Don't Buy Miles. It's a Ripoff.
Right now with travel way down, travel industry companies are hurting for revenue. Airlines and hotels are pressing customers to buy points. It's a way to pay now, travel later. To make it seem more attractive they're offering tantalizing bonuses such as United Airline's "Up to 100% bonus miles" flash sale. But does that make it a good deal? In a word, No.
Understand that miles have an average redemption value. That's something you, as the traveler, have to work out based on your personal needs and travel patterns. My value may not be the same as yours may not be the same as someone else's. For years there was enormous range in what these values could be. In recent years, though, as airlines and hotels have changed their miles/points programs from fixed redemption charts to revenue-price-based redemption pricing it's become a bit simpler.
What does that mean? Take United Airlines as an example, since they've got a sale going right now and since I'm fairly familiar with their Mileage Plus program. The value of a UA Mileage Plus mile is basically about 1.2 cents per point (cpp). That's easy to derive because if you look up the cash cost for a ticket, then toggle the button to see the point cost, you'll see that by-and-large UA is showing you the same price with a 1.2cpp exchange rate.
Is it always 1.2 cpp? No. I've seen it lower some of the time, like 1.0 ~ 1.1cpp, and occasionally higher, up to 1.4cpp. Very rarely I've seen it above 1.4cpp.
Why does this matter? Well, look at the cost of buying a point. United will sell you points at 3.5cpp. They're basically selling you a coupon at roughly 3x what it's worth. So even their 100% bonus sale is still a ripoff: spend $1,400 or more (the minimum for the 100% bonus tier) and they'll charge you only 1.5x what those points are worth.
Is it any wonder airlines are one of the most hated industries?
Understand that miles have an average redemption value. That's something you, as the traveler, have to work out based on your personal needs and travel patterns. My value may not be the same as yours may not be the same as someone else's. For years there was enormous range in what these values could be. In recent years, though, as airlines and hotels have changed their miles/points programs from fixed redemption charts to revenue-price-based redemption pricing it's become a bit simpler.
What does that mean? Take United Airlines as an example, since they've got a sale going right now and since I'm fairly familiar with their Mileage Plus program. The value of a UA Mileage Plus mile is basically about 1.2 cents per point (cpp). That's easy to derive because if you look up the cash cost for a ticket, then toggle the button to see the point cost, you'll see that by-and-large UA is showing you the same price with a 1.2cpp exchange rate.
Is it always 1.2 cpp? No. I've seen it lower some of the time, like 1.0 ~ 1.1cpp, and occasionally higher, up to 1.4cpp. Very rarely I've seen it above 1.4cpp.
Why does this matter? Well, look at the cost of buying a point. United will sell you points at 3.5cpp. They're basically selling you a coupon at roughly 3x what it's worth. So even their 100% bonus sale is still a ripoff: spend $1,400 or more (the minimum for the 100% bonus tier) and they'll charge you only 1.5x what those points are worth.
Is it any wonder airlines are one of the most hated industries?