Comments on: Miles vs. Money

By: Credit Blogspot » Blog Archive » Examining the Value Equation and Other News

Tue, 07 Jul 2009 14:08:28 +0000

[...] is refreshing to see this thoughtful analysis of the value equation of an award ticket over at the One Mile at a Time blog. It is not that simple, however it is a [...]

By: kkjay77

kkjay77 — Wed, 15 Apr 2009 08:29:35 +0000

Seems like $2K for TPAC is a little bit low for me.
I normally value $3K for TPAC in Business class and $4K for First class award.

By: Tim

Tim — Tue, 14 Apr 2009 01:04:15 +0000

We have a calculator that helps with this: http://www.acruw.com/calculator.aspx

We try to update the values of points/miles once per quarter. The last update was 2 months ago, so due for a refresh soon. Hope it helps.

By: Ed

Ed — Mon, 13 Apr 2009 15:14:34 +0000

I’m with andrewwm and his notion of discount factor. The truth is that, for many of us less skilled at working the ANA system, etc., it’s very difficult to use the awards when we want them. I personally always find myself moving my dates a few days, or flying at some ungodly hour, etc. I admit that this might also happen in order to get a cheaper paid fare, but, with the paid fare, there is always a better sense of control of this.

My philosophy is almost always to use the miles if the flights times and taxes are reasonable.

But then I’m a coach flyer that always flys with my family, so I’m probably atypical.

By: bmvaughn

bmvaughn — Mon, 13 Apr 2009 14:13:12 +0000

It can sometimes be good to think about the $15k cost for the Int’l F ticket as it makes you realize what someone flying revenue, perhaps right next to you, might have paid.

By: andrewwm

andrewwm — Mon, 13 Apr 2009 14:06:47 +0000

You might want to explain the how you value a mile part a little bit more clearly. I’ve tried explaining it to my friend that loves to collect AS miles, but he still doesn’t get it. He buys all kinds of stuff based on the email promos they send him (like 100 miles for buying flowers, etc) that he otherwise wouldn’t because “he really wants the miles”.

The simplest way to think about it is to consider what you typically use your reward for. I typically use mine for short trips on the PEK-NRT corridor, which often prices out at about $500 USD. What would I pay if I didn’t use the miles on this? Well, I’d probably only fly it often if it were around $250 USD. So I get $250 of “value” out of the ticket. Take the 25,000 miles, divide by the value you are getting ($250), and viola, you get 1 cent per mile of value (not the miles forgone).

Another discount factor that you forgot to mention is the cost of capacity controlled rewards. If you can only fly on certain carriers on certain dates on certain routings, that’s a “cost” that ought to be factored into the valuation. On the NRT-PEK route, there isn’t much cost because getting a Y award is trivial with options on three different carriers that are almost never *Net filtered. However, if one’s main goal is to use miles for leisure travel in C with a companion, UA miles are worth substantially less. Having to pick inconvenient dates, extra time in transit, using non-preferred carriers lowers the “value” side of the equation substantially.

By: whakojacko

whakojacko — Mon, 13 Apr 2009 02:12:41 +0000

“Realize the difference between actual cost and value to you.”

OH GOD THANK YOU. It pisses me off every time I hear people talk about how they got their $15k F ticket w/ miles, as if they would have ever payed $15k for it (I certainly wouldnt ). The rest of your points are all valid of course, but that one in particularly annoys me.

Also worth considering for LAX-LHR example-As a UA elite, you would also earn 4 e500s for that flight. Again, I wouldnt value 4 e500s as $200, but its something to consider in the value proposition

By: Iceman

Iceman — Mon, 13 Apr 2009 01:47:57 +0000

For 25,000 miles, I’m willing to drive someone from LA to San Diego.