Use Mile vs Pay Cash decision: Austin to Heathrow
Jun 9, 2019, 5:41 am
#1
Original Poster
Join Date: Feb 2012
Posts: 573
Use Mile vs Pay Cash decision: Austin to Heathrow
Could you double-check my thinking on this and tell me
what you would do in same situation & why?
My cruise to Norway next year is from Southampton.
Preferred flight: the daily BA direct from Austin to London Heathrow.
I need to decide whether to pay with
137500 Avios points fare + $ 1,547 fees Business Class
If Avios miles June Value = 1.5 cents / mile
https://thepointsguy.com/guide/monthly-valuations/
137500 points * 0.015 $/point = $2,063 FareIfUsingPoints
$2,063 FareIfUsingAvios +1,547 fees = $3,610 round trip business class w/ Avios
=== Cost Business class Using Cash: $2,813
$1266 FareifCash + $1,547 fees = $2,813.
=== Extra cost (penalty) of using Avios: $797 !
$3,610 - $2,813 = $797
=== What about the +30% special Chase transfer bonus?
“JP Morgan/Chase has quietly launched a transfer bonus for its credit card rewards customers, offering a 30% bonus when they transfer Chase Ultimate Rewards points to the British Airways Executive Club frequent flyer program.”
Deadline: next Sunday, June 16
Will this new transfer bonus eliminate the $797 penalty of using points?
=== Cost of Business class using Avios Miles with the 30% transfer bonus: $3,130
($480 better than without the transfer bonus from Chase)
X + 0.30X = 137500
1.30X = 137,500
X = 105,770 points needed to transfer to book flight, given the 30% transfer bonus
105,700 + ( 30% * 105.700 = 31,731 points) = 137,501
105700 Avios fare + $ 1,546.68 fees =
105700 points * 1.5 cents / point + $ 1,546.68 =
$1,586 FareIfUsingAvios + $1,547 fees = $3,130
=== Cost Business class Using Cash: $2,813
$1266 FareifCash + $1,547 fees = $2,813
=== Extra cost (penalty) of using Avios instead of Chase Sapphire Reserve CC: $317
$3,130 - $2,813 = $317
If booked with cash, $2,813.
Using Avios points results in an extra $317 cost.
=== Initial conclusion
So it sounds like I should still pay for this with my Chase Sapphire Reserve Visa directly, and not via mileage transfer, even with the 30% bonus now - Sunday June 16.
=== Other Factors ===
--- Other uses for the miles
One thing I love about transferring Chase Ultimate Rewards back and forth with Southwest Rapid Rewards miles: This effectively creates a totally risk free (no time risk, no cost risk) cancellation policy for flying.
When I pay for a Southwest flight by cash, Southwest will let me cancel with no fees, but I only have 1 year to use the airline credit.
When I pay for a Southwest flight using Rapid Rewards miles, all miles are simply returned to my mileage account to use again any time with no return fees.
--- Cancelation risk flexibility for BA when using miles
For a $50 change fee, I could have the BA Avios miles returned to my account if I cancel the vacation.
This would be a bigger consideration, except that I already have purchased Trip Cancellation insurance for the estimated cruise + trip cost.
--- Factor favoring using miles When fare prices are high
Addition thanks to @corporate-wage-slave's first reply below.
"Using redemption is also useful if you suspect fares are too high, you can hold a reservation and wait for fares to fall."
In this case, that is a pretty good CW fare for Austin, so it's more academic.
--- Factor favoring paying cash to earn miles on the flight
Addition thanks to @corporate-wage-slave's first reply below.
"Clearly paying revenue would also earn Avios / AA miles too."
--- 4.5% return on when booking revenue flights using Chase as the travel agent
from a 2017 blog:
https://thepointsguy.com/2017/09/sap...e-or-transfer/
"Rather than pay cash for some of your domestic flights and hotel reservations, consider booking travel directly with Chase, knowing that you’ll always get a fantastic return of 4.5% for each dollar spent on travel and dining."
--- 3 points per $ earned on all travel with Sapphire Reserve
from a 2017 blog:
https://thepointsguy.com/2017/09/sap...e-or-transfer/
"The Sapphire Reserve allows you to earn 3 points per dollar spent on all travel (excluding $300 travel credit) and dining expenses, up from 2x with the Chase Sapphire Preferred Card. "
--- Future value of having more cash vs having more points
Addition thanks to @craigthemif in second reply:
"I can spend cash on anything I want, save it, invest it, give it to charity, etc.
I can spend Avios, Chase points, etc. on one specific thing - travel - and if I hang on to my points too long they will inevitably be worth less in the future."
what you would do in same situation & why?
My cruise to Norway next year is from Southampton.
Preferred flight: the daily BA direct from Austin to London Heathrow.
I need to decide whether to pay with
- my Chase Sapphire Reserve Visa (below I sometimes call this "cash" instead of points. But I mean the Visa, not cash )
- Avios miles by transferring Chase Ultimate Rewards points
137500 Avios points fare + $ 1,547 fees Business Class
If Avios miles June Value = 1.5 cents / mile
https://thepointsguy.com/guide/monthly-valuations/
137500 points * 0.015 $/point = $2,063 FareIfUsingPoints
$2,063 FareIfUsingAvios +1,547 fees = $3,610 round trip business class w/ Avios
=== Cost Business class Using Cash: $2,813
$1266 FareifCash + $1,547 fees = $2,813.
=== Extra cost (penalty) of using Avios: $797 !
$3,610 - $2,813 = $797
=== What about the +30% special Chase transfer bonus?
“JP Morgan/Chase has quietly launched a transfer bonus for its credit card rewards customers, offering a 30% bonus when they transfer Chase Ultimate Rewards points to the British Airways Executive Club frequent flyer program.”
Deadline: next Sunday, June 16
Will this new transfer bonus eliminate the $797 penalty of using points?
=== Cost of Business class using Avios Miles with the 30% transfer bonus: $3,130
($480 better than without the transfer bonus from Chase)
X + 0.30X = 137500
1.30X = 137,500
X = 105,770 points needed to transfer to book flight, given the 30% transfer bonus
105,700 + ( 30% * 105.700 = 31,731 points) = 137,501
105700 Avios fare + $ 1,546.68 fees =
105700 points * 1.5 cents / point + $ 1,546.68 =
$1,586 FareIfUsingAvios + $1,547 fees = $3,130
=== Cost Business class Using Cash: $2,813
$1266 FareifCash + $1,547 fees = $2,813
=== Extra cost (penalty) of using Avios instead of Chase Sapphire Reserve CC: $317
$3,130 - $2,813 = $317
If booked with cash, $2,813.
Using Avios points results in an extra $317 cost.
=== Initial conclusion
So it sounds like I should still pay for this with my Chase Sapphire Reserve Visa directly, and not via mileage transfer, even with the 30% bonus now - Sunday June 16.
=== Other Factors ===
--- Other uses for the miles
One thing I love about transferring Chase Ultimate Rewards back and forth with Southwest Rapid Rewards miles: This effectively creates a totally risk free (no time risk, no cost risk) cancellation policy for flying.
When I pay for a Southwest flight by cash, Southwest will let me cancel with no fees, but I only have 1 year to use the airline credit.
When I pay for a Southwest flight using Rapid Rewards miles, all miles are simply returned to my mileage account to use again any time with no return fees.
--- Cancelation risk flexibility for BA when using miles
For a $50 change fee, I could have the BA Avios miles returned to my account if I cancel the vacation.
This would be a bigger consideration, except that I already have purchased Trip Cancellation insurance for the estimated cruise + trip cost.
--- Factor favoring using miles When fare prices are high
Addition thanks to @corporate-wage-slave's first reply below.
"Using redemption is also useful if you suspect fares are too high, you can hold a reservation and wait for fares to fall."
In this case, that is a pretty good CW fare for Austin, so it's more academic.
--- Factor favoring paying cash to earn miles on the flight
Addition thanks to @corporate-wage-slave's first reply below.
"Clearly paying revenue would also earn Avios / AA miles too."
--- 4.5% return on when booking revenue flights using Chase as the travel agent
from a 2017 blog:
https://thepointsguy.com/2017/09/sap...e-or-transfer/
"Rather than pay cash for some of your domestic flights and hotel reservations, consider booking travel directly with Chase, knowing that you’ll always get a fantastic return of 4.5% for each dollar spent on travel and dining."
--- 3 points per $ earned on all travel with Sapphire Reserve
from a 2017 blog:
https://thepointsguy.com/2017/09/sap...e-or-transfer/
"The Sapphire Reserve allows you to earn 3 points per dollar spent on all travel (excluding $300 travel credit) and dining expenses, up from 2x with the Chase Sapphire Preferred Card. "
--- Future value of having more cash vs having more points
Addition thanks to @craigthemif in second reply:
"I can spend cash on anything I want, save it, invest it, give it to charity, etc.
I can spend Avios, Chase points, etc. on one specific thing - travel - and if I hang on to my points too long they will inevitably be worth less in the future."
Last edited by MareLuce; Jun 9, 2019 at 8:49 am
Jun 9, 2019, 5:51 am
#2
Moderator, Iberia Airlines, Airport Lounges, and Ambassador, British Airways Executive Club
Join Date: Feb 2010
Programs: BA Lifetime Gold; Flying Blue Life Platinum; LH Sen.; Hilton Diamond; Kemal Kebabs Prized Customer
Posts: 63,726
I think you have got the right judgement here (to go revenue rather than redemption) particularly given the Opportunity Cost factor.. But just to highlight that using redemption is also useful if you suspect fares are too high, you can hold a reservation and wait for fares to fall. Now in your case that is a pretty good CW fare for Austin, so it's more academic. Clearly paying revenue would also earn Avios / AA miles too.
Jun 9, 2019, 6:41 am
#3
Original Poster
Join Date: Feb 2012
Posts: 573
But just to highlight that using redemption is also useful if you suspect fares are too high, you can hold a reservation and wait for fares to fall. Now in your case that is a pretty good CW fare for Austin, so it's more academic. Clearly paying revenue would also earn Avios / AA miles too.
Jun 9, 2019, 7:34 am
#4
FlyerTalk Evangelist
Join Date: Aug 2011
Location: Barcelona, London, on a plane
Programs: BA Silver, TK E+, AA PP, Hyatt Globalist, Marriott LT Plat, Hilton Diamond
Posts: 13,031
The only thing I missed when skimming through the exhaustive analysis is...
I can spend cash on anything I want, save it, invest it, give it to charity, etc.
I can spend Avios, Chase points, etc. on one specific thing - travel - and if I hang on to my points too long they will inevitably be worth less in the future.
I can spend cash on anything I want, save it, invest it, give it to charity, etc.
I can spend Avios, Chase points, etc. on one specific thing - travel - and if I hang on to my points too long they will inevitably be worth less in the future.
Jun 9, 2019, 8:56 am
#5
Original Poster
Join Date: Feb 2012
Posts: 573
Just got off the phone with Chase Ultimate Rewards Travel Center.
One thing I quoted from a blog does not seem to be true anymore:
--- 4.5% return on when booking revenue flights using Chase as the travel agent
from a 2017 blog:
https://thepointsguy.com/2017/09/sap...e-or-transfer/
"Rather than pay cash for some of your domestic flights and hotel reservations, consider booking travel directly with Chase, knowing that you’ll always get a fantastic return of 4.5% for each dollar spent on travel and dining."
The agent I spoke with said there's no points difference earned in using
- Chase Ultimate Rewards Travel Center to book the reservation (paid with my Sapphire Reserve card)
vs
- Calling British Airways directly and booking through them (paid with my Sapphire Reserve card)
???
She said the superior value occurs when using Ultimate Reward points for payment (which must be booked via Chase).
One thing I quoted from a blog does not seem to be true anymore:
--- 4.5% return on when booking revenue flights using Chase as the travel agent
from a 2017 blog:
https://thepointsguy.com/2017/09/sap...e-or-transfer/
"Rather than pay cash for some of your domestic flights and hotel reservations, consider booking travel directly with Chase, knowing that you’ll always get a fantastic return of 4.5% for each dollar spent on travel and dining."
The agent I spoke with said there's no points difference earned in using
- Chase Ultimate Rewards Travel Center to book the reservation (paid with my Sapphire Reserve card)
vs
- Calling British Airways directly and booking through them (paid with my Sapphire Reserve card)
???
She said the superior value occurs when using Ultimate Reward points for payment (which must be booked via Chase).
Jun 9, 2019, 9:51 am
#6
Join Date: Jan 2010
Location: SFO
Posts: 1,749
If you book on the chase travel portal, using Chase points, you dont have to pay any ancillary taxes or fees. If you book an award with BA, you shell out cash and points.
For us, 2 x r/t tickets were 112,000 Chase points, and no cash outlay. This was a good deal for is, as we saved $1200, and we did not have to spend cash. YMMV.
Also, dont put too much stock in Points Guy Valuations. Sometimes you get a good deal, sometimes you get a great deal, and sometimes you simply “just dont have to shell out the cash”. I have had all three, and they each have their merits.
For us, 2 x r/t tickets were 112,000 Chase points, and no cash outlay. This was a good deal for is, as we saved $1200, and we did not have to spend cash. YMMV.
Also, dont put too much stock in Points Guy Valuations. Sometimes you get a good deal, sometimes you get a great deal, and sometimes you simply “just dont have to shell out the cash”. I have had all three, and they each have their merits.
Jun 12, 2019, 2:35 am
#7
Original Poster
Join Date: Feb 2012
Posts: 573
The specific benefit of Chase Ultimate Rewards points that I routinely receive the most value from is
1) Transferring those points into Southwest Rapid Rewards miles
2) Paying for personal flights with Southwest Rapid Rewards miles
3) Being able to change or cancel that personal flight on whim. ALL points used are returned to my Southwest Rapid Rewards account.
In 3) type of situations, Had I used Chase Ultimate Rewards points instead of Southwest miles and then canceled, I would have only 1 year to use the travel credit $$. Southwest travel credits are not easily findable on my Southwest account (at least they weren't last time I had a credit.) I have to track it in a Google Docs file, set calendar reminders about the deadline approaching, etc. PITA.
4) On Southwest, 2 bags fly free (LOVE!) so it's truly a no-cost flight
I'm surprised there's no points % benefit to using the Chase UR Travel Center to book flights with the Chase Sapphire Reserve Visa card (i.e, NOT points). Don't they make a commission off the revenue booking?
