How Many Points Should You Spend.. and For What? How to Decide?

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.

Gene writes,

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).

Besides, given that it’s rene offering the commentary, those would be Delta points and nobody has enough of those to pay for first class redemptions on an ongoing basis . . . rimshot


About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

More articles by Gary Leff »

Comments

  1. OK, good subject. I have the following dilemma:
    My wife really wants to take our son and his wife to Greece because he was keen on the ancient Greeks when he was young. They are keen to go and so I said I would try to get tickets for September which seems to be a good month. That was some time ago and there is nothing except at peak rates, i..e double. Delta wants 130,000 miles EACH in ECONOMY which I think is a terrible use of the miles. I do have 520,000 miles exactly and so I could do it but it hurts.

    On the other hand, the reason I have so many Delta miles is that over the last few years I have never been able to use them for a decent booking. I collect my miles mostly for international travel in Business class. For US travel I have SWA Companion Pass and tons of awards and points, so I will not likely use Delta miles in the US. I also have plenty BA miles for short trips for our whole family. I have even more AA miles and they do get used.

    Any suggestions to get to Greece as I can’t find any other decent routs from California? or as a second thought Italy for this September without paying large fees. Air Berlin is great except only economy.

    I have used all my United miles but I do have plenty Chase UR points, but as I consider these most valuable I hate to just use them unless I have to.

    Bottom line: how can I get value from 520,000 Delta miles? I do go to South Africa every year and Europe too. Open to somewhere else, but I do like to get better value.

  2. [sigh – head held low in shame] – Yes, I know, we have no real 1st class. But, our business is SO GOOD it is better than others 1st class! 😉

  3. @Frank – One thing you could try would be to see if Delta has availability to a city with a low cost carrier, then fly the low cost carrier for the short haul. My wife and I did this to Greece last year from Switzerland to Greece on Easyjet. That should give you some better options. Good luck.

  4. @ Gary — Apparently I’m more coach-averse than you. One of my travel goals is to NEVER sit in the back. I will pay “too much” for that!

    I redeem for domestic DL F frequently. Everyone thinks 80k miles r/t is outrageously expensive when compared to the 50k that AA and UA charge. I value 80,000 DL miles at $960, while I value 50,000 AA or UA miles at $800, so the DL award is only 20% more expensive. However, DL has WAY better availability at 80k than AA or UA have at 50k, so in many cases DL is actually less expensive at 80k than a “standard” 100k award on AA or UA.

    Finally, I almost always book a stopover in ATL, so I effectively get 1.5 r/t on DL. I’m sure this gem will be gone next year, but I plan to book a bunch of speculative awards for 2015 later in the year.

  5. I had this dilemma today but with a hotel. It was do I take 75k UR points and flop them to Hyatt for a 3 night Category 6 redemption or pay for a better room via AMEX FHR and get the benefits from there. The UR points at 2 cents puts the redemption cost at $1500 vs $1110 cash for AMEX ($1350 with taxes and fees). I’m a Platinum with Hyatt but I ended up saving the UR points and paying for the room.

    The wife and I are in the air now. I could’ve also met in the middle with 37.5k points + $450. Decisions decisions.

  6. I don’t know why anyone would use an earn-and-burn strategy on miles. If AA and UA go to delta’s new program those miles will be hard to come by in the future.

Leave a Reply

Your email address will not be published. Required fields are marked *