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Figuring out the value of your frequent flier miles is crucial for determining whether an award is a good deal, whether you should book a specific trip with cash or miles, which credit card bonus to sign up for, and which airlines to book an award on if you have several options. Perhaps because it can seem daunting to precisely calculate the value of a mile, I have seen no systematic attempts to do so mathematically. Luckily the formula is actually quite simple, and I’ve created an even simpler calculator at the bottom of this post. The way to calculate the value of a frequent flier mile is to figure out its value for specific tickets and generalize from there. Below is a simple mathematical formula that requires us to plug in only a few numbers numbers. I’ll walk you through how to come up with those numbers with a few examples below.

Frequent Flier Miles Value Calculation

  1. Ticket Value- For the ticket we are acquiring with miles, we need the lesser of the ticket’s value to us and the ticket’s cost.
    • Example: A coach one-way ticket from LAX-PIT costs $200. Bill is flying to Pittsburgh to propose to his girlfriend, so he values the ticket at $5000. For the formula, we use the lesser of the cost ($200) and the value ($5000), so we plug in $200.
    • Example: Jacqueline lives in San Francisco and decides at the last second to go to Atlanta to watch UVA basketball play in the ACC Tournament. On the way, she wants to stop in Minneapolis to visit family. Last second tickets from SFO-MSP-ATL-SFO cost $1213. Jacqueline is not a rabid fan and sees her family several times a year, so she only values the chance to go take this trip at $450. For the formula, we use the lesser of the cost ($1213) and the value ($450), so we plug in $450.
    • Example of Premium International Travel: The most common time the cost and value diverge are for international first class travel. Jeff lives in Los Angeles and wants to book his dream vacation to see the Australian Open with a little exploration of Australia thrown in. He is also an expert on maximizing AAdvantage miles, so he knows he can get a free stopover in the international gateway city for as long as he likes. So he books JFK-LAX (June), LAX-SYD (January), MEL-LAX (January), and LAX-MIA (March). The transpacifics are in Qantas first class on A380s; the transcontinentals are on AA first class on 777s with fully flat seats. He plans on using the transcontinentals as half his airfare for upcoming vacations to New York and Miami. In cash, this itinerary would cost $25,700. To figure out his subjective value, Jeff looks at the cost of this itinerary in coach, which is what he would book if he had to use cash. The cheapest Australia itinerary in coach costs $1225, but it includes stops and is over 40 hours one way. Jeff values his direct flights $400 more than that and his first class a further $600 more. So he values the Australia part at $2225. He values the other first class legs, using the same process of finding the applicable coach fare and then adjusting for his valuation of first class and routing, at $700 total. So for the formula, we use the lesser of the cost $25,700 and his value ($2925 = $2225 + $700), so we plug in $2925.
  2. Taxes and Fees Associated with an Award Booking- Include all taxes, award booking fees (US Airways), phone ticketing fees, close in ticketing fees, and any other fees. This number should be easy to find, since it is the total amount the airline is trying to charge your credit card.
    • Bill purchased his flight within 21 days of departure online. United hits him with a $75 close in ticketing fee and $2.50 in taxes, so his total taxes and fees associated with the award booking are $77.50
    • Jacqueline purchases online and Delta does not charge close in ticketing fees. Her total taxes and fees are $7.50.
    • Jeff has to call a phone rep to book Qantas flights with AA miles. AA charges him a $25 phone fee plus taxes of $128. His total taxes and fees are $153.
  3. Miles Used- How many miles will the trip we are considering cost?
    • Bill found saver award space for the date he wanted. His trip cost 12,500 United miles.
    • Delta allows free stopovers domestically in cities that are along a legal routing. It is legal to route SFO-ATL through MSP. Because Jacqueline found low level availability on for her entire itinerary (she has magical powers), her total cost is 25,000 SkyMiles.
    • Jeff’s LAX-Australia roundtrip in Qantas first costs 145,000 AAdvantage miles. He craftily added the transcons in fully flat seats for no additional miles. Total: 145,000 miles.
  4. Miles Foregone by Not Purchasing Ticket- Use the Great Circle Mapper to calculate how many miles the trip would earn in coach if you paid the fare. Add in any mileage earning bonus you would receive if you have status on the airlines you are flying. Use the miles earned in coach even if your award is booked in first classunless you would have paid for a first class seat in cash if you had not used miles.
    • Bill’s PIT-LAX is 2136 miles, so he is forgoing 2136 miles by not purchasing his ticket with cash.
    • Jacqueline’s routing is 4634 miles, but she is a Delta Diamond Medallion flier, so she would earn a 125% mileage bonus on her miles flown if she purchased the ticket with cash, so she is foregoing 10,426 (4634 + 1.25*4634) miles by not purchasing the ticket with cash.
    • Jeff’s megatrip is 20,226 miles of flying, which is how many he’s foregoing by not purchasing the ticket with cash.

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In the examples above, on Bill’s trip, his United miles were worth 1.35 cents per mile. Jacqueline’s SkyMiles were worth 1.25 cents per mile, and Jeff got 1.68 cents per mile out of his AAdvantage miles. (These were realistic, but stylized examples. They are not my valuation of those currencies. For my valuation of those currencies, see the links at  the bottom of this post.)

Now calculate these four numbers for your award and plug them into the calculator above in the appropriate locations. If you know you will use your miles for the specific award you just entered, you are done. The calculator will spit out the value of that frequent flier currency to you. If you are considering a few possible awards with your miles, plug them all in to the calculator. Whichever awards shows the highest cents per mile, that is the award you should book. And its cents per miles is the value of the miles to you.

If, instead, you have a pile of miles in one currency and want to know their value but don’t have a specific award in mind, or you want to know the value of a credit card sign up bonus but don’t know exactly how you’d use it, then we will need to explore the specific programs more deeply to take into account their varying rules regarding overall availability, partner availability, one way awards, open jaws, stop overs, generosity of routing, close-in ticketing fees, change fees, and access to first class. For a specific award that you’ve already reserved, these things were all taken into account by the calculator above in either the Value or Fees fields. But if you don’t have an award in mind, then these all affect the value of the miles sitting in your account.

I’ll go in depth on each major mileage currency in future posts.

  1. US Airways Dividend Miles                                           1.95
  2. United Mileage Plus                                                        1.81
  3. American Airlines AAdvantage                                    1.77
  4. British Airways Avios                                                      1.70
  5. Southwest Rapid Rewards                                             1.69
  6. Delta SkyMiles                                                                  1.22

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