vxmike

My personal valuation for such math is $.015/mile.

When evaluating a flight I determine the value of miles that will be earned on the paid ticket then subtract that amount from the total cost of the flight to determine my actual out of pocket expense for travel.

I then take my "real" cost if paying cash and work out the value per mile I would receive if using miles. If the value is greater than $.015/mile it makes sense to redeem.

Of course there are other factors such as upgrades, flight schedules, etc. If the valuation is similar between paying vs redeeming but I will likely get an F upgrade as EXP compared to a guaranteed coach seat via an award then paying could appear more attractive. This tends to lead towards buying most domestic tix versus using awards internationally.

There are exceptions though in certain situations. For example I'm planning a trip to Peru this summer. I can get a paid ticket all in economy (EXP upgrade DTW-MIA) for ~$600 but fly an award in Business for 60K miles. The math would actually favor buying the ticket, but with the award I get international Biz class on the 763, AC access in MIA in both directions for substantial layovers, and better flight times. With the paid Y ticket I get lengthy layovers in MIA with no AC access, terrible flight schedules and times, and guaranteed coach since the paid flight would be on LAN (I wouldn't waste evips on such a short flight anyways though). This is one case where I'll justify "splurging" a bit even though the math is off.

Sometimes once the miles accumulate you just have to start redeeming due to the inflation factor. I now get almost 500K AA miles a year between my flights and BankDirect, and the math doesn't favor redemptions enough to completely use this balance each year in the most optimal fashion.