Newbie needs help - $$ or miles
 

This is my first post on FlyerTalk. By way of background, my travel is all personal travel, and I am Silver Preferred with USAirways. I use my miles on Star Alliance awards to Europe and the Caribbean.

I'm looking to book a tour from Buenos Aires and need RT flights from PHL. As I see it I have three options, and I need help in deciding which makes the most sense:
1) If I book the air with the tour operator, they'll put me on LAN with a cost of approx. $1100. Miles accrued on LAN won't do me any good on Star Alliance, so I'm getting no added benefit with this option.
2) As of this minute, I can get RT flights on UA for 55,000 miles.
3) I could pay approx $1600 RT on UA and earn roughly 11,000 miles.

I'd really appreciate some feedback. What are your recommendations?

What are the taxes with option 2?

$66.50

Where would the 11k miles put you on renewing/expanding your status this year? If you're already going to get to 25k, but nowhere near 50k (that's it for Gold on US, right?) then definitely book it with miles. That's a good value.
But if you need the miles for status... how much is it worth to you?

I doubt that I would get to 50K this year. What's the best way to compare options 2 and 3? I'm trying to understand the price per mile principle.

Welcome to Flyertalk.

I would choose Option 1. If you choose option 2 you are using 66,000 miles to save about $1,100. That's about $0.017 per mile. (Why 66,000? You are redeeming only 55,000 but you are also forgoing the opportunity to earn 11,000 Dividend Miles.)

The ticket that the tour operator buys for you may not be eligible to earn miles. It will depend on the fare code, and you should investigate how many miles the fare would earn if credited to LAN's program versus another OneWorld program such as American Airlines AAdvantage.

With option 3 vs. option 2, you'll end up 66,000 miles down but $1,600 up. This is equivalent to paying 2.4¢ per mile if you buy the ticket. If you think miles are worth at least 2.4¢, you should go with option 3 (buy the ticket). If you think they're worth less than that, go with option 2 (use the miles).

Most people here think airline miles are worth from 1 to 1.5¢ each, sometimes as much as 2¢. However, this has been a subject for heated debate. Some point to "high-value" awards they've obtained, such as international upgrades, that would have cost up to 8 or 9¢/mile had they paid for them and use that as the value. Others point out, correctly IMHO, that this is bogus economics because those people would never have paid that much, and peg the value of that award at what the person would have paid for it in money had it been available at that price. Neither group has ever convinced the other. You can read the threads on the value of miles, get thoroughly addled, and you'll still have to make up your own mind.

Another consideration is when you expect to have another opportunity to use those miles, and for what. If you'll be able to do something better with them before you've had a chance to earn another 66,000, buy this ticket and hold onto the miles. If saving $1,600 is the best you'll be able to do for a while, do it.

I would choose option 2 if the schedule is fine and you don't need status miles from option 3.

This is where I get confused. How/why did you use 66,000 to get the per mile cost? Why not use 55,000, which works out to 2.9 cents?

Because if you paid X dollars, you'd not only get the flight, but you'd get the 11,000 miles. So your swing is from a negative 55,000 miles to a positive 11,000 miles - a difference of 66,000.

In another way: you're not including the value of the miles earned if you just ignore the 11,000 miles from the equation. The 11,000 reduce the real cost of the $1600 flight.

Thanks! That's exactly what I had in mind when I posted, but probably expressed more clearly than I would have.

Thanks! You've all been very helpful.

During my morning drive I came up with a pretty good solution. I'm going to use miles to fly to Buenos Aires. If I find that I need extra miles by the end of the year, I'll take a weekend trip to Europe....I can get much better fares to Europe than to Buenos Aires. That, or I'll have to study up on techniques for a mileage run. :)

When comparing alternative 1 and 3, using alternative 2 as base, I usually think like this:

Alternative 1 Miles/dollar = 55000/1100 = 50.
Alternative 2 Miles/dollar = 66000/1600 = 41.25.

and this is still not taking in the equation that you might get some miles on LAN (AA?) for future fun. By this we can see that is is not even close, alternative 1 is better than alternative 3. The only thing that could change my mind here if you are either close to a status level that the 11k miles would put you over, or ifyou are saving miles for a honeymoon.

So when we have disqualified option 3, you will have to decide if 1/50 = $0.02 is a good value/redemption rate for your miles, and that depends of course on your economy, future travelplans and similar stuff. It is a close call, your decision.

Even if you think that LAN miles are worthless, you'd be paying $500 for flying Star Alliance vs. LAN, or 30% more, and that's a lot in my opinion. Can you credit LAN flights to AA and use the miles for a one-way award someplace?

Don't buy the ticket from UA. Judging from your Silver status, I figure you don't fly a whole lot and this is probably the most expensive ticket you'll buy in the near future. Use the miles for it and save 1600 dollars that you can use for anything.

Also, for 1600 bucks, you can flat out buy your miles back from US Airways if you decide you'd like the miles more than the cash in the future. But you can't convert miles back to cash...

Good luck.

the way I see it opt #1 & #3 are out since the OP would be paying .15 per UA mile and .10 per AA mile with LAN

quick TransCons can yield the OP at least 2x the EQMs for the same $$, over 3x with UA or US. Heck Im sure $1600 spent on transcons can yield 25k if done right

as for #1 not all TO tkts are able to earn Miles