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The Value of a Mile
The Value of a Mile
by Tim Winship With Air Canada and United still in bankruptcy, US Airways likely headed back for a second round of Chapter 11 protection, and Delta's most recent SEC filing alluding to the possibility of a bankruptcy filing if pilot salary concessions are not forthcoming, consumer concern at the prospect of a major airline failure has never been more acute or widespread. Particularly worrisome to many business travelers is the question of their reward miles' fate. http://frequentflyer.oag.com/stories...y_revised2.asp ... 1. Cash Out 2. Convert 3. Wait and See (and Hope) --- Thoughts? :) |
Very interesting.
What are FTers' thoughts on potential bankruptcies and what one should be doing with UA and US miles? I only have about 40K and 33K on them respectively since they aren't what I tend to accrue on (NW and AA). Should I be looking to use up or convert these miles ASAP? Should I not bother spending the time, money, and effort to go for the free RTW in Bid'ness class on UA for my flights out of DC this year? How serious are these threats to our miles and if they are, what do you think the timeframe is for getting the hell outta Dodge with all the miles I can carry? Thanks! peace, ~Ben~ |
FWIW, I'm personally, and quite earnestly looking for opportunities to burn miles these days.
Why? Well among other things: ...Gordon Bethune, the CEO of Continental Airlines and one of the executives testifying on Thursday, will describe the industry's financial condition as "perilous, and the skies are only getting darker," according to prepared testimony obtained by The Associated Press. "All-time high oil prices and the ever-increasing burden of government taxes and fees are killing the industry." http://biz.yahoo.com/ap/040602/airlines_outlook_1.html --- Not to mention all the other "stuff" that makes it increasingly hard to keep the business plan flying! I hope I'm wrong, but seemingly, with the increasing deflation in the real value of miles, and the increasing difficulties in utilizing them, why not get as much as possible now? -Mark |
Real Value
I estimate it is about 1.2 cents/mile. But if it becomes very difficult to get standard or (25k domestic or 50k Europe) award tickets, then it drops to about 0.6 cents/mile. At that level it no longer makes sense to get the credit cards or fly just for miles when you have a choice on personal travel. On international travel I dont look for miles, just convenience and dates.
Airlines might tell you otherwise, they estimate at 2 cents/mile. |
Originally Posted by doc
I hope I'm wrong, but seemingly, with the increasing deflation in the real value of miles, and the increasing difficulties in utilizing them, why not get as much as possible now?
I like your idea to burn, but I also like to renew my status! And if you like to play within your FFPs rule, these two goals can be contrary… |
Originally Posted by Patron
First of all, thanks for the link, doc!
I like your idea to burn, but I also like to renew my status! And if you like to play within your FFPs rule, these two goals can be contrary… Understood! I agree! :) FWIW, I was somewhat surprised to find that still, many broker sites such as corpflyer will apparently pay between 1.2 and 1.8 cents per mile. I have never personally used any of these sites, nor bought or sold miles period, BTW! Since the old thread concerning the real "value" of a mile is now seemingly lost in the ubb to vb migration morass, I wonder what the current valuation is for folks. It almost seems as if the once popular FT expression, "just my 0.02" might now more accurately be "just my 0.01!" ;) -Mark |
Originally Posted by doc
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Understood! I agree! :) FWIW, I was somewhat surprised to find that still, many broker sites such as corpflyer will apparently pay between 1.2 and 1.8 cents per mile. I have never personally used any of these sites, nor bought or sold miles period, BTW! Since the old thread concerning the real "value" of a mile is now seemingly lost in the ubb to vb migration morass, I wonder what the current valuation is for folks. It almost seems as if the once popular FT expression, "just my 0.02" might now more accurately be "just my 0.01!" ;) -Mark The target I shoot for in accruing my miles is to have around 60,000 for a RT to Asia from DC since its the ticket I'd be purchasing in any event. For where I want to go in Asia, it'll run me about $800 - $1200 in Y to get there if I buy the ticket outright. I just do the math.. $1000/60k = 1.67 cents per mile. Just my basis for starting. For one, in buying my ticket at that price, I have a lot more flexibility in terms of availability / dates / etc. On the other hand, the intrinsic value of whatever I'm consuming that earns me miles needs to be taken into account as well (like Kellogg's cereal that I'm eating for breakfast). All said, if I could outright buy miles, I'd spend a maximum of 1.2 or 1.3 cents per mile if it were on a program a prefer. peace, ~Ben~ |
Originally Posted by doc
Since the old thread concerning the real "value" of a mile is now seemingly lost in the ubb to vb migration morass, I wonder what the current valuation is for folks.
Assume, the price for FRA-LAX vv is € 8.146--/€ 2.310,--/€ 590,-- (F/J/Y) and I have the option the redeem 140/105/70K M&M miles (F/J/Y) for these flights (5,8/2,2/0,8 cents/M&M miles). As I do not like to sit in cattle on a long haul flight and the difference between a first and business class award is “only” 35K M&M miles, I go for a First Class Award. Assume ”my” flight LAX-FRA is overbook an the check in agent offers me € 3.000,-- in cash for releasing my F class seat in exchange for a business class seat. I think this way: someone gives me the choice of either travelling in F or sitting in J with € 3.000,-- in my pocket, how much cash would he need to offer me to take the cash? IMO the key question is: Where would be the limit for me? Once I figure that limit out I know "my value". If I have the option to choose between a paid and a reward ticket, I look at the current fare I have to pay and miles I will earn. Let me come up with another example: If I have to travel VIE-FRA vv and my options are buying a cattle class ticket for € 269,-- and earning 2.500 M&M miles or redeeming an award for 18K M&M miles (1,5 cents/M&M miles), I take the award. So to make a long story short: I redeem for a price of 1,5 cents/M&M mile.
Originally Posted by doc
FWIW, I was somewhat surprised to find that still, many broker sites such as corpflyer will apparently pay between 1.2 and 1.8 cents per mile.
There are an increasing number of people like firstflyer_com, hansbabel or cheapbuy1975 who are selling premium class award tickets or upgrade certificates to the general public. These “brokers” are successful because they are able to buy miles at a lower price than they sell award tickets in first & business class for international travel (article was published in March, 1995 in the Los Angeles Times, comments in red published here): Mileage Guru Petersen who is "No Fan of Awards Brokering" By CHRISTOPHER REYNOLDS TIMES STAFF WRITER Randy Petersen, the Colorado Springs, Colo.-based editor and publisher of the Inside Flyer newsletter and perhaps the nation's leading authority on frequent-flier programs, says the brokering of mileage coupons isn't officially illegal in any state but Utah, where the practice was barred about two years ago. However, Petersen also says that as the economy has sputtered and the airline industry has cut domestic prices, the mileage coupon-brokering industry has shriveled from more than $100 million a year in 1989 to about $25 million now. As the market has contracted, Petersen suggests, the reputation of brokers has suffered. And since airlines typically earmark just 10% or fewer of their seats for travelers using mileage awards, those who buy or trade for coupons often gain their seats at the expense of travelers who have followed the airlines' restrictions to the letter. That, says Petersen, doesn't seem sporting. Mileage brokers spend alot of time and money advertising the sell of frequent flier miles. The only way brokers make real money is off business and first class international airline tickets. Which by the way the ailines charge $4,000 to $12,000 for!! Could you emagine how hard it is for a broker to find a client willing to buy a ticket for half that price or even a quarter?? Does Mr. Peterson know how hard it is to find such clients? Sporting ? Does the mileage member have the energy or the time to go looking for such clients? Does the mileage member have the time to screen every call they recieve to make sure it is not the airlines trying to close their account? Look most brokers are X Travel Agents who have been squeezed out of the travel business by the airlines cutting the commisions. Most brokers could be an executive for the airlines (thats how good they are). If Mr. Peterson is an authority on frequent flier miles boy I must be a GOD! Free air travel Flying round world as free as a bird Free Market in First Class – How to trade air miles (OP published in Forbes on August 12th 2003) Milespy (discussion about a business Matthew Clement & Steve Belkin opened in 2001) |
It's been years since I've valued a mile at 2 cents. My current valuation for miles is about 1.35 cents each. I don't "buy" miles any more unless I can get them for less than 1.0 cent each, and preferably less than 0.8 cents each. This pretty much eliminates mileage runs for me, and in fact I haven't taken a mileage run in about 2.5 years. I don't have anywhere near the statuses I used to carry, but so be it.....first class simply isn't what it used to be even 5 years ago.
Although international business and first class awards appear to offer more bang for the mile, I can't see myself increasing my mileage valuation for those as I simply do not and would not pay those fares. My yardstick for travel is coach fares with a small to moderate premium for business/first that is roughly equivalent to what it would cost to purchase domestic upgrades. |
Originally Posted by MileKing
It's been years since I've valued a mile at 2 cents. My current valuation for miles is about 1.35 cents each. I don't "buy" miles any more unless I can get them for less than 1.0 cent each, and preferably less than 0.8 cents each. This pretty much eliminates mileage runs for me, and in fact I haven't taken a mileage run in about 2.5 years. I don't have anywhere near the statuses I used to carry, but so be it.....first class simply isn't what it used to be even 5 years ago.
Although international business and first class awards appear to offer more bang for the mile, I can't see myself increasing my mileage valuation for those as I simply do not and would not pay those fares. My yardstick for travel is coach fares with a small to moderate premium for business/first that is roughly equivalent to what it would cost to purchase domestic upgrades. Thanks for the links, Patron. You certainly raise a good point(s)! :) And so does MileKing, and I'm inclined to agree. Yet, FWIW, I still personally think that using 'em for UG's whenever possible is a best value! :) And as I recall, one of the major impediments to the IRS plan to tax our miles was the extreemly wide range of airfares on any given airline(s) particular flight, and an inability to agree upon what, if any, price would be assigned for tax purposes to any ticket obtained utilizing award miles? To each his/her own! :) -Mark |
Though I can come up with examples of cases where miles are "worth" much more than 1 cent, for me that's what they are worth.
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I just hope the current "value" holds (or perhaps even rises! ;) ) at this level, rather than falls any further!
Thanks! :) -Mark |
lets hope the valur goes up just as we hope gas prices go down, I dont understand why people would by miles for more than 1 cent unless you really needed it to fill up a ticket award desperatly
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Originally Posted by dschon
lets hope the valur goes up just as we hope gas prices go down, I dont understand why people would by miles for more than 1 cent unless you really needed it to fill up a ticket award desperatly
Obviously many travellers have travell patterns never requiring expensive tickets. They should still understand why others value miles more than they do. I will never pay for a business class seat; but I understand why others do. |
FWIW,
What the heck is the value of our miles and points right now? I could hit you with a brilliantly reasoned strategic treatise on the state of frequent-travel programs in general, but I think we'd all be better served by thinking tactically. So here are four items of immediate miles-and-points importance. You'd be well-advised to take appropriate notes and act accordingly during the next few weeks. http://www.usatoday.com/travel/colum...ncatelli_x.htm |
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