There are a couple of comments from my discussion yesterday I’m Flying Economy More and More.. and Loving It! that were worth sharing, because they shed fantastic light on how I think about what to spend miles on and how much to pay.
My thoughts are summed up in three words: at what margin?
I wrote the post while onboard an American Airlines DC-Chicago flight I had spent 4500 British Airways points for.
Why not shell out the 27,000 miles r/t for first class? (I would.) That is still a way better value than $650, especially if you have more miles than you can use in the foreseeable future (like me).
Gene is right, 27,000 miles for domestic first class isn’t bad in and of itself.
And if the choice was, 25,000 miles for domestic coach roundtrip or 27,000 miles for first class, I’d absolutely pay an incremental 1000 miles each way to sit up front. Call that $15 for the upgrade.
What I won’t do, though, is pay an incremental 9000 miles each way for the DC – Chicago upgrade.
See, British Airways charges three times the price of a coach award for domestic first class on American and Alaska because they call it (and code it) as first class. If it were considered business it would be twice the points.
(US-Canada and US-Mexico flights are generally dubbed business class, it can make great sense to book a short haul business class flight Chicago or New York to Canada for instance).
So I could pay 4500 points DC – Chicago each way in coach for 13,500 for first class. That’s 9000 more points at the margin, call it $135 at 1.5 cents per mile. Too much in my opinion for a 612 mile flight under most circumstances.
The second point Gene makes is an important one: how much do I (should I) value my remaining miles? Given a large mileage balance those leftover miles are worth less, because they’ll be used farther into the future (time value of miles) and because they will likely be subject to one or more additional rounds of devaluation. It’s important to discount for that.
If I placed little or no value on the points then the incremental ‘cost’ is much lower. Would I pay $45 to upgrade DC – Chicago? Yes. I would, though not everyone would of course. If I only valued my remaing points at half a cent each then I should clearly burn the points for first class awards.
Meanwhile rene writes,
Gary, if you are short on points, all you have to do is ask and I will be happy to book you some seats up front! 🙂
I think it’s fairly clear, I have plenty of points — how much I value those points does depend in some measure on how many I have (since they’re of diminishing returns above a certain level), but how many I am willing to spend very much depends on that value.
It’s not a question of how many points I have, but how much value (in points) I’m willing to trade for value (for a given travel itinerary).
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