Travel Hacking and the Law Of One Price

I was talking with Yana about Virgin Atlantic’s amazing ANA awards — seriously, roundtrip in one of the world’s better first class products for 110,000 miles between the US and Tokyo — and I was outlining all of the hoops you have to jump through.

  • Virgin Atlantic partner awards on ANA are roundtrip only
  • You can’t book online
  • Virgin Atlantic call center agents act as though they’ve never searched for a partner award before
  • Sometimes they just tell you nothing is available without looking, or because they didn’t look correctly
  • They do add fuel surcharges to awards (though Japan and North Asia on ANA those are nearly nonexistent)

You definitely want to confirm that an agent sees availability before you transfer points, but Virgin Atlantic’s miles are super easy to get since Chase, American Express, and Citibank all offer transfers to Virgin Atlantic. And if you’re willing to jump through those hoops, you get amazing awards at about half what United charges for the same thing.

Virgin Atlantic has the worst miles… except when they don’t.

Yana’s response to that whole discussion was perfect and just 5 words: the Law of One Price.

Essentially the concept says that arbitrage eliminates price disparities such that a good sells for the same price in all markets.

There are (legal) barriers to this happening, it doesn’t apply to non-tradable goods, or where market imperfections such as lack of good information persist.

But in frequent flyer program redemptions what this means is you pay in points and ease of booking or you save points and make up the difference investing in understanding rules and paying with your time to hang up, call back and in your patience.

For instance there are amazing deals to be had from Korean Air Skypass and also from Singapore Airlines KrisFlyer. You have to learn about them and they aren’t as easy as just booking online.

You can find plenty of deals out in the world, but you pay for them with unfront learning investments and ongoing search costs.

And the best deals — as the law of one price suggests — don’t last. The frequent flyer hobby is all about arbitrage opportunities. And those are profitable until you arbitrage away all the excess profit. The best deals don’t last.

Some last longer than others, because Virgin Atlantic’s miles are viewed as not especially useful, because of their fuel surcharges, and because of the frustrations booking partner awards most people just ignore them. That helps, and perhaps explains that while I wrote about these ANA first class awards three years ago (and they weren’t new then) they’ve persisted.

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, 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 »

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  1. Excellent post, Gary.

    Perhaps you’ve done this before, but it might be useful for readers if you could provide some kind of list/analysis of the best airline programs to transfer Amex/SPG/ThankYou/Ultimate Rewards points into for flights to different regions of the world from the USA (and perhaps from other regions). By “best,” I mean which ones require the fewest points for economy, business or first class award flights. As you point out, this is a constantly evolving landscape. But as you also highlight, at a given moment/day/month/year, some programs offer better award redemption value than others.

  2. A very true post. I think Virgin Atlantic miles are highly undervalued except by people who know how to use them.

    When Bank of America offered the 90,000 miles, I jumped all over it. The bonus topped with 1.5 miles per $1, I got fantastic value.

    I had several redemptions on Virgin America and I even redeemed on Virgin Atlantic themselves… before you call me a fool, listen to what I got.

    4 x 24,000 miles round trip between Boston and LHR in Y with NO FUEL SURCHARGES. I believe they had a software glitch when they had their mileage sale 4 or 5 months ago. If I booked it as two one ways I got massive YQ; as a round trip YQ=$0.

    Are the awards a pain to book? Yup. If you know why you are doing and work the system you can get exceptional value.

  3. Interesting analysis, and one wonders if “Virgin Atlantic call center agents act as though they’ve never searched for a partner award before” because they have been instructed to make it as difficult as possible to issue these awards. In other words, if the customer is so frustrated then the airline saves money by not issuing valuable rewards such as this.

    Contrast that with my recent attempt to use Etihad miles for one of its most valuable rewards: Brussels to East Africa in economy for <25k miles r/t on Brussels Airlines. Having read blog posts suggesting it's best to phone their call center in UK, I did that. And 15 minutes later I had an award ticket to East Africa.

  4. I recently booked my partner and I on ANA in First using VS miles and it couldn’t have been easier. I looked up space using Expert Flyer, called up VS’s Flying Club and they were able to hold the seats (separate tickets, separate calls) for a full business day. Miles transferred in instantly. Maybe I got lucky, but only one agent was unknowledgeable. The other two did it exactly right. Also, no problem with open jaw (ORD-HND-JFK). 30GBP change and cancellation fee (outside of 72 hours).

  5. +1 on Steve’s suggestion. The advice here is phenomenal, and has already helped me out, but as a couple in their retirement, I find the amount of advice almost dizzying. We have the ability to travel on short notice, and a lot of miles to allocate, but at any given time, different regions of the world are more or less attractive than others. A handy “cheat sheet” would be most appreciated.

  6. Gary, can you confirm that all awards are really round trip on Virgin? Seems like I was browsing partner redemptions and it implied I could book a one way on Delta for half the round trip price. Your confirmation is appreciated.

  7. These guys should really just visit AwardAce, plug in origin and destination, and voila! the prices across various programs will appear.

  8. I have seen examples of where it says roundtrip travel required but in practice they can book one-ways, such as when Virgin America was a partner.

  9. Cathay Pacific using Alaska miles seems very similar . A good price in miles but, a lot of headaches . I have spent hours on the phone . I guess I should consider that part of the ticket price .
    Easy to believe it might be deliberate after reading this article .

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