The Basics Of Miles Redemptions

The other day, a coworker asked me, “How can I use miles to get to Paris?” Now, most people who know me well don’t ask me questions like that. They know that it’s going to take about a half hour for the answer. She must have been having an off day, though, since she asked anyway.

It occurred to me that I speak a lot about redeeming miles, but rarely about the process involved. So in this post, I’m doing aspects of “Redemptions 101.” It may be a bit basic for some, but I’m hoping that others can use it as a resource. Today, I’m going to do airlines. At a future date, I’ll do hotels.

Mileage History

frequent flyer miles, redemption

Your ticket to anywhere

When frequent flyer programs first came out, they were simple. You earned miles, you redeemed miles. No off-seasons, no multiple-pricing schemes, etc. An award chart told you how much a particular flight would cost. Earning miles was just as easy. For every mile you flew, you (usually) got one mile of credit.

The programs were too successful for the airlines’ own good. Eventually, they realized that they could sell miles to other merchants, who could them use them to reward their customers. You know what happens then. They sold too many miles and couldn’t possibly redeem them all. They instituted black-outs, raised prices, started “peak season pricing,” etc. Eventually, Delta moved away from award charts altogether. Instead of being able to determine a fixed cost in miles ahead of time, the number would be dynamic. In other words, you would tell them what flight you wanted and they would then tell you the price in miles. It would be like a menu without prices. But even those adjustments, however, couldn’t clear up the backlog of outstanding miles. Just as consumers had become addicted to miles, airlines had become addicted to the profits.

So Delta did something different, which the other major airlines quickly followed: It changed its point of attack. Now, in addition to making award flights more difficult, it tied earnings to how much you spent. As you may know, there is a disconnect between ticket prices and distance flown. A short flight might be very expensive because an airline has a monopoly on the route, while a transcontinental flight might be dirt-cheap because of the competition. Why should I get fewer miles when I paid more money? The value got so distorted, in fact, that people would do mileage runs, or trips to nowhere/anywhere because they earned so many miles for such a cheap flight. I once flew to India, waited in the Delhi airport for three hours, and then flew back, simply because I earned so many miles for an inexpensive ticket. And then I did it again, three weeks later.

A few years ago, Delta changed its policy. Instead of earning miles based on distance, you’d earn them on spending. You’d earn a base number of miles per dollar spent.* Members with elite status got more miles, depending on their level. It didn’t stop the free flow of miles, but it did close the gap in terms of mileage value.

Redeeming Miles

miles, redeeming

They’re in the vault!

Congratulations! You’ve got your bank of miles, and now you want to redeem. Just call up the airline and book, right?

Not so much. The “price” in miles will depend on a number of factors. Those include (but are not limited to):

  • Who are you flying and how are their awards determined? You have to determine whether there is still an award chart (i.e., the menu) or whether the price of the award is variable. For example, let’s say you want to book an award from Boston (BOS) to Fort Lauderdale (FLL).

On Delta, the prices are dynamic. There is no award chart, so you have to find the flight you want and then you will be told how much it costs:

delta

The Delta chart. It could change on you at an instant.

On American, it’s easier. The company still has an award chart, so you have an idea of how much you will pay. At least you know the limits on how much it will cost, a courtesy that Delta doesn’t give you. For cheaper tickets, the prices aren’t too different. But do a search for international first class and you’ll find some big gaps. Sadly, I think that AA will go to a Delta-type system soon, so take it while you can.

American

One of four possibilities on AA

Airlines like JetBlue and Southwest are the easiest. Pricing is dynamic, which means that there is no award chart and it can change from minute to minute. But what makes it nice is that the price in miles is highly correlated to the price in dollars. A JetBlue point is worth about 1.5 cents, and a Southwest point is worth about 1.7 cents. Both of those exchange rates are for the cheapest fare classes. While it’s annoying that the prices change frequently, it’s nice that you can assess what the ticket is actually worth.

jetblue

The not-so-dynamic dynamic award chart

I’ve always worried that the major airlines are going to go to the same system that JetBlue/Southwest do, which would drive up the price of international premium class tickets significantly. Turns out that they don’t need to. They can simply use the system that Delta does. There is some method by which they come up with the award price, but we don’t know what it is.

Other Tips

  • When redeeming miles for international travel, remember to check to see if award availability on alliance partners is available. Most major airlines are one of the three global partnerships, or at least have other carriers where you can use your miles. You may not be able to find the information online. It may require a phone call.
  • Remember, you may have to pay taxes and fees on your tickets. For example, if you’re flying British Airways, particularly in a premium class of service, they’ll add fees that could push your total toward $1,000 per person (Hint: Use Iberia, instead.). Virgin Atlantic isn’t too much better. Bottom line: you may need to have your credit card handy.
  • Miles don’t earn interest. It’s fun to have a six, or even 7-figure balance, but airlines are free to change redemption rates at any time.
  • Virtually every airline allows you to use miles in some form to upgrade. If you already have a ticket purchased for cash, you can check with the airline to see what is available.
  • And just because you don’t have miles for a particular airline doesn’t mean you can’t get an award on them. Remember, certain banks offer proprietary currency that can be exchanged for miles. If you have Chase, Citibank or American Express points, check with your program to see what airline miles those points can be exchanged for.

 

 


*Low-cost carriers are generally newer to the scene and, having seen the problems that the majors faced, they did their programs based on spending from Day 1. Southwest originally gave you flights based on the number of segments that you had flown with them, but they, too, changed to dollar-based earnings.

 

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1 comment

    • John lui on August 5, 2019 at 8:12 pm
    • Reply

    I am a member of JetBlue and would like to join

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