How many miles is a good deal?

A friend recently asked me about how I booked tickets in business class. When I am not traveling for business, I pay for business class using miles instead of cash. These tickets are called award tickets. However, business class award redemption prices can vary widely. Different airlines charge different amounts of miles/points for different routes and different classes of service. To make matters more complicated, you can book on one airline using another airline’s miles, and you can transfer certain credit card points to miles for a slate of airline partners. This makes answering the question “how many miles is a good deal” a lot more involved than simply providing a number.

How much is a mile worth?

In order to figure out whether an award ticket is a good deal, we need to know how much a mile is worth. It depends on the airline.

Each airline assigns a certain monetary value to their miles/points system. This value is internal and can only be discerned for certain if you happen to have the airline’s balance sheet and a total number of miles across all accounts. However, when many data points are collected, we can arrive at a pretty precise guess.

For instance, aviation industry experts estimate that a single American Airlines AAdvantage mile is worth 1.5 cents, while a single Delta SkyMiles mile is worth just 1.1 cents.

This all being said, the monetary value is on average 1 cent per mile. Sometimes, it can be less. Other times, it can be more. But most importantly, it doesn’t really matter because what matters is the price for redemptions.

Rule number 0: always compare the award price with the cash price

Using miles comes down to deciding when to use an alternative currency. The cash price does not always correlate proportionally with the award price. For instance, if Delta is selling a $500 ticket, it might cost 50,000 miles for one day, but for another day it might be still $500 cash but only 35,000 miles. This is common; there will oftentimes be major differences between the cash price of a cash ticket and the cash value of an award ticket. It’s from this difference that you can essentially pick the better price of the two when you have both currencies.

If you want to maximize how far your miles will take you, you should only spend them when it gives you a better deal than paying with cash. Use the baseline point valuations that a travel site like The Points Guy or One Mile at a Time provide, then compare it with the cash price.

Example

For instance, if I have 100,000 AAdvantage miles and I find a redemption for 60,000 AAdvantage miles one-way from Dallas to Tokyo flying in business class, but I could pay $4,500 in cash for the same ticket, how do I compare these two prices?

First, I need to convert the miles cost into its corresponding cash cost so I can compare using the same unit of measurement (in this case, the U.S. dollar). Per the above given valuation, 60,000 AAdvantage miles is worth about $900 when using the average valuation of AAdvantage miles. However, if the ticket’s cash price is $4,500, then you’ve basically just gotten a choice to either pay $900 or $4,500 for your ticket. Obviously, you’re going to want to pick the $900 choice. And that means you are getting $4,500 of value from $900 worth of miles.

Now that you know it’s a better deal to use miles, you could go ahead and book. However, let’s not forget about the original cost of 60,000 miles. We need to compare that cost with the $4,500 price tag.

You can then say that, if $4,500 is the original cost and 60,000 miles is the award ticket’s cost, each mile is worth 7.5 cents with this redemption (since $4,500.00/60,000 = 0.075). That’s much more than the average 1.5 cent per point valuation. And it’s this metric—cents per point or cents per mile—that you should be using to determine how much you’ll save, because it’s possible you might find another redemption that’s worth even more cents per point!

Using credit card points rather than airline miles

But hang on, you might ask. What about those credit cards that let you transfer credit card points to airline miles? Simple. Just treat those points as miles at the conversion ratio. Typically, 1 credit card point converts into 1 mile. Then, everything above continues to apply.

But credit card points can convert to different mileage programs. Then, due to some mileage programs charging in different ways from others, you can shop around for the best price. Here’s a real life example of how you can pick wisely:

I wanted to book a flight on United Airlines from Newark to Burlington, VT. United Airlines was willing to sell me this ticket for 15,000 MileagePlus miles. However, United is not the only place I can buy this award ticket. Air Canada is in the Star Alliance with United Airlines, so they can sell award tickets for United Airlines flights too. In this case, Air Canada only wanted 6,000 Aeroplan points for the exact same flight. The choice is dead obvious: book with Air Canada.

When I was about to book, I had at least 15,000 Chase Ultimate Rewards (UR) points to spend. To make this award ticket booking, I could either transfer 15,000 UR points to United Airlines or 6,000 UR points to Air Canada to make the exact same booking. Obviously, I chose the 6,000-point redemption. See how shopping around actually makes credit card points more powerful than a single airline’s miles?

What’s a good cost per point/cost per mile?

• Anything below 1 cpp is a really bad deal. Don’t use points/miles if their value is this low, unless you have no other choice.
• 1 cpp is your baseline. It’s not a great use of miles because there’s much higher possible cpp values if you find the right redemption. Use it if you have no other choice.
• Between 1 cpp and 2 cpp is the average valuation of most airline miles. Hitting average is not a great use of your miles/points; you want to be above average.
• 2 cpp is decent. This is about the point where you can begin considering making redemptions. I would also say this is considered an average cpp for non-business class redemptions. Keep in mind that you could get higher cpp by booking business class (but for inevitably more points than an economy rate).
• 3 cpp is good. At this point, you should seriously think about using award miles to book instead of cash.
• 4 cpp and above is a great deal and you should go for it at that point.

Rule number 1: Domestic U.S. redemptions generally suck

Most domestic U.S. redemptions give you cpp values below 3. Their short flights also mean there’s little time to enjoy the experience. You should avoid using it unless you’re saving a ton of money.

There are some sweet spots, like Etihad Guest charging 6,000 miles for a one-way domestic U.S. flight under ~1,000 miles on American Airlines. But the number of award tickets (known as “award space”) for each flight may be severely limited.

These days, I only make domestic redemptions when I need to book a last-minute flight that would otherwise cost over $500. While these domestic points/miles redemptions are almost never the best, they usually represent significant cost savings compared to booking with cash.

Rule number 2: International business class redemptions are the goal

Most people redeeming lots of miles and living that glamorous life are shooting for international business class. Economy redemptions will always have lower cpp values compared to business class. Consider maximizing your cpp with business class if possible, but if you want to minimize points spent instead of maximizing point values, book economy and don’t sweat it if your cpp doesn’t go above 3-4 cpp.

Rule number 3: Always shop around

Since different airlines will have different pricing strategies for different routes, it’s always a good idea to identify the sweet spots for redemptions and shop to see what the lowest rate you can get is.

Be sure to look at airline frequent flyer programs that typically have good redemptions and are transfer partners with credit cards, such as Air Canada Aeroplan, Air France/KLM Flying Blue, Avianca LifeMiles, British Airways Executive Club, and Virgin Atlantic Flying Club.

Don’t forget about taxes and fuel surcharges

No award ticket is fully free. Every award ticket that originates in the U.S. will cost at least $5.60. That’s your transportation security fee, which pays for your security inspection at the airport’s TSA checkpoint. That’s considered low though and it only gets worse the further you get outside of the U.S.

Award redemptions on non-U.S. carriers, as well as redemptions on U.S. carriers originating from foreign countries, often carry hefty taxes and/or fuel surcharges.

Examples of taxes include:

• Canadian Air Travellers Security Charge (ATSC): rates between the U.S. and Canada range between CA$16.08 and CA$33.07
• UK Air Passenger Duty (APD): rates are usually a bit over £90 for trans-Atlantic departures in economy but are over £200 for business class

Fuel surcharges, on the other hand, are not mandated by the government and were created by airlines. They are charged by the airline who is selling the ticket instead of the airline operating your flight. Some award programs are infamous for charging hundreds of dollars for fuel surcharges on top of an otherwise extremely good award deal. As of now, U.S. airlines are very good about not charging fuel surcharges.

Here are some airlines infamous for fuel surcharges, listed in alphabetical order (and not by order of the magnitude of the surcharges):

• British Airways
• Turkish Airlines
• Virgin Atlantic

Rules of thumb for redemption categories

To provide a more succinct answer to “How many miles is a good deal?”, here are my approximations for what’s a good deal. All prices are for one-ways.

We’ll start with economy:

Region	Excellent range	Good range
Within the U.S.	Under 6,000 miles/points	Under 15,000 miles/points
North America–Europe	Under 30,000 miles/points	Under 45,000 miles/points
North America–East Asia	Under 40,000 miles/points	Under 60,000 miles/points
North America–South and Southeast Asia	Under 40,000 miles/points	Under 60,000 miles/points
North America–Central and South America	Under 40,000 miles/points	Under 60,000 miles/points
Within East and Southeast Asia	Under 7,500 miles/points	Under 15,000 miles/points

And then conclude with business:

Region	Excellent range	Good range
North America–Europe	Under 30,000 miles/points	Under 60,000 miles/points
North America–East Asia	Under 60,000 miles/points	Under 120,000 miles/points
North America–South and Southeast Asia	Under 60,000 miles/points	Under 120,000 miles/points
North America–Central and South America	?	?
Within East and Southeast Asia	Under 15,000 miles/points	Under 30,000 miles/points

Why are some categories missing?

• Within Europe: Fares are usually very cheap for economy. It would be a waste of money to use miles to book flights within Europe. European business class is just economy with the middle seat blocked and free meals; it’s simply not worth it.
• Middle East and Africa: I don’t have enough data points to make a recommendation.
• Within South Asia: Cash flights on IndiGo are cheap enough. There’s not much of a point to use points to book (no pun intended).
• Within the U.S. (business): except for American Airlines’ premium transcontinental flights, JetBlue Mint transcontinental, etc., first class is good but not impressive. It’s certainly not worth spending miles on. Save your miles to spend on something actually worthwhile. For instance, you’ll be able to get lie-flat business class seats for just 15,000 miles on JAL between Tokyo and China if you book with Alaska.

Keep in mind that sometimes looking at the absolute number of miles spent might not be the best metric. In cases where all award tickets are expensive, calculating the cents per mile or cents per point valuation will help you get a good idea of how much money you save by booking with points.

Examples of good deals

To give you some examples to compare to, here are some good points redemptions that either I made or someone I knew made:

Business class

• 52,500 Turkish Airlines Miles&Smiles from Seattle to Delhi/Mumbai (via Istanbul) on Turkish Airlines
  • Unfortunately this one came with about $400 in taxes and surcharges each way
• 88,000 Aeroplan points from Mumbai to Seattle (via London and Vancouver) on Air Canada
• 60,000 AAdvantage miles from Seattle to Tokyo (nonstop) on Japan Airlines
• 15,000 Alaska Mileage Plan miles from Tokyo Haneda to Shanghai Hongqiao (nonstop) on Japan Airlines

Economy class

• 6,000 Aeroplan points from Newark to Burlington, VT (nonstop) on United Airlines
• 12,500 AAdvantage miles from Dallas–Fort Worth to New York–LaGuardia (nonstop) on American Airlines
• (Last-minute urgent trip booked less than 24 hours before departure) 15,000 United MileagePlus miles from Seattle to Dallas–Fort Worth on United Airlines