I have always been a proponent of valuations based on actual cost of miles earned versus trying to figure out if miles are a good value compared to a 'retail' fare. Admittedly, this approach has become more complicated over the past couple of years with the onslaught of new taxes, fees and now the ever-gobbling surcharges.

Further, the MIX of how one earns miles directly impacts the value of the ACTUAL cost per mile valuation, as the miles earned by flying require a hard cost on airfares whereas miles earned by credit cards are essentially a FREE byproduct of necessary spending anyway. Top-tier status on an airline can result in more RDM bonuses that increase mileage balances. And the strategic selection of a credit card also can result in more miles (ie- the 5K bonus per 20K airline transfer of SPG Amex).

Fictional examples (excludes taxes for clarity, assumes 50K RDMs per $5K airfares):

#1 top tier status; medium credit card spend
Earned:
50K EQMs + 50K Plat elite bonus RDMs= 100K RDM;hard cost:$5000 of airfares
40K SPG Amex = 50K RDM with 10K bonus transfer; hard cost: $0

Redeemed:
150K US-Australia J award

Cost per mile: $5000/150,000 miles= .03 per mile
HARD COST OF MILEAGE AWARD: $5000

#2 no status flying; lots of credit card spend
Earned:
50K EQMs + 0K Plat elite bonus RDMs= 50K RDM;hard cost:$5000 of airfares
80K SPG Amex = 100K RDM with 10K bonus transfer; hard cost: $0

Redeemed:
150K US-Australia J award

Cost per mile: $5000/150,000 miles= .03 per mile
HARD COST OF MILEAGE AWARD: $5000

#3, no flying; lots of credit card spend
Earned:
0K EQMs + 0K elite bonus RDMs= 0K RDM;hard cost:$0 of airfares
120K SPG Amex = 150K RDM with 30K bonus transfer; hard cost: $0

Redeemed:
150K US-Australia J award

Cost per mile: $0/150,000 miles= .00 per mile
HARD COST OF MILEAGE AWARD: $0

#4, lots flying no status; no credit card spend
Earned:
150K EQMs + 0K elite bonus RDMs= 150K RDM;hard cost:$15,000 of airfares
0K SPG Amex = 0K RDM with 0K bonus transfer; hard cost: $0

Redeemed:
150K US-Australia J award

Cost per mile: $15,000/150,000 miles= .10 per mile
HARD COST OF MILEAGE AWARD: $15,000

#5, lots flying with top tier staus; no credit card spend
Earned:
75K EQMs + 75K Plat elite bonus RDMs= 150K RDM;hard cost:$7500 of airfares
0K SPG Amex = 0K RDM with 0K bonus transfer; hard cost: $0

Redeemed:
150K US-Australia J award

Cost per mile: $7500/150,000 miles= .05 per mile
HARD COST OF MILEAGE AWARD: $7500

#6, Strategic Mileage Runner W/ Status Who Earns RDMs at .025
Earned:
75K EQMs + 75K Plat elite bonus RDMs= 150K RDM;hard cost:$3750 of airfares
0K SPG Amex = 0K RDM with 0K bonus transfer; hard cost: $0

Redeemed:
150K US-Australia J award

Cost per mile: $3750/150,000 miles= .025 per mile
HARD COST OF MILEAGE AWARD: $3750




The BIS folks definitely have a far less desirable value proposition than the credit card spendthrifts, no matter how much FFP status!