Buying Miles: Is it ever worth it?

Ramsey Qubein, February 23, 2011
Fares from Washington DC:

    Airline loyalty programs provide a host of perks for frequent flyers, but is it ever worth forking over money for miles without flying? Most domestic airlines offer a purchase miles program, but the costs can be pretty steep. Some airlines allow you to top up your account in conjunction with a paid flight, but those miles can be even more expensive. So when is it ever worth it to pay outright for miles?

    Selling loyalty miles is a huge money maker for airlines since it is essentially costing them nothing to give you miles. While they do cost the airline a small amount (since they are now a liability on its balance sheet until you redeem them), it is a great way for them to build ancillary revenue. Ahh, there’s that famous term that is so prevalent in today’s airline industry. Yet, this may be a wise move on your part. Let’s examine.

    Typically, it is advised to value each mile at two cents when redeeming them for award travel. Obviously, the value of a mile skyrockets when using it for international Business or First Class seats instead of an expensive domestic Economy seat. But, everyone’s needs are different. Be sure to think about your intention of using miles before ever purchasing mileage as that would be an expensive venture.

    Buying miles to spend on mileage tickets that are not the traditional “saver” priced awards is another major no-no. This is the airline’s way to rid you of your valuable miles while improving their balance sheet’s bottom line in a jiffy. When it’s comes to paying 50,000 miles or $2,000 for a last-minute Economy Class ticket, well that may be a different story. But, most of the time, the double-priced mileage tickets are a very poor value.

    The price for purchasing mileage varies, but is usually 2.5 cents to 3 cents per mile plus tax and service fees. But, that outlay can be worth it when you are close to having enough miles for an award that you need. If you need just a few to reach the next award level, then go for it. It is often advised to spend your miles as fast as you wisely can since airlines are constantly adjusting their mileage charts (almost always in one direction…up!). Each year, awards become more expensive. As more miles are issued, it is only a matter of inflation. Hence, mileage prices must go up.

    Airfarewatchdog.com advises taking  advantage of bonus offers and sales when mileage programs offer them. Here are a few good deals at the moment.

    US Airways is offering a 75%-100% bonus on purchased miles through 3/31/11. This is a tremendous bonus for those looking for overseas premium class awards. Remember US Airways is famous for offering off-peak awards to Europe and Hawaii (January and February each year) and to South America and Hawaii (in March or May plus October each year) for as little as 35,000 miles in Economy and 60,000 in First/Business. That’s quite the bargain putting a business class ticket at less than $900 if buying all the miles! Less, if you already have some in your account.

    Here’s a great deal for bonus Delta SkyMiles. If you are a member of American Express Membership Rewards, transfer your miles to Delta between now and 5/31/11 and receive a 50% bonus. This offer is valid for those who have never transferred miles to Delta before, but this can be a great way to top off your Delta account without having to spend anything other than the taxes that AMEX charges to complete the transfer. If you insist on buying more Delta miles, do so before 3/31/11 to get a 50% bonus on your purchase.

    Continental Airlines and United Airlines are ready to capture your cash by offering bonus miles for sale upon check in for your flight. These offers are almost always a bad idea as they are far more expensive than they should be. Resist the urge as you could be paying more than four cents a mile for them.

    Try to avoid the temptation of glossy advertisements selling miles. It’s always cheaper to earn them with flying or other transactions. But when promotions abound, be sure to weigh the value of what you are redeeming for; sometimes, it is cheaper to buy the miles and redeem them right away.

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