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Is it time to hoard miles – will their value go up?

Is it time to hoard miles – will their value go up?

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Old Jan 17, 17, 6:03 am
  #46  
 
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Originally Posted by rendezvous View Post
Well, in the early 2010s, it was an extremely arduous task to secure award tickets at the saver level, especially when traveling with multiple people.
This is the only scenario I see that potentially increases the value of miles. If a significant subset (those earning primarily or a majority of RDM through flying) are earning less RDM and thus using miles less frequently, I can see that there might be less "competition" for Saver awards making these easier to secure. Unless, of course, AA reduces the amount of Saver awards commensurately.
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Old Apr 4, 19, 12:04 pm
  #47  
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Originally Posted by golfingboy View Post
Miles will not go up in value, probably ever, unless AA wants to explain to their investors why they are seeing a drastic reduction in offloading AAdvantage liability on their balance sheets.

My prediction, in 3-5 years redemption will be $$$ based similar to how we buy tickets with CC points. The huge upside will be we can book any seat, but we have to pay what that seat is worth.
and in your prediction scenario, what would a mile buy you in revenue travel?
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Old Apr 4, 19, 1:34 pm
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Interesting revival of a 2 year three month old thread......

Anyways, in the OP, writetorich valued AA miles at 0.8-1.0 cents apiece. That is exactly what I would value them at today. A couple of weeks ago I just booked SAAVER awards for a domestic Y trip and even with the SAAver pricing, my valuation 0.96 cents per mile. I feel like it was a win though since it has an actually decent travel schedule (no weird overnight stop, funky routing, crazy early flights, or all day layovers) which seems impossible to find sometimes. Last year, my 1 redemption was 0.84 cents a mile (also SAAVer awards) and came originally with a three layover trip, partly on Alaskan (which flight rescheduling thankfully made impossible and I was able to change to a more direct flight).

Real question to writetorich -- Are you still bullish on the value of a AAdvantage mile?
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Old Apr 4, 19, 1:45 pm
  #49  
 
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You have multiple devaluation methods or enhancements by AA if you like to fly First/Biz. So the miles are worth far less if you like to travel in F over the water.
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Old Apr 4, 19, 1:55 pm
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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.
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Old Apr 4, 19, 2:27 pm
  #51  
 
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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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Old Apr 4, 19, 2:50 pm
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(Saving FT screen space from quote of really long post)

Eh, if that is what makes you happy. Personally I really only redeem for international J, which I would never buy straight up barring a crazy sale, so another reason why I just do not pay much heed to the valuation madness.
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Old Apr 4, 19, 2:53 pm
  #53  
 
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I bought about one month ago, five sAAver awards NYC-LHR-Europe for a week this summer (2 RTs and 1 OW for a friend coming from India who will meet us and travel back with us).

1. I was astonished at my luck to find so much 'U' inventory at 57,500 each way (thanks ExpertFlyer).
2. I booked 3 tickets on AA and 2 tickets on BA, paying the $400 YQ fee.
3. BA radically changed its schedule, so I was able to re-book that ticket onto AA and the YQ fee was refunded (a back-door "trick" of which I was previously unaware)
4. 115,000 AAdvantage miles for a Round-Trip to Europe in Summer in Business all the way (including Club World on the LHR to Europe segment and domestic First on the US segments) is a BARGAIN.
5. I value AAdvantage miles at 1.3 cents, so these tickets are worth $1500 in points to me.
6. The same itinerary currently prices out at $3000, and I expect that will increase further.
7. My EXP status gives me First Lounge access along the way, an additional enhancement over business class.

With bargains like these, I am spending down my account. I am down to 200k miles currently, probably the lowest balance I have had in 10 years.
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Old Apr 4, 19, 4:00 pm
  #54  
 
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Originally Posted by fastflyer View Post
3. BA radically changed its schedule, so I was able to re-book that ticket onto AA and the YQ fee was refunded (a back-door "trick" of which I was previously unaware)
I thought it was always the case that one could change the routing and carrier on award tickets, so long as the O&D don't change, and the fees would adjust accordingly. Not requiring a schedule change. Is that something that's gone away? I haven't been paying close attention...
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Old Apr 4, 19, 6:03 pm
  #55  
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I think he’s referring to using the schedule change as a way to rebook into alternate AA flights without regard to award inventory being available.
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Old Apr 4, 19, 6:24 pm
  #56  
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Originally Posted by MarkOK View Post
Interesting revival of a 2 year three month old thread......

Anyways, in the OP, writetorich valued AA miles at 0.8-1.0 cents apiece. That is exactly what I would value them at today. A couple of weeks ago I just booked SAAVER awards for a domestic Y trip and even with the SAAver pricing, my valuation 0.96 cents per mile. I feel like it was a win though since it has an actually decent travel schedule (no weird overnight stop, funky routing, crazy early flights, or all day layovers) which seems impossible to find sometimes. Last year, my 1 redemption was 0.84 cents a mile (also SAAVer awards) and came originally with a three layover trip, partly on Alaskan (which flight rescheduling thankfully made impossible and I was able to change to a more direct flight).

Real question to writetorich -- Are you still bullish on the value of a AAdvantage mile?
I have been bearish on the value of miles for years now. Admittedly I came from Delta, who arguably perfected the art and science of the “enhancement” (read: devaluation).

Credit cards are printing miles left and right. More demand for award seats means fewer seats available, unless the fare (in miles) goes up to compensate. Airlines then tell us we “asked” for such increases when we complained about poor award availability.

Eventually, I suspect all the US airlines will end up in fare-based redemption. Delta is most of the way there already with its dynamic award pricing. The beauty to such programs, in the eyes of the airlines, is that the reward value is predictable and consistent. That’s also why it should be boring to rational consumers - it’s effectively a rebate. In a world where miles are pegged at $0.01/ea., almost everyone would be better off putting spend on cash back cards. In theory, this should kill the appeal of most mile-earning credit cards, but people are not rational.

Sweet spots have existed for years and continue to exist, but earn-and-burn continues to be the prudent strategy for anyone concerned with maximizing the value of their miles.
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Old Apr 5, 19, 7:59 am
  #57  
 
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Originally Posted by javabytes View Post


I have been bearish on the value of miles for years now. Admittedly I came from Delta, who arguably perfected the art and science of the “enhancement” (read: devaluation).

Credit cards are printing miles left and right. More demand for award seats means fewer seats available, unless the fare (in miles) goes up to compensate. Airlines then tell us we “asked” for such increases when we complained about poor award availability.

Eventually, I suspect all the US airlines will end up in fare-based redemption. Delta is most of the way there already with its dynamic award pricing. The beauty to such programs, in the eyes of the airlines, is that the reward value is predictable and consistent. That’s also why it should be boring to rational consumers - it’s effectively a rebate. In a world where miles are pegged at $0.01/ea., almost everyone would be better off putting spend on cash back cards. In theory, this should kill the appeal of most mile-earning credit cards, but people are not rational.

Sweet spots have existed for years and continue to exist, but earn-and-burn continues to be the prudent strategy for anyone concerned with maximizing the value of their miles.
I think the current valuation will more or less hold. People that do the careful math already know that cash back cards can get more real monetary 'value', even if plenty still choose to earn miles to redeem them on a first class ticket they would never have paid cash for. Travel sparks an irrationality center of the brain. And like you said, then there are people AA really counts on like my parents, who fly maybe once every four years but have put a decade's worth of purchases on their AAdvantage card thinking it will let them travel more, only to recently find out how little value the miles really have. But, I think if AA devalues too much farther, more people will catch on.
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Old Apr 5, 19, 8:08 am
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Originally Posted by MarkOK View Post
I think the current valuation will more or less hold. People that do the careful math already know that cash back cards can get more real monetary 'value', even if plenty still choose to earn miles to redeem them on a first class ticket they would never have paid cash for. Travel sparks an irrationality center of the brain. And like you said, then there are people AA really counts on like my parents, who fly maybe once every four years but have put a decade's worth of purchases on their AAdvantage card thinking it will let them travel more, only to recently find out how little value the miles really have. But, I think if AA devalues too much farther, more people will catch on.
Of course, airline credit cards often have more benefits than just the miles for spending.
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Old Apr 6, 19, 7:34 am
  #59  
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Originally Posted by Cledaybuck View Post
Of course, airline credit cards often have more benefits than just the miles for spending.
I’m not suggesting people shouldn’t hold the card if they travel a couple times a year and get more free bags than the AF would otherwise cover, or (for DL) if you can make use of the companion ticket. But that’s not to say you should actually put spend on the card.
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Old Apr 6, 19, 10:19 am
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Originally Posted by javabytes View Post


I’m not suggesting people shouldn’t hold the card if they travel a couple times a year and get more free bags than the AF would otherwise cover, or (for DL) if you can make use of the companion ticket. But that’s not to say you should actually put spend on the card.
Unless your tickets don’t cost enough and you need the waiver for elite status.
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