# Mile Value Calculator

Figuring out the value of your frequent flier miles is crucial for determining whether an award is a good deal, whether you should book a specific trip with cash or miles, which credit card bonus to sign up for, and which airlines to book an award on if you have several options. Perhaps because it can seem daunting to precisely calculate the value of a mile, I had seen no systematic attempts to do so mathematically when I first started writing this blog. Luckily the formula is actually quite simple.

The way to calculate the value of a frequent flier mile is to figure out its value for specific tickets and generalize from there. Below is a simple mathematical formula that requires us to plug in only a few numbers numbers. I’ll walk you through how to come up with those numbers with a few examples below.

#### How to Calculate the Value of a Frequent Flier Mile

Cents per Mile Value of Award = 100 x (value of award – taxes & fees paid) / (miles used + miles foregone)

#### Determining the Variables in the Equation

###### 1. Ticket Value

For the ticket we are acquiring with miles, we need the lesser of the ticket’s value to us and the ticket’s cost.

Example #1: A coach one-way ticket from LAX-PIT costs \$200. Bill is flying to Pittsburgh to propose to his girlfriend, so he values the ticket at \$5,000. For the formula, we use the lesser of the cost (\$200) and the value (\$5,000), so we plug in \$200.

Example #2: Jacqueline lives in San Francisco and decides at the last second to go see her Alma Mater play a football game in Atlanta. Roundtrip tickets between San Francisco and Atlanta cost \$848. Jacqueline is not a rabid fan, so she only values the chance to go take this trip at \$400. For the formula, we use the lesser of the cost (\$848) and the value (\$400), so we plug in \$400.

Example #3 (Premium International Travel): The most common time the cost and value diverge are for premium international travel. Jeff lives in Los Angeles and just happened to get a month off work. He wants to book his dream vacation to see the Olympics in Rio de Janeiro, with a stopover along the way in Colombia. He is also an expert on maximizing Singapore Krisflyer miles, so he knows he can get a free stopover on an international roundtrip partner award as long as the stopover city is not within the country of origin. He also realizes he can buy up to three additional stopovers total for \$100 each, so he books LAX-BOG (mid August), BOG-RIO (later August), RIO-BOG (early September), and BOG-LAX (mid September) to spend some extra time in Colombia on the way back as he has to leave Bogotá after a week on the way to Rio in order to catch some of the Olympics at the end of August.

• Both flights between Los Angeles and Bogotá are in Avianca Business Class (with a fully flat bed) on a Boeing 787-8 Dreamliner
• Both flights between Bogota and Rio de Janeiro are in Avianca Business Class (with a 12 inch recliner) on an Airbus A319

In cash, this itinerary would cost \$4,381.71. To figure out his subjective value, Jeff looks at the cost of this itinerary in coach, which is what he would book if he had to use cash. The cheapest roundtrip itinerary in coach to Bogotá is \$443, but it has tons of connections that cause a 24 hour travel time in one direction, and is obviously not in a flat bed.

Jeff values his direct flights \$400 more than that and his Business class flat bed a further \$500 more. So he values the roundtrip between Los Angeles and Bogotá at \$1,343.

He values the other Business class roundtrip between Bogotá and Rio, using the same process of finding the applicable coach fare and then adjusting for his valuation of Business Class and routing, at \$1,178.

So for the formula, we use the lesser of the cost \$4,381.71 and his value (\$2,521 = \$1,343 + \$1,178), so we plug in \$2,521.

###### 2. Taxes and Fees Associated with an Award Booking

Include all taxes, award booking fees, phone ticketing fees, close in ticketing fees, and any other fees. This number should be easy to find, since it is the total amount the airline is trying to charge your credit card.

Example #1: Bill purchases his flight within 21 days of departure online. United hits him with a \$75 close in ticketing fee and \$5.60 in taxes, so his total taxes and fees associated with the award booking are \$80.60. But wait! Bill’s a ninja and knows the trick to avoid the United close-in booking fee, so his out of pocket cost for the award is reduced to only \$5.60.

Example #2: Jacqueline purchases online and American Airlines also charges \$75 close in ticketing fees, but she has AAdvantage Gold Status. Her total taxes and fees are \$11.20.

Example #3: Jeff has to call a phone rep to book Star Alliance partners with Singapore miles. He’s also planning and booking this trip within a week of departure. Luckily, Singapore Krisflyer has a very lenient fee policy and doesn’t charge phone booking fees nor a close-in booking fee. His total taxes and fees are \$300 (\$100 of which is for the added stopover in Bogotá on the way back.)

###### 3. Miles Used

How many miles will the trip we are considering cost?

Example #1: Bill found saver award space for the date he wanted. His trip cost 12,500 United miles.

Example #2: Jacqueline found SAAver level award space on aa.com for her entire itinerary, her total cost is 25,000 American Airlines Miles.

Example #3: Jeff’s extended trip around South America in Avianca Business Class costs only 100,000 Singapore miles.

###### 4. Miles Foregone by Not Purchasing Ticket

If the loyalty program has a revenue-based mileage earning system, use the cost of the coach ticket you would have purchased to determine miles foregone by not purchasing (along with any multiplier that airline status might give you). If the loyalty program uses a distance-based mileage earning system, use the Great Circle Mapper to calculate how many miles the trip would earn in coach if you paid the fare (and again, account for any bonus you would receive if you have status on the airlines you are flying).

Use the miles earned in coach even if your award is booked in first class unless you would have paid for a first class seat in cash if you had not used miles.

Example #1: Bill’s PIT-LAX flight would cost \$200, so he is forgoing 1,000 miles (200 x 5, as Bill is just a normal United Mileage Plus member) by not purchasing his ticket with cash.

Example #2: Jacqueline’s SFO-ATL roundtrip would cost \$848, but she is an AAdvantage Gold flyer and therefore would earn 7 miles for every dollar spent (a 40% mileage bonus), so she is foregoing 5,936 (7×848) miles by not purchasing the ticket with cash

Example #3: Jeff’s megatrip is 12,639 miles of flying, so he will forego 3,160 Singapore miles by not purchasing the ticket with cash (25% of 12,639 as that is the accrual rate for Singapore when flying Avianca)

###### The Value of Each Example’s Mile

For reference, here is what the equation looks like:

Cents per Mile Value of Award = 100 x (value of award – taxes & fees paid) / (miles used + miles foregone)

Example #1: Bill’s United miles were worth 1.44 cents per mile:

100 x (200 – 5.60) / (12,500 + 1,000) = 1.44

Example #2: Jacqueline’s AAdvantage miles were worth 1.26 cents per mile:

100 x (400 – 11.20) / (25,000 + 5,936) = 1.26

Example #3: Jeff got 2.15 cents per mile out of his Singapore Krisflyer miles:

100 x (2,521 – 300) / (100,000 +3,160)= 2.15

**These were realistic, but stylized examples. They are not my valuation of those currencies. For my valuation of those currencies, see the links at the bottom of this post**