Old Apr 4, 19, 2:27 pm
Join Date: Aug 2017
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Originally Posted by arlflyer View Post
Point/mile valuation is silly for a number of reasons, but here is one. We are currently in a high fare and high load factor environment. That means that miles have a comparatively high “value” at times WHEN they can be used (to be clear we are talking SAAver). Now if a recession hits, prices go down, load factors go down, fares go down, but probably more seats released. So “valuation” goes down but utility goes up.
Ehh, forget about the theoretical what ifs -- I only like to use an data point based method: The valuation is simply as follows:

For the last ticket (or tickets) that you bought on miles recently, A. how many miles did you spend?
And then, B. take the lower value of the following: 1. How much is the cash price of that ticket at the time you redeemed your miles -- or -- 2. What would be the cash price you would have paid for that flight. (no inflating valuations just because AA puts a sticker price on the flight that you wouldn't pay anyways

And since I am exact, I deduct whatever fee is involved in the mileage redemption from B.

Then divide B by A and get an average and standard deviation for your redemptions in the last three years. Boom, that is what you are valuing your miles at.

Part B2 may be the trickiest part, but is absolutely needed. Redeeming miles for trips you would never pay cash for is simply valuing your miles at nothing monetarily.

Now, that is all the numbers I care about because only when you redeem your miles are you actually putting a value on them. Sure, it changes a lot person to person, not just based on travel differences, but on their own gut valuations as well. If someone hoards miles and is only redeeming when the redemption value is like 5 cent/point for example, then the value of miles to that person is 5 cent/point because that is what is taking to part them of points. So as far as availability goes, this incorporates any availability or lack thereof because only datapoints in which you actually redeemed miles are being counted. If you redeem nothing, you get a zero or an inifinity for your personal valuation (either you value them so little you ignore them, or so highly that no valuation that AA has presented is worth parting with those miles to you)

My valuation is 0.8-1.0 cents per mile based wholly on my datapoints in which I found a redemption worth taking.
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