satori

I have been playing around with equations to allow me to quickly calculate relative value of mileage runs. I need a way to compare the value of different mileage runs on UA. For example, let's say I can fly to Hong Kong for $550 and get double miles in March or go to Singapore for $800 and get triple miles in April or I fly to Columbus, Ohio for $115 7 times. How do I compare mileage runs to get the best deals?

My method to compare mileage runs.

1. Calculate the $ value of Status miles for the mileage run.

2. Calculate the $ value of bonus miles for the mileage run.

3. Add the $ value of status miles and bonus miles to get a mileage value.

4. Divide the status and bonus mile sum by the actual cost of the tickets.

5. You get a ratio you can use to compare different mileage runs.
The ratio result allows you to compare different itineraries.

An example:

SFO-HKG ticket via LAX = 14,684 flight miles for $550 with outgoing trip at 2x miles for elite bonus and return trip at 3x miles for additional bonus.

1. Status miles = 14,684/100,000 = .14684
.14684 x $4000 = $587.36
(The $4000 is my personal estimate of what it would cost ME to get 100,000 paid UA miles. Substitute whatever figure is reasonable for you.)

2. Bonus miles = 36,710 miles total = $734.20
7342 miles x 2 (prem. ex bonus)
x $.02/mile = $293.68
7342 miles x 3 (prem.ex + additional promo bonus) x .02 = $440.52

3. $587.36 + $734.20 = $1321.56 mileage value

4. $1321.56 / $550.00 = 2.40

Now I will compare this with what it really costs since I have to fly from my home to SFO. The additional ticket is $168 and it adds 1000 status miles and 2,500 bonus miles to the totals.

1. 15684/100,000 x $4000 = $627.36
2. 7842 x 2 x .02 + 7842 x 3 x .02 = $784.20
3. $627.36 + $784.20 = $1411.56
4. $1411.56 / $550+$168 = 1.97

The value of the mileage run drops, but is still good.

Compare to mileage run at $115 to Columbus, OH.
1. Status miles = 4692 =.04692 x $4000 = $187.68
1846 (sfo-ord) + 500 (ord-cmh)
2. Bonus miles = 4692 x 2 x .02 = $187.68
3. $375.36
4. $375.36/ $115 = 3.26

Great run potential. But realistically you need to factor in the costs of hotels for any run which is taken solely for miles and no vacation value. (I guess some people probably vacation in Columbus, OH).
$375.36/ $115 + $60 hotel = 2.14 (still good)

Definitions:

Status Miles = miles counting towards reaching elite level (I chose UA 1K as a target, but you can substitute any level or program.)

To calculate Status Miles:
# miles flown / # miles needed for status.
SFO-HKG 14,685 miles / 100,000 miles (1K level) = .14685 (This tells you the proportion of miles the run gives you towards your annual goal.)

Bonus Miles = actual miles awarded for the mileage run.

Calculating a dollar value for bonus and status miles. I valued bonus miles at 2 cents each. Highly arguable, but I stick to it as a reasonable value for a ff mile.

The highly variable part of the status miles equation: How much do you need to spend on tickets to reasonably reach 1K (or other elite level) from your hometown. This will vary depending on where you live. SFO has great fares and if I lived there I could count on getting web specials and cheap fares to Europe and Asia year round. 4 trips to HKG and 3 trips to Milan would make 1k for about $3200. I live 300 miles from SFO so I have to factor in additional airfare or car&hotel costs to get to SFO.

I estimate the reasonable cost of 1K at $4000 for international trips given my situation. I don't want to make 17 trips to San Diego to qualify on segments (although it would be $1000 less).

I have more calculations which include making elite status on segments, but I will wait and see if there is any discussion on this. Hopefully someone will find this useful in their planning. Please help me refine it if you are a math head.

And always remember the primary corollary of travel: The value of a good vacation can't be quantitated.



[This message has been edited by satori (edited 01-28-2001).]

MoreMiles

Too much time man...

seawolf

I only run for status miles under the cost of $0.04 per mile. Bonuses have no bearing on whether I'll do the run or not.

bbinchi

While I find calculating the dollar value of the miles earned to be interesting, it is only that - it does not necessarily determine whether or not I will do the mileage run. I don't have the inclination or patience to go through such a detailed analysis! However, I find the approach taken by "satori" to be rather fascinating especially because I am by no means a "math head."

This year, timing seems to be more of a factor for me than in previous years. I did a mileage run, on AA, to LHR last weekend (Jan. 20-21) and will repeat it Feb. 3-4. The base fare for each run was $308 which, while not great (especially in light of the NetSAAvers that were offered this weekend for $219!), was still reasonable. I just seized the moment when the fares were available and I knew I had no other commitments for either weekend.

Plus, flying American from ORD to LHR I have the benefit of AA90, the morning departure, that allows me to arrive LHR at night, get a good night's sleep, and fly home the next day. I only spent £40 for my hotel (a "clickit weekend" rate at the Posthouse Heathrow) which helped keep the total cost of the trip down.

On February 22 I am taking my third trip to Europe - to Paris this time - under the "Take Your Love to Europe SAAle" for a base fare of $279. That trip will involve five days and, as such, it will cost much more than a quick overnight run to LHR. But I'm taking my sister and a friend along so it will be a real vacation rather than just a mileage run.

The way I looked at these opportunities was much less a value-per-mile issue than one of convenience: by the end of February I will be 50% of the way to PLT status (based on flown, qualifying miles) for 2002 with ten more months to do three more long-haul trips (should not be hard to do as one is already planned for May) or some combination of domestic and long-haul flights. What's more, I will earn over 57,000 bonus miles (PLT, EUR00 and AA.com booking bonuses) for these first three trips to Europe and I will not have to use up my one-time opportunity for the Platinum Challenge as I had once thought.

Mikey likes it

I have started keeping a spreadsheet of mileage and cost. It's simple; I just note the cost, number of status miles and all bonuses, and then calculate two costs per mile: status and total.

I have spent $408.75 on airfare since Jan. 1 of this year. This has netted me 10,135 status miles on UA and 23,720 total miles, for a per status mile cost of about 4.0c and per total mile cost of 1.8c.

I am doing this to figure out, as satori apparently already has, what it is likely to cost me, in time and money, to get to 1K status. I think the 4.5c per status mile is a pretty solid value domestically, and not much more than an $800 ORD-SIN run at about 4.2c per status mile. Based on these numbers, it looks like about $4500, not too far from satori's $4000. The tough part is putting my a** in the seats for all that time.

Of course, I'm going to get someone else to pay for as many of those miles as possible.



[This message has been edited by Mikey likes it (edited 01-29-2001).]

MileKing

It's my view that most people underestimate the cost of mileage runs. Calculating the flight costs is the easy part. On top of that you must consider (if applicable) hotels, car rentals, taxis, parking, food, phone etc. Granted, many mileage runs can be done without any of these items if you have someone take you to/pick you up from the airport, travel on overnight flights so you never need a hotel,and don't call the significant other. If you only eat the airline food, I suppose you don't have to pay for food either. If your mileage run causes you to take a vacation day from work, that is a huge cost....I can't understand how people can justify the cost in those cases, but I guess they can.

Getting status miles for 4 cents each would be great, but in my experience that is rather difficult to do. For me, 5 cents or less for status miles is a more realistic target as long as total mileage cost (status and other miles) is 2.5 cents or less.

I prefer domestic mileage runs because I can easily do them in a weekend and the chances of getting stranded somewhere and being forced to take a vacation day are very slim. I've also gone to using Priceline for hotels to greatly reduce those costs if an overnight is needed.

As for 1K costs, I believe you can get 1K status doing only domestic runs for around $4500 (from IAD/DCA/BWI) if you can take advantage of the occasional UA sale. Granted, that is a lot of traveling, about 2 trans-cons per month every month, but it is not impossible.

Tango

Many overseas mileage runs can be done without extra cost if you get back on the same plane.

If you do overnight, you have to take into the account of the benefit of being in that city and all what it has to offer.

I never take a taxi to/from the airport/hotel. Public transportation is cheap and much more rewarding.

EPS

Things get more interesting when you are trying to accumulate hotel stays. Finding the best compromise between bargain airfares and affordable point/stay-earning accommodations can be something of a challenge.

If I can save $30 on a hotel by paying $20 more for airfare, it's worth it. That kind of thinking has lead me to pick destinations I wouldn't have chosen on the basis of airfare alone.

Tango: That assumes public transportation is available. At one point I was considering a weekend in PVD, but learned the bus I would have taken back to the airport doesn't run on Sundays.

I don't track costs of status miles separately, so I'm highly susceptible to bonus promotions (hint, hint).

drtravels

and subtract the costs of:

1. Turning the heat down to 50.

2. Not eating at home.

3. No showers, electricity.

From the west coast it seems pretty easy to go 13 - 14,000 Q miles for around $430 or just over .03/mile I figure that EXP can be done in 7 RT @ ~450 each or $3150 plus a reno trip or two just to make sure.

[This message has been edited by drtravels (edited 01-29-2001).]

MagMile

Satori,

A comment on your calculations. It seems to me that the calculation in (1) is redundant. Why calculate the value of the status miles relative to some benchmark cost of getting 1K? If you are wrong, it can skew your results by making you value the status miles from the run too much or too little. This can be especially problematic if the ratio of bonus to status miles differs across trips (e.g., if there are special bonuses on a trip).

If you are confident in your assessment of the value of bonus miles, then why not simply subtract that from the price of the ticket and other costs. That will give you the pure price that you are paying for your status miles. Divide, and you will get the price per status mile for the trip.

Valuing other costs is difficult b/c there can often be other benefits. E.g., if the extra cost for a hotel is in a city you might want to spend a night/day in, then there is some value in that.

For me, aside from a "pure" mileage run I just took (ORD-LHR-ORD, never left the terminal), most of my trips are weekends where I see friends or family. In those cases, the benefits often come close to or actually outweigh all costs of the trip, as long as I have free time.

satori

Mileking has a good point in that mileage runs tend to be underestimated in terms of real cost. Between LatinPass and the 99 One World promotion and some other flying I pulled in 1.4 million miles for about $5,000 in airfare, about double that for all the travel associated with the runs (but, those runs had some vacation value thrown in). In the past I always looked at the total miles and deducted that from the cost of the trips. At .02/mile or even .01/mile I am doing pretty good.
In the past I have looked solely at the value for the number of miles I accumulated. I am planning early this year to be a more strategic frequent flyer. My thinking is leaning more towards attaining status with one airline, UA, this year. For one, I don't think the big bonuses are going to be out there that we saw from 1999 and 2000. Secondly, from the posts I read here it sounds pretty good for a frequent traveler to have high status with an airline with some perks and hopefully receive more consideration when travel problems arise. And the hoops and hurdles of the big bonuses were nailbiters when you take all those flights and then wait to see if all your tickets were the correct booking class and all your receipts are in order and honored. I don't regret the LatinPass mileage runs, but I could have put the money into United mileage runs and be 1K with its benefits and probably have 300,000 miles.
What got me thinking about this whole idea of a ratio to compare the value of status miles and total miles for a trip was the "Baht run". When I studied that option I wondered how I should compare a mileage run for miles with one for elite status. It is easy to see the value of miles, but placing a $ value on status is a little more difficult.
Assume I can go to Thailand and get 1K status for $2000, but I don't get much of a vacation with all the flying and I only get 50,000 miles for the 100 segments. How do I balance that with getting 1K by 8 trips on Lufthansa from SFO to Frankfurt for $2,400 and 100,000 miles? If I fly United 8 times SFO-FRA I get 1K and 200,000 miles for $4,000. (All these prices are based on what I know is available from SFO.)
Like most people collecting miles my time is one factor and money is the other. It is no problem for me to get four vacation trips of a week or more in the low fare season with my teaching job. I have 8 weeks in summer to travel but I can't rely on getting a reasonable fare out of the country then. So I am thinking I will need two or three mileage runs to make 1K.
I picked up cheap auction tickets last summer for a couple of trips to Europe. What I am looking for in developing a mileage run equation is a method to quickly evaluate different auction opportunities and special fares that pop up. The really good fares seem to last only a day or two. Two low-fare international mileage runs in the low season for provides enough miles for a summer international award ticket when fares are exhorbitant.
I want a method for quickly comparing different options that arise any time one is bidding at auction. How does a mileage run to Casablanca for $450 compare to a mileage run to London for $390 in terms of status miles and total miles awarded?

EPS has a good point about the cost of hotels in a mileage run. I always try to take that into consideration and avoid ending up in an expensive city on a weekday when a hotel is going to be double the weekend price.

I am glad to see some good discussion on this point. And my next trip is in two weeks to London. Eight days and this one is a "vacation run".

ElmhurstNick

Ground costs only matter if you don't do anyting where you are going. I think the bigger hidden cost is time. The idea of spending 16 hours out of 24 flying ORD-LHR-ORD gives me a headache. I love travelling, I hate flying. More than 3 hours gives me a headache, unless I'm in 3-class F.

I consciously spend more per mile than most of you - I've budgeted $3k for 40,000 status miles in 2001. But I am planning it around nine weekends of 2 1/2 to 5 days in duration where I get a substantial travel benefit (visiting friends, golfing, exploring Europe, etc.) as well as my status and bonus miles.

Will I do pure mileage runs? Sure, but they're small ones, like OAK-LAX-LAS/back off of a work trip for a quick 2,000 status miles. If I do those, then yeah, I'll count in ground costs as well.

Otherwise, the time and ground costs don't matter, as they are accounted against other personal benefits than my renewed Executive Platinum status.

satori

Compare three runs:

Thailand Baht run
$2000, 100 segments
.02/status mile; .04 mile/ 50,000 ff miles
Cheap status, expensive miles.

Lufthansa 8 trips West coast-Europe
$2400 100K
.024/status mile; .024/ ff mile
Status with more miles for 20% more than Baht run.

United West Coast - Europe 8 trips
$4000 200 K miles
.04/status mile; .02/ ff mile
Expensive status miles, but lots of ff miles at a lower price.

What makes a good mileage run?

The $4,000 in my original calculations: I was looking at the maximum I want to pay to reach 1K.

Revising the original ratios and leaving them unlinked seems more reasonable. But I think you have to link status miles with some dollar amount if only for the purpose of creating an annual budget. Then you can see if you are above or below it.

I flipped the ratio so status miles and total ff miles will be more easily compared.

Calculate what you are budgeting for annual travel and divide that by the cost of the trip and percent of status miles you get for trip.

LH SFO-Berlin 12,500 miles/$300 ticket.

($4000 x .125)/ $300 = 1.67

As long as my ratio is larger than 1.0 I am within my budget. 12,500 miles x .02 = $250
250/300 = .83 ff miles. The higher this ratio the more miles value I get.

UA SFO-Berlin 25,000 miles/ $500 ticket.
($4000 x .125)/$500 = 1.0 status ratio

Back to the SFO-HKG ticket
14,684 status miles/ $550 ticket

(4000 x .14684) = 587.36
587.36/550=1.07 good status value
36,710 miles x .02/550 = 1.33 good ff value.

I like this equation, but of course to really do it correctly you need to cost out the expense of the entire trip with hotels, transportation, and extras. Come up with an annual budget for all your travel expenses and use this as the value I have in the $4000 part of the ratio.