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British Airways has a loyalty program with a lot of high value awards available to Americans. One of my favorites is that for only 25,000 Avios + $5 roundtrip, you can book direct flights from the west coast to Hawaii on American Airlines and Alaska Airlines flights.

This deal featured prominently on my list of the Cheapest Ways to Get to Hawaii.

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LAX-HNL for 25k miles roundtrip per person

But even with such a cheap miles price to Hawaii, it may be a better deal to use Arrival miles from the Barclaycard Arrival(TM) World MasterCard® – Earn 2x on All Purchases to get to Hawaii.

The Arrival World MasterCard comes with a 40,000 mile sign up bonus after spending $1k on the card in the first 90 days. Arrival miles can be redeemed for literally any flight on any airline with no blackout dates (in addition to any hotel or car rental) at a rate of 1 cent per Arrival mile.

That means a $400 ticket would cost 40k Arrival miles.

But cardholders receive a 10% rebate on the miles used for each travel redemption, so on that 40k mile redemption, you’d get 4k Arrival miles back in your account, for a net outlay of 36k Arrival miles for a $400 ticket. This is why I value Arrival miles at 1.11 cents each.

Furthermore, since you buy the ticket with your Arrival World MasterCard (and then go online to redeem miles to remove the charge), the airline treats the flights like paid tickets, which means you earn miles and status on the flights. On a roundtrip from Los Angeles to Honolulu, this would be about 5,100 redeemable and status miles, which combined would be worth well over $100 to me.

If this sounds like a complicated list of things to take into account, I’ll break it down to a simple calculation you can do on your phone with a few taps.

When should you use Arrival miles and when should you use Avios to get to Hawaii?

When to use miles and when to purchase a flight with cash is a recurring question in the milesphere. Today’s question is the same question in disguise.

Arrival miles are so cash-like–they have a fixed value and can be used on any flight, hotel, car rental, and more–that I analyze whether to use them exactly the same as I analyze whether to use miles or whether to use cash to buy a flight.

If I come to the conclusion to use miles, I use my airline miles. If the conclusion is to use cash and you have Arrival miles, use the Arrival miles and save your cash.

When should you use airline miles and when should you use cash (Arrival miles)?

For every type of mile you have, you should have a valuation. I have my valuations here. (They are overdue for an update with the recent devaluations.)

  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

The process for getting my valuations was to consider the possible redemptions with the miles, focus on the highest value redemptions, and find the average value of those.

I got the value for individual redemptions through a simple formula that includes four questions:

  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.
  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. Basically the total amount the airline is trying to charge your credit card.
  3. Miles Used: How many miles will the award trip we are considering cost?
  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 class unless you would have paid for a first class seat in cash if you had not used miles.

For more details and examples for each of these four variables, see MileValue’s first ever post: How Much are Frequent Flier Miles Worth? A Guide.

MileValue used to have a calculator, so you could plug in these four values and figure out how many cents per mile your award was netting. I had to disable it for bandwidth reasons, but the calculation is simple:

(Value – Taxes/Fees) / (Miles Used + Miles Foregone)

For a given award, use a calculator to get the cents per mile you are getting on the redemption with above calculation.

If you are getting a cents-per-mile value that is better than your valuation for the miles you are planning to use, book the award with miles.

If you are getting a cents per mile that is worse than your valuation for the miles you are planning to use, book the award with cash (or Arrival miles.)

An Example from Los Angeles to Hawaii

Right now, flights are cheap from Los Angeles to Honolulu for the rest of winter.

For a quick five day trip next month, the cost is $410 per passenger on direct American Airlines flights.

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The same flights have several award seats that you can book for 25k Avios + $5 per person roundtrip.

So the four values are:

  1. Value of ticket: $410
  2. Taxes/fees of award: $5
  3. Miles Used for award: 25k
  4. Miles Foregone by not booking with cash: 5,112

($410 – $5) / (25000 + 5112) = 1.34 cents of value per Avios

I value Avios at 1.7 cents each, so the conclusion is obvious (though surprising.) When ticket prices are this cheap to Hawaii from the west coast, even 25,000 Avios is not a good deal for the award!

Instead you are better off booking the flights with cash, or if you have them, Arrival miles.

A $410 flight would cost 41,000 Arrival miles, but you would get 10% of those rebated. The net cost would be 36,900 Arrival miles.

You would earn 5,112 American Airlines miles from flying a paid ticket plus 5,112 elite qualifying miles on American Airlines.

And you would save 25,000 Avios for even higher value uses, whether that’s the same route when ticket prices are higher or cheap direct flights to Mexico or elsewhere.

General Applicability

The method I just used to figure out whether to use airline miles or Arrival miles to book flights works for any flights to any destination. If you get the four variables right and your calculator gets the arithmetic right, you’ll make the right decision between airline miles and Arrival miles according to your own valuations 100% of the time.

Arrival World MasterCard

I plan to get the Arrival World MasterCard in the future because its 40,000 mile sign up bonus is worth $444 in free travel with no blackouts.
Additionally, it’s one of the three best cards for everyday spending, since every purchase earns 2 Arrival miles per dollar, which is like getting 2.22% back toward travel on all purchases. This is why I named it one of the Three Cards Big Spenders Should Use.

The card also comes with a free year of TripIt Pro, a $49 value. I’ve been experimenting with TripIt Pro, and so far I’m impressed with how it puts all my upcoming trips in one place, and simplifies things.

I also love that the card has no foreign transaction fees, and that Barclaycard gives cardholders their FICO scores for free.

The card has no annual fee the first year, then $89.

Full Offer Details:

  • Earn 40,000 bonus miles if you make $1,000 or more in purchases in the first 90 days from account opening. 40,000 bonus miles equates to $400 off your next trip!
  • 0% introductory APR on purchases for the first 12 months after account opening. After that, variable APR, currently 14.99% or 18.99%, based upon your creditworthiness.
  • Earn 2X miles on all purchases
  • No mileage caps or foreign transaction fees
  • Get 10% miles back when you redeem for travel (i.e. redeem 25,000 miles for travel and get 2,500 miles back)
  • Use miles for a statement credit toward any airline purchase to any destination with no seat restrictions and no blackout dates
  • Easily redeem your miles for statement credits toward flights, cruises, car rentals, hotels and more
  • Complimentary FICO® Scores as a benefit to active cardmembers. Opt-in to have instant and convenient access to FICO® Scores from your Barclaycard online account.

Application Link: Barclaycard Arrival(TM) World MasterCard® – Earn 2x on All Purchases

 

Earn 60,000 Chase Ultimate Rewards Points after you spend $4,000 spend in 3 months. Plus, new Sapphire Preferred cardmembers will enjoy a one-time, automatic $50 statement credit on grocery store purchases

Just getting started in the world of points and miles? The Chase Sapphire Preferred is the best card for you to start with.

With a bonus of 60,000 points after $4,000 spend in the first 3 months and 2x points earned on dining and travel spend, this card truly cannot be beat for getting started!


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