FlyerTalk Forums - View Single Post - The Value of a Mile
View Single Post
Old Jun 8, 2004 | 12:27 am
  #8  
Patron
Guest
 
Posts: n/a
Originally Posted by doc
Since the old thread concerning the real "value" of a mile is now seemingly lost in the ubb to vb migration morass, I wonder what the current valuation is for folks.
Let me start that I differ between "price" and "value". I define “price” what I have to pay for this service and "value" what the service its worth to me. Let me come up with an example:

Assume, the price for FRA-LAX vv is € 8.146--/€ 2.310,--/€ 590,-- (F/J/Y) and I have the option the redeem 140/105/70K M&M miles (F/J/Y) for these flights (5,8/2,2/0,8 cents/M&M miles). As I do not like to sit in cattle on a long haul flight and the difference between a first and business class award is “only” 35K M&M miles, I go for a First Class Award. Assume ”my” flight LAX-FRA is overbook an the check in agent offers me € 3.000,-- in cash for releasing my F class seat in exchange for a business class seat. I think this way: someone gives me the choice of either travelling in F or sitting in J with € 3.000,-- in my pocket, how much cash would he need to offer me to take the cash? IMO the key question is: Where would be the limit for me? Once I figure that limit out I know "my value".

If I have the option to choose between a paid and a reward ticket, I look at the current fare I have to pay and miles I will earn. Let me come up with another example:

If I have to travel VIE-FRA vv and my options are buying a cattle class ticket for € 269,-- and earning 2.500 M&M miles or redeeming an award for 18K M&M miles (1,5 cents/M&M miles), I take the award.

So to make a long story short: I redeem for a price of 1,5 cents/M&M mile.


Originally Posted by doc
FWIW, I was somewhat surprised to find that still, many broker sites such as corpflyer will apparently pay between 1.2 and 1.8 cents per mile.
I am not surprised, because this group is not a supporter of "fair play"!

There are an increasing number of people like firstflyer_com, hansbabel or cheapbuy1975 who are selling premium class award tickets or upgrade certificates to the general public. These “brokers” are successful because they are able to buy miles at a lower price than they sell award tickets in first & business class for international travel (article was published in March, 1995 in the Los Angeles Times, comments in red published here):
Mileage Guru Petersen who is "No Fan of Awards Brokering"

By CHRISTOPHER REYNOLDS TIMES STAFF WRITER

Randy Petersen, the Colorado Springs, Colo.-based editor and publisher of the Inside Flyer newsletter and perhaps the nation's leading authority on frequent-flier programs, says the brokering of mileage coupons isn't officially illegal in any state but Utah, where the practice was barred about two years ago.
However, Petersen also says that as the economy has sputtered and the airline industry has cut domestic prices, the mileage coupon-brokering industry has shriveled from more than $100 million a year in 1989 to about $25 million now. As the market has contracted, Petersen suggests, the reputation of brokers has suffered.
And since airlines typically earmark just 10% or fewer of their seats for travelers using mileage awards, those who buy or trade for coupons often gain their seats at the expense of travelers who have followed the airlines' restrictions to the letter. That, says Petersen, doesn't seem sporting.

Mileage brokers spend alot of time and money advertising the sell of frequent flier miles. The only way brokers make real money is off business and first class international airline tickets. Which by the way the ailines charge $4,000 to $12,000 for!! Could you emagine how hard it is for a broker to find a client willing to buy a ticket for half that price or even a quarter?? Does Mr. Peterson know how hard it is to find such clients? Sporting ? Does the mileage member have the energy or the time to go looking for such clients? Does the mileage member have the time to screen every call they recieve to make sure it is not the airlines trying to close their account? Look most brokers are X Travel Agents who have been squeezed out of the travel business by the airlines cutting the commisions. Most brokers could be an executive for the airlines (thats how good they are). If Mr. Peterson is an authority on frequent flier miles boy I must be a GOD!
Mileage Enabler
Free air travel
Flying round world as free as a bird
Free Market in First Class – How to trade air miles (OP published in Forbes on August 12th 2003)
Milespy (discussion about a business Matthew Clement & Steve Belkin opened in 2001)