MileValue is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as CreditCards.com. This compensation may impact how and where links appear on this site. This site does not include all financial companies or all available financial offers. Terms apply to American Express benefits and offers. Enrollment may be required for select American Express benefits and offers. Visit americanexpress.com to learn more.

Note: Some of the offers mentioned below may have changed or are no longer be available. You can view current offers here.


The other day, I booked myself a direct flight from Tampa to Charlotte with 4,500 British Airways Avios and $5.60. Avios are the best miles when American Airlines, US Airways, or Alaska Airlines has a short, direct flight where you want to go.

Screen Shot 2015-01-08 at 8.09.06 PM
Because the flight is under 651 miles flow, it costs only 4,500 Avios (from gcmap.com)

 

The same flight costs $481 cash.

Screen Shot 2015-01-06 at 6.18.08 PMI could pat myself on the back and say I got more than 10 cents per mile of value, but those outlandish valuations are one of my big pet peeves.

I would never pay $481 for the one-and-a-half-hour flight. I would book a one stop flight for $166 or use hidden-city ticketing to get the Tampa-to-Charlotte leg as part of a cheaper, larger ticket.

I basically got a $166 ticket for 4,500 Avios in my mind, which is less than 4 cents per mile of value–still awesome!

Interestingly, though, if I were rich, I could definitely say I got 10 cents of value from my Avios. If I had millions of dollars, I wouldn’t flinch at paying $481 for the most convenient, direct flight. If I were willing to pay that for the flight, then redeeming 4,500 Avios would really have saved me $481, meaning I really would have gotten 10 cents of value from each mile.

That’s why, in some senses, the richer you are, the more your miles are worth.

The Other, Big Application of This Idea

The main time I see outlandish valuations of awards is on international First Class tickets. Someone will say something like: “I spent 67,500 American Airlines miles and $40 on a one way First Class ticket in Cathay Pacific First Class that costs $10,000, so I got 15 cents of vlaue per mile.”

I would suggest you only got that much value if you would have spent the $10,000 on the ticket in the absence of miles. That is, if you were really, really rich. If you’d only be willing to pay $1,500 for the ticket, adjust your valuation of your award accordingly.

Of course, none of this is new. I expounded on this exact point in the first ever post on this blog.

Back to My Avios Award

I’m hoping I need the flight I booked from Tampa to Charlotte, but I actually might need to fly to Louisville or Seattle or Pittsburgh that day. In that case, I can cancel my Avios award. I’ll get back my 4,500 Avios and lose only the $5.60 in taxes I paid. I have no qualms booking awards speculatively with these miles because of free or cheap cancellations.

Your Take

Am I right to call people out who would describe my award as 10 cents of value per mile? Are miles worth more in the frequent flyer accounts of rich people?

Screen Shot 2015-01-08 at 8.29.19 PM

Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 when you redeem through Chase Ultimate Rewards®.

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, 5x points on travel booked through the Chase Travel Portal and 3x points on restaurants, streaming services, and online groceries (excluding Target, Walmart, and wholesale clubs), this card truly cannot be beat for getting started!


Editorial Disclaimer: The editorial content is not provided or commissioned by the credit card issuers. Opinions expressed here are the author’s alone, not those of the credit card issuers, and have not been reviewed, approved or otherwise endorsed by the credit card issuers.

The comments section below is not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved, or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all questions are answered.