Should You Buy Miles Or Be Loyal To An Airline?

Don’t worry, this post has nothing to do with revenue based frequent flyer programs, be it revenue based elite qualification, revenue based mileage accrual, etc.

Instead this has to do with a (rather long but interesting) question that reader Lex posed on the “Ask Lucky” page of the blog:

I’m currently a diamond member with CX and my membership is due for renew this coming August. I don’t want to fly in economy for the sake of racking up miles. Unfortunately I cannot afford to fly business to achieve 120,000 miles either. With regards to PE, I’ve found QF and NZ to be outstanding, and CX and BA to be terrible.

I’m happy to downgrade to Gold this year in order to keep all the OneWorld benefits. For that I will need to fly 60,000 miles. CX’s miles based scheme makes achieving this threshold a very difficult endeavour (flying in Biz).

While I deeply appreciate CX’s Macro Club especially the recognition given when flying, and guaranteed seat and priority waitlist, I have found it to be difficult to attend high status. I’m pondering on whether a revenue based scheme will be more suitable.

In all honestly I only need to fly once a year from NZ to Taiwan. All other trips are not essential, but flying is in my soul.

Now my questions are
1)Which FFP scheme do you think would suit my flying behaviour better?
– Status seeking
– Never economy, happy with premium economy
– occasionally business class when there is a sales.

2) Do you have any other suggestions to help me maintain my status more cost effectively?

I can understand the desire for status

I’ve been playing the “mileage game” for nearly a decade, and I can relate to Lex‘s passion for flying and the industry, and wanting to have elite status. Even though Lex only needs to take one longhaul trip a year, if you’re passionate about airlines and frequent flyer programs there’s still something nice about having status and flying more than that.

Historically US frequent flyer programs are more generous

So Lex is a Marco Polo Club Diamond member, which requires 120,000 miles or 80 segments. That’s a lot of flying.

Cathay-Pacific-Status-Tiers

What’s really quite sad are the benefits you get for Diamond status, though. You receive things like:

  • Lounge access
  • Priority check-in
  • Priority seating
  • Extra baggage

Cathay-Pacific-Diamond-Benefits

And other similar benefits. But you don’t get a single complimentary upgrade as an elite perk (though have priority for operational upgrades).

Meanwhile as an Executive Platinum member with American (which requires 100,000 miles) I get eight systemwide upgrades valid on any fare, plus unlimited complimentary domestic upgrades.

And as it stands I think that Executive Platinum is the only status level in the US that’s really worth going out of your way to earn. Other than that it’s really not worth it, in my opinion. Airfare is as high as I’ve ever seen, benefits have been diluted, and requirements to achieve status have gone up. And that’s in the US, where historically it has actually been worth going out of your way to earn status.

But if you’re totally going out of your way to earn status like Lex is, are you really being properly rewarded for 120,000 flown miles with Cathay Pacific? What would I do instead?

Break the status addiction and buy miles

I know it can be really tough to give up status. But Lex, you’ll be paying less for first class than you paid for premium economy before, which you say you’re perfectly happy with.

We frequently see promotions for buying miles from Alaska Mileage Plan, Avianca LifeMiles, US Airways Dividend Miles, etc. They all consistently sell miles for less than two cents each, and given their award rates that should allow you to consistently fly business class (or maybe even first class) for less than you’d pay for premium economy.


Cathy Pacific business class

For example, US Airways charges 90,000 miles for business class between North Asia and New Zealand. At a rate of 1.6725 cents per mile (a rate at which you can generate US Airways miles right now), that’s ~$1,500 for a business class ticket.

Meanwhile the cheapest premium economy fares I see between Taipei and Auckland are $2,500+.

Premium-Economy-Fares

Is buying miles “sustainable?”

I’d argue buying miles is as sustainable as being loyal to an airline. Airlines have created massive businesses out of selling miles, and that’s something we’ll continue to see grow over the coming years. As I wrote about a couple of weeks ago, thanks to the evolution of alliances airlines have the opportunity to make money by selling award seats on partner airlines, and there’s no reason we’ll see that stop anytime soon.

That’s not to say award costs and rules won’t change, but at the end of the day the beauty of this community is that we can collectively stay one step ahead of the airline. 🙂

Bottom line

Even without access to the lucrative credit card sign-up bonuses that we have here in the US, I still think you’re better off funding your travels through buying miles as opposed to being loyal to an airline. That’s at least true if you value premium cabin travel. If you’re fine in economy the math doesn’t work out that great, but if you value premium economy at a minimum then you’re definitely best off buying miles, in my opinion.

You deserve better!

Comments

  1. “Airlines have created massive businesses out of selling miles..” – What about Lufthansa, who has stopped selling miles? At all. Forever. Don’t you think others will follow?

  2. @ Tobias — But they never really made a business of selling miles to begin with. Clearly they’re trying to run an airline as opposed to a frequent flyer program, for better or worse.

  3. JAL or Alaska would be a good program, because they have some of the most valuable miles, and that is the #1 priority if status doesn’t matter to her that much. JAL does have the advantage of recognizing her oneworld status, though. Also, on their AKL route, CX uses an a340-300 with the old “coffin” business class, not the one pictured. Sadly, there are no credit cards in NZ for JAL, Alaska, or SPG.

  4. I think I disagree. Sure, they have a weird program. But how can they partner w pretty much every retailer in Europe, give away 10k miles for a 90€ newspaper subscription and then stop selling them for a much higher price? I just don’t get it.

  5. @Tobias: The reason why LH might give you 10,000 miles for a 90 euro newspaper subscription is not because LH wants you to read the news. It’s because the newpaper publisher wants you to subscribe. *The publisher* is the one who buys the miles from LH, and then he gives them to you.

    For LH, the retail sale of miles to the public might not be lucrative because the miles are so expensive that no one buys them – so it’s a net cost to maintain the program. Why can’t they reduce the price to generate more business? Precisely because of all those retail partners: if LH reduced the direct-to-the-public miles price too much, there would be no advantage to the customer to buy from those partners to get miles because the customer can buy from LH directly at a fair price. I assume that LH’s sales of miles to partners is very lucrative, which might explain their emphasis on that and not on retail sales to the public.

  6. The one fly in this ointment is award availability and personal flexibility. If Lex needs to travel in specific time windows and/or needs to make his plans a certain amount of time in advance, he may have an easy time accumulating many miles, but he may have little success in using them. One of the biggest disconnects I’ve encountered between the points/miles bloggers and my own needs are in this realm.

    Lucky, you yourself noted that one of the most common requests to your booking service is US-Australia at the holidays in biz class, which is almost impossible to fulfill six months out.

    For the flexible and spontaneous, this is really good advice. For those of us who operate with more constraints, I’d consider making some test “bookings” and see what you come up with.

  7. I second Adam P. It´s cheaper to buy miles and redeem a business or first class award than buying a ticket. But as long as you have flexibility to fly the dates or companies where you can find awards. So far, to me, buying miles has been really attractive, but for those who don´t travel alone or have to fly on high season, I´m not sure if that would apply. Before buying miles, it´s better to simulate if the desired flights would be achievable on awards.

  8. @ Robbie — Alaska is a good program for collecting miles, though the issue is that no matter how many miles you credit to Alaska, you won’t get lounge access with Cathay Pacific. You also can’t use Alaska miles to upgrade a Cathay Pacific ticket.

  9. @ Tobias — So what do you think the reason is? I’ve posted in the past about airline award reimbursement rates and they’re lower than the rate at which any airline sells miles.

  10. @ Lucky, snic – The only solid reason I can come up with is that they don’t want you to obtain miles if you’re not flying. They’re basically trying to turn their M&M program into a “senator only” party: I mean, we see the “10k miles for 90€” offers much less often in 2014 so I assume they somehow increased the rate for selling miles to their partners. Now they stop selling miles altogether (which weren’t outrageously expensive, btw – think 0.025$ right now factoring in a 20% bonus). I’m just wondering what’s next.

  11. Hey Lucky,

    How many miles do you typically buy in a year? Does it make up a big proportion of your overall mileage earning?

    Thanks!

  12. Also, do you think that this gravy train will end someday? paying sub-$2000 for a round trip J ticket sounds too good to be true…

  13. Lucky – all good advice… for someone who is *not* in the situation that Lex is in. I am New Zealand based and mileage availability (especially in premium cabins) out of New Zealand is generally terrible. This is especially so for someone like Lex who needs to get to a specific destination in Asia (namely Taiwan).

    CX Diamonds are also treated very, very well when flying on CX metal. No ability to confirm upgrades in advance (though other than the North American airlines and Air NZ I struggle to think of any airline in this part of the world which offers this to their elites – upgrades are a very “American” thing which many US-based flyers seem surprised isn’t offered by other airlines) and for the amount of flying that you do (which I agree is ridiculously high) CX really go out of their way to keep you happy.

  14. Lucky – if I plan to redeem miles for 1st or business class seats on Cathay Pacific, which airline miles should I buy, US or Alaska – if Alaska has a 35% or 40% bonus sale?

    In other words, which airline’s promotion is better? US or Alaska? And which of these 2 airlines is easier to redeem miles on Cathay?

  15. Hi Lucky,

    Cheers for your super prompt reply. haha I apologised for posting such a long question, really appreciate your patience for even reading it through!

    I have thought about buying miles as it will reduce my travel cost substantially, however the problem I face, and as @Alex pointed out, is the lack of availability.

    When I was still a lowly silver, I found it extremely difficult to redeem an award ticket with CX out from Auckland….

    But your feedback is very informative, I will look into US Airways’s miles purchase promotion:)

  16. @Alex, was wondering if you could share with me which airline programme you are with now? Do you reckon BA or VA would be a good alternative if I want to have some sort of status?

    QF earning rate on partner airlines is too stingy, and I’ve heard many bad reviews on NZ’s airpoint….

    Many thanks:)

  17. @Lex – I am BA Gold. However this is mainly because I used to be London based and only recently returned to NZ. BA enforces a 4-segment rule which would make it very difficult for someone based in NZ to achieve unless you are making frequent trips to Europe or flying BA on SYD-SIN with any regularity. Also BAEC won’t allow a NZ/Aus mailing address (throwback to the days when it was cozy with QF) and so unless you have a Taiwanese or non-NZ address you can use, you won’t be able to join.

    Don’t have any experience with VA. QF was a reasonably good programme until their recent slash and burn to partner redemptions. A3 is always a good one to have if all you want from status is lounge access and priority standby, and handy especially in NZ if you fly domestically as it gets you into the Koru lounges.

  18. If Lex had a reason to fly to London, I would also have recommended BA, as it’s really quite easy to get BA Silver if you can meet the 4 segment minimum (far easier than CX).

    I prefer BA status over AA, even though I’m based in the US (PHX), for the following reasons:

    * It’s far easier to get BA Gold/OneWorld Emerald than any other program based on my flying patterns (usually paid J if the flight is more than 2 hours), especially now that US has merged with AA
    * My most frequent route to Europe is PHX-LHR. BA Gold gives you free seat assignments in J, and access to 1A/K in F
    * Free lounge access

    I’ve never received a free upgrade on any international flight (at least 100 flights), but I’ve also never flown in economy and only twice in premium economy. Free upgrades from J to F seem pretty rare, regardless of status.

    I know my flying pattern isn’t normal compared to the average person on here. Reaching BA’s Gold guest list might be nice, but I’m not really interested in flying that much more (we have a young baby), but the free upgrades and jokers might make it worthwhile when the baby grows up a bit.

    My travel also almost always requires me needing to be somewhere for a very specific amount of time, so waiting for last minute award availability, or booking a year in advance, doesn’t work for me. So miles are generally worth a lot less than status at the moment.

  19. There’s just one massive caveat (or two) to buying miles and stockpiling them:

    1. It assumes award flights are readily available for when you want to redeem them, or
    2. It assumes your personal travel plans are flexible enough to work around those dates that are available.

    Otherwise, you just end up with cash out of pocket and a whole heap of miles you can’t use.

  20. @ Frank — They should both have access to the same space, the only differences are:
    1) The redemption rates
    2) Alaska allows one ways with a stopover, while US Airways only allows roundtrips
    3) Alaska doesn’t allow redemptions in all regions

    So very much depends where you want to fly to/from.

  21. I am more leaning towards using a 2% cashback card and buying miles whenever the opportunity comes up and if the award availability is there. It gives me flexibility to adapt to programs and availability with that program. Otherwise, I still continue to churn and get points that I can use to supplement those miles purchases or just make straight out redemptions if I have enough.

  22. To attain diamond on CX, you actually need to fly 120k miles as a gold. So for someone to go from green to diamond, they’ll need to fly 210k, not 120k.

  23. Lucky,
    I would agree that for the most part buying miles is the way to go now-a-days, especially with the introduction of cost-based frequent flyer programs.

    However, I think “pooling” and becoming elite on Alaska at this point in time is very beneficial to a US traveler, regardless of where you live. The fact that you have access to Main Cabin Extra on AA, and elite seating on DL, free bags on both, free upgrades on AS, the ability to choose Oneworld and Skyteam partners to gain mileage fast, the ability to change an award ticket free of charge multiple times (I’ve changed an award ticket 10 times), and the crazy good redemption partners, along with multiple other benefits I didn’t list. I think being AS elite for a US based flyer, regardless of if you fly them or not, is really an easy and beneficial idea.

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