this was just something i was pondering over the weekend... (when debating which airline to fly, and whether or not to spend $$ or miles for the ticket)

as a platinum, i earn ~12,500 miles for a transcon trip. If I value the miles at $0.01 apiece, that means I earn $125 in miles on my trip, which could be considered to offset my ticket purchase price. Indeed, if I value miles at $0.02 (I think most people's estimates vary between 1c and 2c per mile, right?) that's $250 in miles.

Assuming I pay ~$300 for the flight, that means after mileage "rebate" the trip cost me between $50 - $175.

I'd like to hear if others consider this issue in the same way, or have another way to think about it.

PS. It seems that mile valuation depends wildly on what you intend to do with the miles. If you have no specific plan for them, you'd probably not even consider them worth 1c.

I like to value them against the biz class quantas award (105k mi) which is a trip I'd otherwise be willing to spend $2,000 on. That calculation yields 2 cents/mile.

Note that I am not valuing the miles against what Quantas (or any other carrier) actually CHARGES for that biz class ticket, because those prices don't really represent any value for anything that I would ever purchase (ie: $7,000+ for an airline ticket). I instead imagine the maximum price I would conceivably pay. That places a cap on the value I give to an airline mile.

A more sophisticated mile valuation also might include risk: risk of airline going bankrupt, risk of award availability not ever allowing use of miles, risk of vacation plans changing, and the time value of money.

The value of a Continental OnePass mile is $0.015 and falling.

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"We will not cut benefits from OnePass, our industry-leading frequent flyer program, because we remain committed to rewarding our most loyal customers."

-- Gordon Bethune (Continental's CEO) two weeks before significantly cutting benefits of the OnePass program

If you decide to view the miles as something of value (as a rebate against what you've paid for your flights), you need to keep that thought in mind when booking a reward ticket. You must consider flying on reward tickets as an expense, as you're paying with the "rebates" you've accumulated.

For example:

$500 ticket earns 10,000 miles.
10,000 miles @.015 = $150.00
$350 ticket

Spend 10,000 miles on a one way AllPass domestic upgrade.
10,000 miles = $150.00 spent

If your travel is paid by your employer, then that must be considered. If you earn mileage from other sources, that must also be considered. For me personally, I just don't pay any attention to attempting to assign value!

[This message has been edited by TransWorldOne (edited 05-05-2003).]

transworldone- this is precisely what i was thinking about this week (that reward flights have a cost). This logic generally keeps me buying ~$300 transcons and never using miles for them (miles go to int'l upgrade, or now that HOKEY is here, int'l 1st class tix).

1.5 cents/mile is too generous. As a non-elite, CO miles are about as worthless as they come. One must figure in standard award availability, or lack there of in CO's case, when estimating the value of a mile. Since one can always claim an EasyPass award for twice as many miles, the maximum adjustment for award availability can be no more than 1/2 of mileage value (before the adjustment). I peg CO award availability at only 30%, i.e, I estimate that any time I check for a standard CO award chances are that only 30% of the time I will be able to book the route I want on the date I want. Thus, I reduce my mileage valuation by 35% ((1-.30)* 1/2). As I typically value an airline mile before adjustments at about 1.3 cents each, I end up valuing CO miles at about .85 cents each.

I value mine at 0.8 cents a mile. I use my miles for tickets to Latin America, which from MCI tend to run from $500 for Central America capitals, to $800 for South American cities like Lima. 35,000 miles is a huge bargain and standard availability is very common.

That said, my value has dropped from around 1.1 cents a mile to 0.8 cents a mile based on supply (I simply have too many miles) and the CO bankruptcy risk (slight, but still present). I still wouldn't replace a $450 coach ticket to Europe with a reward ticket, but mileage runs become very rare with this lower valuation.

Nologic: I definitely evaluate my long-weekend mileage runs that way; even have a spreadsheet to do it with.

I require that the total mileage payback (after bonuses) at least offset the entire ticket cost and preferably some of the car, car gas and hotel.

I total the air, car, gas and hotel (and all taxes, of course), plus the cost getting to my own airport or parking to get the "base" cost, which is compared against the mileage value. The difference is the "overhang,"
which I want to be as low as possible.

I value the miles at a relatively generous 1.666 cents per mile (though have been thinking of moving that down to 1.5 cents per). Am lucky because I can burn at about the same rate I earn, I have gold status, and a typical award trip will be to a place like Asia where I can milk a useful stopover and possibly open jaws as well, adding to value.

As for mileage-earning trips, they have to be fun, too. I can't bring myself to just turn around & not spend time in a place (defeats the purpose), and some places seem too dull to go to at about any price.

But, from ATL, the numbers usually add up for places like HNL at $325 airfare or below (rare, but not unheard of), west coast at $175 or below, or Europe in dead of winter at $350 or below. Any mileage-bonus specials really help, and 100% elite bonuses are also a key component of this. Definitely a YMMV.

As for time value, I don't even want to think about it. Could probably have been a millionaire 2 or 3 times over if I had taken the time spent on learning & beating the airlines' system and putting it into playing stocks or real estate.

[This message has been edited by RustyC (edited 05-06-2003).]

[This message has been edited by RustyC (edited 05-06-2003).]

Since the only time I use reward travel is to go Bogot�, I take the average fare from Austin ($1000-$1200) and divide by the reward to go there (35,000). I roughly get $0.3 per mile and that's how I regard them.

I use my miles for F and J rewards such as on QF. Therefore, for me I find them to be in the range of 2-3 cents/mile value to me, and about 7-8 cents/miles value compared to the full fare price for reward tixs if paid for with cash.