Cashing in miles? Make sure it's worth it
Spending miles on an otherwise affordable flight isn't the wisest choice, expert says
Dear Cashing In,
I'm flying from Austin, Texas, to Richmond, Va., to see my grandmother on her 95th birthday. Since my wife and I have a ton of miles, we're cashing some in, rather than putting them on our plastic. However, it's going to cost us 40,000 miles each to make that trip, which seems crazy-high. Is it just my imagination or does it take many more miles to buy a ticket now than it used to? And why would that be? -- Annoyed Grandson
Flights are shrinking as airlines try to weather a recession compounded by higher fuel prices. In the process, taking advantage of frequent flier miles has become more challenging.
Fewer flights mean fewer seats, and airlines have a system in place to ensure that they make some profit off each flight. The most desirable award seats go at the first tier -- for domestic flights, that typically means 25,000 miles -- and they go fast. You and your wife likely ended up with what airlines call "mid-tier" awards for a domestic fare, the 40,000-mile variety. If your flight was down to the last available seats, you could have found yourselves using about 60,000 miles per seat.
Using miles works best the farther ahead you plan and the more flexible you are. Award seats and availability vary by route, season and customer demand. If you're trying to get on an expensive summer flight to a resort destination during peak hours, those 25,000-mile seats will go fast. Generally, the more flexible you are with your travel plans and the more flexible with flight times, the better your chances of landing deals.
That said, 40,000 miles for coach seating on a domestic flight does seem steep. An economy seat on a domestic flight can still typically be had for 25,000 miles. I don't know that I'd waste 40,000 miles on a flight as affordable as the one you're taking. A roundtrip coach fare from Austin to Richmond over a mid-September weekend is running about $330 before taxes. My husband and I recently flew round-trip to Italy for 50,000 miles each, saving us about $2,200. Do you really want to blow 80,000 miles to save $660?
If you have plenty of miles to spare or need to use the ones you have, and you know there won't be more exotic travel in your future, by all means, use your rewards. Better to use them than lose them, or pay cash you don't need to spend. If you're using up the majority of your frequent flier miles, however, and you and your wife decide to fly to the Caribbean this winter or Paris next summer, you may be sorry you used up your miles.
Domestic flights are still surprisingly affordable, despite the high cost of fuel. That flight from Austin to Richmond is close to the average cost of a flight within the U.S. two years ago. Whenever you're weighing the option of using miles versus paying for a flight, it helps to figure out how much bang you're getting for your mile.
You can do this by dividing the cost of the flight by the miles required to purchase it. If a domestic flight costs $500, for example, a 25,000-mile reward flight means you're getting about two cents worth for every mile. If that flight to Richmond required 25,000 miles, you would be getting your $330 flight for $.013 per mile -- pretty close to the average value of a reward mile for off-peak domestic flights. By my calculations, the miles you're spending on this flight are worth about $.0008 each ($330 divided by 40,000 miles).
I'd advise saving them for a better deal. The deals are still out there, just not always when we want them.
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