When Paying For Business Class Is Better Than Using Miles?

Miles aren’t free. That’s one of the concepts I have the hardest time explaining to friends outside the hobby.

They can’t wrap their head around the fact that I’d pay for a hotel stay or flight when I have millions of points. Which is sort of understandable. What those people don’t understand is that each point has a specific value to me, and unless circumstances are extreme, I won’t redeem it at less than that value. That’s because there’s always an acquisition/opportunity cost to the miles I earn.

Travis recently wrote a series outlining how to value miles, both on the earnings and redemption side:

Which brings me to a situation I’m facing at the moment. I’m committed to reviewing as many new business class products as possible over the coming months.

Avianca has some snazzy new 787s, which feature reverse herringbone seats in business class.

Avianca-787

That’s my favorite type of business class hard product.

Avianca-Business-Class

While Avianca generally flies A330s to Los Angeles, they’ll be flying 787s between Los Angeles and Bogota during winter (between late December and late March). I’ve never been to Bogota before and have never flown Avianca, so that seems like a really fun way to visit a new city and check out a new airline.

Since Avianca is in the Star Alliance, I started by checking out how many Aeroplan miles the ticket would cost me. As it turns out, Aeroplan charges 75,000 miles for the roundtrip in business class. Not a bad deal!

Avianca-Ticket-Cost-1

Then I checked out the redemption costs through Avianca’s own LifeMiles program — after all, there are lots of easy ways to rack up LifeMiles. They charge just 66,000 miles roundtrip in business class. Even better deal!

Avianca-Ticket-Cost-2

Those are some pretty great redemption rates when you factor in that Los Angeles to Bogota is ~3,500 miles, which is roughly the same distance as New York to London.

LAX-BOG

Out of curiosity — as I usually do — I checked out the cost of a paid ticket on the route in business class. After all, it’s nice to be able to say “I redeemed _____ miles, and this ticket would have cost me _____ dollars.”

Much to my surprise, the ticket cost was “only” $1,369 on virtually any day. That was cheaper than I expected, because as I said above, this flight is as long as a transatlantic flight.

Avianca-Ticket-Cost

So then I went back and crunched some numbers:

  • I value the 66,000 LifeMiles at ~1.5 cents each
  • If I redeem miles I’d still pay the ~$75 in taxes
  • I’d be giving up the ~10,000 miles I’d earn if I were on a paid ticket, which I also value at ~1.5 cents each

That means the “real” cost of a redemption is ~$1,225. If I cared about Star Alliance elite qualifying miles, that would even shift the value in favor of spending cash rather than redeeming miles.

Bottom line

It’s not unusual to see a transatlantic fare sale whereby it’s sometimes a better value to pay cash for a business class ticket than to redeem miles. That being said, in this instance ~$1,369 seems to be the fare across the board.

Given my personal situation, I’ll probably end up redeeming miles, since I don’t care much about Star Alliance elite qualifying miles. That being said, this was an instance where I found myself scratching my head, which is one of the downsides to being the type of person who crunches the numbers on everything.

66,000 miles for a roundtrip business class ticket for a weekend getaway? That sounds like a deal! $1,369 cash? That’s a bit tougher to swallow.

What would you do in the above situation — pay cash or redeem miles? Also, if you’ve been to Bogota before, is it worth a visit?

Comments

  1. Ben, it’s nice that you want to review new products, but what about the old ones that you didn’t write about? TAP, for example? I mean, the entire trip to Iceland….

  2. “…It’s not unusual to see a transatlantic fare sale…”

    Except that LAX-BOG and BOG-LAX are not transatlantic routes…

  3. Lucky im very pleased to hear your commitment to review new J products. This should get the trip reports back on track as theyve really lost their way this year- like many others im a bit sick of yet another EK or LH F trip report. Youve done so many we know exactly what its like.

    I think everyone wants to see you review GA F!

  4. Sometimes miles are free. All of the many miles I accrue for work have no cost to me, as with everyone else traveling for work. There is no opportunity cost as I have to travel for work and would be on the exact same flights regardless of whether I put my FF number on the ticket or not.

    Stop trying to make “the hobby” happen…it’s not going to happen.

  5. I used to think like this, but then realized that miles are not equal to their cash value because they are unregulated currency subject to ongoing devaluation. So, I focus instead on my acquisition value, and so long as my redemption value is double that, I’ll use the miles every time. Like your calculation though, that’s assuming I’m not trading off with status miles.

  6. Apologies for my noob-ish questions but a couple things I’d like to ask;

    I get (66000 x .015 = $990) + ($75) +(10000 x .015 = $150) as $1215. Am I missing $10 somewhere?

    Also, where do the 10000 miles earned come from if you use miles to get the ticket?

    Thanks for any / all advice. 🙂

  7. Love your blog! So happy I found it and have spent hours reading all your reviews since! However, when will you try SAS, air canada, finnair etc in business class?

  8. I would agree with you if yours miles were on a Swiss bank without the risk of a devaluation. You probably have 3 million miles or more, which would allow you to keep your travel style for 3 years.
    On the other hand, do you have half a million dollars on your bank (maybe you do, you were on Rolling Stone ;-)) that aren´t earning any interest or aren´t invested? Can you generate dollars the same way you generate miles?
    Ok, miles aren´t free, but they are far from being a currency.

  9. @ Ben — We flew LAX-JFK-MIA-BOG-MIA-JFK-LAX in AA business class last year for only $1,017. Sweet deal, plus we used some BizExtrAA upgrades to fly A321 F both ways. Anyway, that didn’t get us on Avianca’s new 787. Bogota is a surprising city! Enjoy.

  10. Buy it! Buy it! Buy it!
    But, could you PLEASE stopover in Caracas?
    I’d love to know what you think of eg the traffic (lots of 727s, 737-classics, etc) and the Admirals lounge there.
    But do NOT I repeat do NOT as an American leave the secure area (airside) unless you must, and if you must, go straight to check in/security, whichever you need to go to, because Caracas is seriosuly not safe for Americans.

    Airside, it is lovely, but I’d rather you were not kidnapped 😉
    Please?
    Pretty please with a cherrynon top?

  11. You could credit the Avianca flight to Krisflyer or Iberia Avios (and transfer to BA). Or, you could pay for a cheap AA fare to Bogota…then again not as nice equipment.

  12. Hi Lucky, Can you combine points on two different star alliance Frequent Flyer programs?
    Is it possible to combine points from any other Frequent Flyer program together?

  13. @lucky, You can also credit your flights to COPA – didn’t you just post about a new status match opportunity with Copa? You could also credit to Lufthansa, I’d imagine you have to have some miles orphaned there, no?

  14. That’s a pretty good price for J roundtrip! Since this is mainly a miles/points blog and you’ve always mentioned the avianca lifemiles sale in the past, it makes sense to redeem lifemiles for an Avianca J ticket. I’d go with that especially since you’re not targeting star alliance elite qualifying miles at the moment.
    As for me, I fly both star alliance and skyteam, and rarely ever on oneworld alliance so I’d probably pay for that price.
    Looking forward to your review!

  15. Ben,

    Is there a place where you keep a consolidated chart of all your current valuations of airline miles? It’d be great if you could compile a table of all them for easy digestion. Unless you’ve already done so and I’ve just missed it.

    Thanks!

  16. @baqa:

    Sheesh…to think I’ve been reading for years and have never actually visited the Start Here page. Thanks for the info!

  17. Hi Ben,

    I´ve been living in Bogotá and I think it´s a great place to visit for 2-3 days and be surprised. Bogotá has really changed over the last couple of years and now features high quality restaurants, culture and accommodation. The new Four Seasons opens tomorrow for example (http://www.fourseasons.com/bogotacm/).

    Check out the following websites for some info:
    http://www.nytimes.com/2010/07/04/travel/04hours.html?_r=0
    http://www.cntraveler.com/stories/2013-07-02/bogota-colombia-dining-restaurants-chefs

    Make sure you visit Andres Carne de Res in Chia (http://seecolombia.travel/blog/2012/01/friday-night-in-bogota-the-inimitable-andres-carne-de-res/#).

    Enjoy!

  18. @Rand: I don´t want to blame you for your comment but writing that without any facts is just being ignorant. And yes, I understand it! Colombia´s image in the world is still the one of drug trafficking, hijacking, robberies, etc. But the actual situation is quite different.
    Yes, you need to be aware of traveling in a South American country and that requires some precaution like not walking alone at night or hailing a cab on the street (as in any other big South American city) But in general terms Colombia (the big cities and tourist areas in the countryside) are quite safe and apart from pickpocketing I have not heard any major incidence in 5 years.

  19. It’s strange that Lifemiles charges 66k miles to fly LAX – BOG when you can fly LAX-BOG-BCN for 60k miles.

  20. YAY! New airline! Psst… would love to see Finnair A350, if you have the opportunity. Maybe you can do it while it is frolicking around Europe?

  21. Hi Ben!
    Bogotá is my hometown, but I’ve been living on the other side of the Atlantic (in Munich) for the past 10 years. It is a city with a very lively vibe, if albeit chaotic and full of contrasts, you’ll see the richest of the rich side by side the poorest of them all. The coutryside just outside the city is very green and mountainous – onceagain a beautiful and peaceful contrast to the hectic city. I’d be happy to give you tips if you do end up going there.
    As for flying Avianca: I find their hard product pretty comfortable, the 787s are brand new, reverse herringbone setas are super comfy and the entertainment system really good (this even in economy on short national flights, you have full seasons of all kinds of tv shows and sitcoms). BUT and it is a big BUT, don’t expect much in terms of service – the food quality is bland, the sparkling wine cheap and most flight attendants do not speak much English. And even for me, a native spanish speaker, some come across as simply uninterested in their jobs / the passengers.
    I usually flight LH or AV (via MAD) transatlantic when visiting my family back in Colombia (4-5 times a year) and I actually find the AV hard product, both in Business and economy a lot more comfortable than LH ( LH was still flying the old business class to BOG until August, but still the herringbone seats on the AV 787 beat the “new” LH J ). If only the service was as good…
    I can only encoursge you to give them s try, if only to resd your trip review!

  22. Wow. I was seriously planning to fly to BOG on that same week you were searching on (i have family there). timing coincides with Carnaval in Barranquilla, which is one other Colombian event that’s on my to-do list. It’s gonna be a great party, if all the stories i’ve been fed hold true ;-).

    I had already looked at UA’s rewards options for SFO departure, and while there are many options, but for premium cabin they all are some variation of a one-stopper in a A3xx or 737.

    Searching on a LAX departure, I can’t seem to get UA’s site to give me the 787 nonstop as a rewards option. It offers Avianca options, but takes you somewhere else on UA before connecting to an AV flight on a A3xx.

    Your 787 fare brings me a nice option. I love the Dreamliner, and want to try AV’s take on it. tack on a couple hundo to get me to LAX, and the flight is still kind of affordable (in the past it was normal for me to pay >$1K for Y seat to BOG ) ; plus i’d earn on MileagePlus.

    As for travelling to that country in general: HIT. The world has taken notice; the increase in tourists i notice with each visit I make, has been quite obvious. That being said, Colombia is much more than just its capital city, so if you have a chance to make an extra stop, do consider it.

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