bosman

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.

writetorich

and in your prediction scenario, what would a mile buy you in revenue travel?

MarkOK

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?

Centurion

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.

arlflyer

MarkOK

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.

arlflyer

(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.

fastflyer

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.

arlflyer

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...

TravelerMSY

javabytes

MarkOK

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.

Cledaybuck

Of course, airline credit cards often have more benefits than just the miles for spending.

javabytes

Cledaybuck