AA miles after $1,500 in spending, no first year fee. I’ll have a personal valuation of AA miles in the next week, but for now let’s conservatively value them at 1.5 cents per mile. That’s an $1,125 rebate in the form of AA miles on my first $1,500 in spending or a 75% rebate!
  • American Airlines Citi Amex: 75,000 AA miles after $4,000 in spending, no first year fee. An $1,125 rebate on my first $4,000 in spending or a 28.1% rebate!
  • Amex Platinum Card: 50,000 Membership Rewards Points after $1,000 in spending, $450 annual fee. I value one MR point at 2.55 cents, so this card has a $1,275 or 87.9% rebate on the first $1,450- $1,000 spending plus $450 fee. Of course, I actually got another $500+ in value from this card in the form of a $200 United gift card, $200 AA gift card, $100 Global Entry, and lounge access at most airports- all for free!


And the list could go on and on. The takeaway is that sign up bonuses are huge rebates, from 28% (pretty sweet) to over 100% in some cases (free money).

So that should be the message of everyone talking about the subject of miles. Open up cards that have a big sign up bonus, meet the minimum spend required to unlock that bonus, repeat.

And yet, a ton of virtual ink is spilled on the subject of which card to use for daily spending. Answering this question, which is frequently posed by miles collectors, means answering whether it is better to burn or cut up a five dollar bill. Sure, when not clearing bonuses, maybe the Chase Sapphire Preferred or SPG Amex earns an extra 1 or 2% rebate over the other in certain situations. But why consider a tiny difference in rebate like 1 or 2% when clearing bonuses is a big double or triple digit percentage rebate?

I can only think of two reasons:

1) Your spending dwarfs the amount you need to meet the minimum spending required to unlock every attractive bonus. In this case, you should probably be using cash back cards anyways for the extra spending.

2) You have an important loan application coming up, so you don’t want the inquiries on your credit score that come from credit card applications.

If the above describes you, check out these thorough and factually accurate articles by The Points Guy and the Frugal Travel Guy on the subject of maximizing mileage earn by methods other than clearing bonuses. I just wish both articles took the underlying question and first answered: Well, you should really be clearing bonuses, but if for some reason you can’t…

In fairness, The Points Guy does say this, but then he lets by the equally shaky: “However, many people who find a card they like want to stick with it.” Why stick with a card other than the fact that it gives you the best deal? And which card gives you the best deal? The one on which you’re clearing a huge sign up bonus!

Not starting their answers with clear advice that clearing bonuses should be by far your main maximization strategy is kind of like answering the question I posed to start this post by saying, “Burn the five dollar bill. I think that would be more fun.”

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