Saturday, November 9, 2013

some frequent-flier basics (part five: what are your miles worth?)

In the greater frequent flier community there's much debate about what a mile is worth but generally speaking they're worth something around 2¢ depending on which airline they're from. 

When you're pricing out a potential flight you can quickly tell how much your redemption is worth by dividing the number of dollars it would cost to buy the ticket by the miles needed (this is another great reason to look for the flight on before starting an award search). 

Let's say your flight was pricing out at $400 and you look on and find a Saver redemption for 12,500 miles each way (for a total of 25,000). Now just do the math:
     $400 ÷ 25,000 = $0.016

So 1.6¢ per mile is a decent redemption rate because you're generally in the ballpark of 2¢. Many frequent fliers aim for 6¢ per mile or more, but the only way you'll ever see a redemption rate that high is if you're booking international business or first class. Domestic economy it's quite difficult to get above 3¢. (Although I recently managed a domestic 9.4¢ redemption!)

On the opposite end of the spectrum  I've seen $159 flights on Kayak that would have cost 25,000 miles to redeem (i.e., $0.006 — six-tenths of one cent!!) so it's possible to really over-pay for flights if you don't do a tiny bit of math first. Even if you eventually decide you have to buy at that price, you should make sure that you're making an informed decision. Put another way: be sure you're ready to trade in two later trips for this one if you're going to cash in miles at such a low valuation. 

It's important to do a reality check when calculating these values — if you would NEVER pay $13,000 to take a First Class flight on an exotic foreign airline, then these miles aren't really saving you $13,000. Some folks advocate pricing your miles against the flight you would have actually purchased had you had no miles. But our flights on British Airways and Korean Air First Class were experiences way more memorable and fun than the (likely) Premium Economy seat we would would have gotten if we'd been paying cash, so I think the true valuation of these First Class flights lies somewhere in between. 

The whole system is designed in such a way to make it difficult for you to know what you're earning when you fly and what you're paying when you redeem. It also bears similarities to chips at a Vegas gambling table – once your visceral connection to physical dollars is cut, you're more easily tricked into spending them unwisely.

I'll go more into this later, but if you have an airline mileage credit card, you're essentially paying 1¢ per mile to earn those miles (because with an airline card you're foregoing 1¢ on every dollar spent compared to a 1% cash back type of credit card...). So you probably shouldn't give the miles back to the airline for less than you paid for them. 

The same logic goes when the airline offers to let you buy points (sometimes offered on paid flights as an "award accelerator"), they're almost always priced well above 2¢ each, so it only makes sense to buy them if you're just a few thousand points short of the mileage needed for a specific flight.

Armed with this information and a calculator, you should be able to figure out if you're getting a good deal for your miles or not. The Points Guy also has a great chart where he tracks his own estimates of what each company's points are worth. 

Part 6: a real-world example ➡️
   < back to part 4

some frequent-flier basics (part four: searching for redemption)

So now that you know route and the current going rate if you pay for the flight, it's time to log in to the airline's website and start looking at availability and mileage costs. Make sure you have all of the necessary personal information handy: all travelers' full names, dates of birth, frequent flier number, passport number and expiration date (for international flights) so if you find a great deal you can grab it before someone else does.

In this example, I'll show Log in with your user name and password, since many of the fees and seat choices will change if you're a member of their program. Select your dates and destinations, make sure to click the Award Travel button, then click Search

Flight availability and pricing is shown for all 3 classes of service – Economy, Business, and First (most domestic flights only have 2 classes whereas international flights tend to have all 3 classes). Direct flights are shown first (both United and Partner flights), followed by flights with stops. If you're lucky, your first choice from your earlier Kayak search is here with Saver availability – just click the "Select" button and move on to the next step!

United award availability

If not, then it's time to start making some decisions. The calendar at the top of the page is color coded to show availability on various dates (NOTE: those colors reflect United availability only – partner availability is not taken into account). Click a different day to see its availability.

As a general rule, Standard Awards are not a good use of your miles, but if you're strapped for cash and there's no saver flights that work you can always use them. Once you've (hopefully) found something acceptable you can afford, select the flights and complete the transaction. The miles are automatically deducted from your account.

This is probably a good time to go on to a larger topic: what are you miles "worth"?

part 5 ➡️
<< back to part 3

Thursday, November 7, 2013

some frequent-flier basics (part three: award charts)

So in the previous step you found the price to purchase the ticket you want, now it's time to see if you can find a mileage reward seat.

Most airlines publish award charts with fixed redemption rates between regions (e.g., 50,000 miles for flights between North America and Europe). Additionally, most have a concept of a "Saver" reward and a "Standard" reward. Like finding low fares, finding Saver rewards often requires planning a trip pretty far in advance, flying at the very last minute, or flying at an unpopular time of day, but the reward is that you can get the flight for a lot fewer miles — often half of the Standard award. (Some have "high", "medium", and "low" but the concept is the same).

United Award chart for flights from North America to Europe

A few airlines (Virgin America, JetBlue) do away with the whole award chart and simply use a flat rate to convert your miles to cash (usually at a rate around 1.5¢ – 2¢ each) and you then pay the current price for the flight you want. So if you're flying from A to B next month and the cash fare $200, it'll cost you 10,000 miles, but if you're flying from A to B tomorrow and the cash fare is $400, it'll cost you 20,000 miles.
With revenue-based award programs the miles needed is proportional to the flight's dollar cost

The nice part about these fixed-value plans is that they'll usually let you use miles to buy the last seat on the plane, even on holidays. Whereas with the Saver/Standard plans the airlines usually only have a few seats on each flight that they've allocated as "mileage award seats" and on popular travel days (Christmas, Thanksgiving) there are often no award seats at all. This is why you hear people planning their first-class mileage vacations fully 12 months in advance — if you want to be certain you have 2 (or more) mileage reward seats together, it can be very hard to find if you don't book as far in advance as possible. On some flights there might only ever be a single reward seat in first class (or worse – none at all), so you might need some extra flexibility with your travel if you really want to fly up front.

On the flip-side, airlines will often release extra award seats at the last minute, so if you can be spontaneous (or if a family emergency requires you to jump on a plane RIGHT NOW and the price is sky high) you can sometimes find incredible values using your miles.

So if you're booking on JetBlue or Virgin, you're done – there's no need to see if there's a good deal or not since the value is fixed. If you've got the points, spend 'em! If not, then you need to see if there are any smart point redemption opportunities for your trip.

on to part 4 ➡️
<< back to part 2

Tuesday, November 5, 2013

some frequent-flier basics (part two: preparing to redeem)

So you've flown a few times, banked a few miles and you're ready to redeem your miles. Here's how I usually start the process:

First, visit the English-language version of the Wikipedia page for your home airport (keep in mind many larger cities have two airports) and scroll down to the Destinations section. There you can quickly see every single route that's available and which airline it's on. This can save you time hunting for a direct flight that doesn't exist! 

Wikipedia destinations

Visit and price out the ticket. Kayak has a ton of very powerful options to help you find exactly the ticket you want at the price you want. Check the Nearby Airports option if you're willing to travel to another nearby airport for more options. (I also uncheck the Priceline and comparative search options since they just open up a ton of windows that I don't need to look at.)
One of the big reasons I go to first is to make sure I'm not passing up a great deal on a flight from a competing airline: why redeem 50,000 miles for a flight when a competitor is running a special on the same route for $149?
Look along the left-hand side of the screen and you can choose departure time, number of stopovers, wifi, etc. (see pics below) Use the 'Sort by' menu at the top to re-order the results (but be very observant of the "total trip duration" in grey — sometimes the cheapest flights will have you sleeping in the airport for 8 hours!)
TIP: One thing I always do is look at the itinerary on the screen and think about what that day will be like. Do you really want to get up at 4am from your super-relaxing vacation and drive 2 hours to get to a distant airport save $22? Or take a red-eye? or a 2 stopover journey on turbo-prop planes? Sometimes it's better to just fly out of the nearest airport on a direct flight at a civilized time even if it costs a little more.

Once you've spotted a flight that looks like it meets your sweet spot of convenience and price, click the "Details" button and see which airline is actually operating the flight (in the example below, it's a flight purchased on Scandinavian SAS but it's actually a codeshare flight that's being operated by United). Note the flight numbers and times so you have them when you visit the airline website to redeem.

on to part 3 ➡️
<< back to part 1

Kayak search options along the left (click to enlarge)
Flight details

Monday, November 4, 2013

some frequent-flier basics (part one)

A good friend was considering getting into the points game so I spent some time writing down a few of the basics. I realized how much I'd learned over the past couple of years and how many of my own misconceptions were shared by many, many others out there on various frequent flyer forums so I'm starting at square one here:
  • Most Airlines have some kind of loyalty program where you're awarded miles (sometimes called "points") based on how far you fly how much your flight costs. (UPDATE: In 2015 most of the US carriers switched their plans around so you earn points based on ticket cost instead of distance). 
  • Some airlines give you bonus miles if you buy an expensive ticket (like business class), others give fewer miles (e.g., 50% of the distance flown) if you buy a steeply discounted ticket. Some also award bonus points if you have Elite Status with them. 
  • You can also earn miles when you fly with a partner airline (e.g., you can earn United miles when you fly with Lufthansa because they're partners). 
  • On top of the point game, most also offer some type of Elite Status. The short story here is: don't bother. Unless your work is paying for your tickets Elite Status isn't worth chasing. The airlines have become shameless in gutting Elite benefits and drastically changing Elite qualifications with no notice. Don't bother. 
  • Only the person who actually flies gets to keep the miles. You can't credit anyone's flying — even your kids — to your own frequent flier account. (though recently JetBlue added a new 'family pool' for miles). If your kids are going to fly more than once every 2 or 3 years, it's totally worth it to sign them up for their own Frequent Flier account. 
  • Legally you cannot sell your miles to other people, and functionally speaking, it's quite difficult to do and can get your entire account (and all of your miles) deleted if you get caught. 
  • You can also earn miles through airline credit card signup bonuses and spending, and through various shopping promotions. 
  • Most domestic airlines require some type of activity on the account every 18-36 months (depends on the airline) to keep all the miles in the account from expiring. Even if you're not flying there are often promotions you can participate in (e.g., "sign up for our travel newsletter and we'll give you 500 miles...") that will count as "activity" and restart the clock. 
  • Every 18 months or so, most airlines do something to significantly devalue the points you have (e.g., raising the cost of a trip from 25,000 miles to 35,000 miles), so it's never a good idea to hoard them for a long time — "earn and burn" should be your mantra
  • Using the airline's website or call center, you can redeem these miles for free or discounted travel on the same airline or one of their partners. It takes roughly ten paid, transcontinental round trip flights in Economy class to earn enough miles for one free round-trip domestic ticket.
  • Keep in mind that these programs are like casinos in Vegas: they're designed to make sure you have fun while losing lots of money! The basic "game" is to trick you into buying a more expensive flight on their airline because you're saving up miles for a reward flight and/or trying to get elite status with them. It's often not worth it! 
  • Therefore, always comparison shop before booking any flight! Given the price of most domestic economy flights, your free ticket will be worth $400-$600. But if you overpay on every flight it took to earn those miles, your "free" flight actually cost you a ton of money. 
  • If you book a mileage reward flight, you don't earn miles for that flight. 
  • In general, playing the point game is best for people who have more time (and patience!) than money. If you hate over-planning your trips and abhor airline call centers, you might be better off just giving away your points as wedding or graduation presents, or donating them to charity.
  • Some credit cards (Chase Sapphire, American Express) have their own points which you can transfer into your airline's frequent flier program. These points are often more flexible than crediting them to a single airline.