There is much to complain about in this article. He's unduly strident and doesn't spend enough time talking about the advantages that the 10 percent he doesn't want to read his comment enjoy from collecting miles. Also, the whole thing where he paints this picture of a supposed frequent flier "apologist" who will make ad hominen attacks is silly. I think most flyertalkers, if counseling a friend about the mileage game, would be pretty clear -- it's not something to dabble in or you will get caught in the switches.

So, all that said, I agree with many of his points, at least insofar as they apply to the supposed 90 percent he's talking to. Signing up for the USAirways card because you hear the sales pitch on the airplane, but then not taking the effort to figure out how it best advantages you, is not a great idea. You'll just end up paying an annual fee for miles that will eventually expire.

I can hardly count the number of people who hear about my mileage exploits and express sincere interest in attempting to learn the game, but who fizzle out pretty quickly on it. I think that's the average consumer mindset and if one's audience or writing niche is the consumer advocate/protection crowd, the advice he gives is pretty sound.

Selfishly, I kind of like these pieces. Less competition. It's funny, but if I could think of one bit of information that the general public seems to have significant trouble with, it's that miles you accumulate in one program can be used to book tickets in another program. People seem to understand the SPG Amex or Membership Rewards and transferring points to airlines' programs, but the average person checks for availability on the web site in which he has miles and if he doesn't find it, moves on, declaring his miles "useless." The notion that a guy not finding a trip on US's website to New York for his 25,000 miles could do a simple search and use the same miles to book to EWR on UA is just something that draws complete blank looks when you try to explain it to people. I really think it's that one bit of information that tends to separate Elliot's 10 percent and everyone else. At least, that's the stepping off point.

IMHO, your 90% is actually 99%. There is something about playing this game to win that most people do not get. They see the postcards, the sun tan, or the fresh chocolates from Brussels yet they do not believe it is real, or real for them. We in the 1% are the magicians while the other 99% are simply the audience for the magic show.:D

I think you're mostly right, but it's a spectrum. I don't consider myself in the top 1 percent. I know some good tips, am diligent, have travel experiences I could never have without miles, and work at it, but I wouldn't put myself in the category of your level of expertise. Similarly, I know some people I would describe as savvy, but not quite taking advantage. Like a friend who has the USAirways credit card, knows how to take advantage of the 5k discount on certain bookings, and has a second biz card so that he can put spend on them to get enough EQM to get 40 percent of the way to gold every year, or who holds an amex hilton card for AXON rewards. I would put him in the 10 percent, but if you get any more esoteric than that, he starts to fade. (Like, when I say, "no, transfer your Amex to Singapore, because you can book business class for less and get one ways," I get a blank look.) If I tell him that I made my family sit in the rental car for a few minutes while I ran in to check out a new Office Depot during a Thanksgiving trip, he would think I was crazy. Yet, if I admit that's about as crazy as I get, many on this board would think me a wussy. It's a spectrum.

Tell me where you can find an $80K car for $10K. Or where you pay $30K for $80K worth of work. Unfortunately these rarely (if ever) exist and are more theoretical than a $25K First Class ticket for 150K mile example.

I bought a car several years ago that was "worth" well over $15K, but I paid $12K for it. Yes, I said the value of the car was $12K (to me). That was also the value to the seller, since they would not have sold it for more if it really was worth more.

Sure people can deceive themselves about the "value" of their miles by quoting an absurdly high value. In reality they are only deceiving themselves. Probably a better example would be how much they would be able to obtain if someone bought those miles on the open market (of course if that were allowed). I venture to say nowhere near what people quote as their "retail value" if they had used cash for a J or an F international ticket.

Not quite.
My dad was also able to play the game really well and holds AA LTG (despite not having stepped on AA on a single revenue ticket)

I think you meant to say "they would have sold it for more if it really was worth more." But I think you mean to add at this point in time to your statement.

To sell something, there must be a buyer and a seller. Smaller markets are less efficient than larger markets. If I want to sell my house in the dead of winter, I might only be able to get $180k for it. If I want to sell it during peak sales time, I might be able to get $200k for it. How much is my house worth?

Similarly, some things have holding costs. As a seller, I might be motivated to sell now at a discount because I can't afford the taxes/upkeep/whatever. Is my thing worth less because I sold it for less?

Let's use a more extreme example: I like your house. A lot. I offer you $1 million. What's your house worth? $1 million? Next year, I want to sell it. You and I both know I won't get $1 million for the house. What's it worth? The million I paid for it?

Given the housing bubble and crash, I think we can all agree that true "worth" is something that can't just be evaluated by the size of a check that exchanges hands.

I don't understand what you are trying to say. I just redeemed a bunch of miles for CX F, and I can fairly say that the value of those miles was the cost of the ticket divided by the number of miles redeemed. It's a fair statement to say that I received XX cents per mile in value from that redemption. On a forward looking basis, do I value my miles that high? No.

Try to value miles is a waste of time after a certain point. The way CX prices F, tickets are much cheaper out of YYZ and ORD than they are out of JFK. If I live in ORD, should I route through JFK just because I can receive more value from my redemption? What's the point of comparing value?

I won't redeem my SPG points for less than 3 cpp. Above 4 cpp, I consider it a slam dunk. This is my personal valuation, which is significantly higher than two prominent bloggers that I know. Why do I value them that high? For my redemption patterns, I know I can get a nice hotel in an expensive city at those valuations or better. If I redeem them at lower values, I'll deprive myself the opportunity to stay in nice places in Rome, Venice, or where have you.

For me, my miles are valued based on opportunity cost. If I spend them now, I won't have them later. I'll spend 25k UA miles to save $1000, even though F valuations are much higher.

I disagree. Those miles were worth exactly the lowest amount you would have sold them for on the day of redemption instead of redeeming them.

Valuing miles is crucial for lots of things. The most pertinent to me is knowing which card to put a dollar of spend on or whether to go with cashback etc., but there are lots of other reasons to value them.

I just think the best way to value a mile or point is what one of the bloggers says -- the amount at which you are indifferent whether to take the money or keep the point.

It is pretty much hopeless with those who like to feel they got much more "value" out of their points than what you say (and I agree with you). Let them feel good about their valuation, even though it has nothing to do with reality!

Earlier today I used United miles to get an RT, SFO-LHR on United in May. I'll be in C in the upper deck of a 747. I've been doing this sort of thing for well over a decade. As I'm sitting in the United Club, sipping a drink before the flight, I'll be sure to remind myself that it's all a scam.

...and that the miles you used for it are worth 10-15 cents each :-)

Dad is in the 1%. The sad reality is that those of us who fly to Paris free just to pick up a Valentines Day gift are a minority of the minority 47%.:p

I'm not talking about people who deceive themselves of the "value" of their miles. I'm talking about the "leveraging of value" they gained from those miles. Everyone's "value" point or reference is different. Someone may pass up an offer to spend $3K for miles that can be redeemed for a $10K ticket, while another person may jump at the opportunity.

In the car example, let's say you got a deal on the car for $12K while it was worth $15K. If the true value was $15K, than you got a deal and many people (including dealers and traders) would want in on the action to turn around and sell it closer to the market price (if $15K was the true market price). Despite the fact it was only worth $12K to you, someone else would be willing to pay $15K, because that's the real market value.

Someone who flew $3K worth of revenue flights and earned enough FF miles and redeemed it for a $10K ticket doesn't mean the ticket they redeemed it for was only worth $3K. If they tried to resell it (hypothetical here, as we all know, that is against T&C of the FF programs), they can most likely get more than the $3K they spent, but obviously less than the $10K market price. This is similar to the point you made. Throw in credit card bonus and other ways to earn miles, and that expenditure for earning the miles goes down even further.

Regardless, the point stands: there is a higher value, and for many people who redeem their miles for premium seats, it is significantly more than what they would pay on their own dime. As many have already pointed out, getting a $10K business class ticket that they wouldn't pay out of their own pocket doesn't mean that the value of the ticket is any less.

No one is deluding themselves in thinking that they are willing to pay $10K for a ticket. However, the fact remains buying the ticket would cost $10K is still true.

As an exercise, what is the maximum dollar value one would pay for miles to go in business class, say LAX-SYD non-stop?

Here are the parameters:
The ticket is usually $10K. Using miles, it's 135K miles (UA miles). If the 135K miles had to be earned, using an average CPM of 3 cents/redeemable mile, that's about $4K worth. Now we all know MR'ers who can get that cost down lower, but presuming it is a 1K with 100% bonus, the revenue fare is going to cost around 6 cents/mile.

If you had to take a round trip LAX-SYD, what's the value you put on those miles?

Can't comment about LAX-SYD specifically, but over NYE 2010/2011, I did a similar exercise with CX where I paid $2300 to fly JFK-HKG-BKK/DPS-HKG-JFK in J. I thought that was a fair price.

Does your valuation properly account for priceline and similar deals? Two summers ago I booked the Hilton in Venice, the city's only 5-star hotel on Priceline or Hotwire, for US$200 per night all-in. I'm pretty sure it beats any SPG property in Venice.

OTOH, the Park Hyatt Sydney is a vacation experience in itself. Sit at the pool and enjoy the view. Rooms are $795 or 22k Hyatt points, and they aren't discounted. The hotel is too small for that.

I have two ways to approach this.

My miles are worth:

a) Not more than the max I would spend for any ticket on any given day for the same route. If I only have 1000$ budget for that flight than this is the amount I saved, no matter if I use 40k for Y, 55k for C or 70k for F. I would not have spent more than 1000$ either way.

b) Exactly the amount I could offload them for if selling a ticket to a friend or family member. Which has been 2500$ for a C roundtrip on occasion. So the value is exactly that. That the ticket in whatever crazy fullfare would have cost 9000$ is irrelevant because nobody would have ever paid for that.

Also bear in mind, a flight is a perishable good. Once you land the magic dust is gone and your 'value' has just dissolved in Jet A during the past 12 hours. :p