Why Miles Are Becoming Less Important To Me (Sort Of)

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It’s easy to get pessimistic in this miles & points hobby, because stuff is constantly changing. This year we’re seeing AAdvantage switch to a revenue based program and also devalue their award chart. They’ve been the last of the “big three” US carriers with a disproportionately rewarding program, and now that’s changing, understandably.

2016-AAdvantage-Program

Is the game over?

As usual, we hear people say “this game is over.” The truth is I’ve been hearing people say exactly that for the past decade, as we’ve seen promotions ended, loopholes shut down, earnings structures change, and award charts devalued. But it hasn’t been the end, and it won’t be the end. Has the way in which we’re earning points shifted? Absolutely. But all things considered, the opportunities are as good as ever before. For example:

Emirates-Shower
There was no showering on planes 10 years ago!

But there’s one fundamental shift which I think can’t be stressed enough, which sort of makes me question the value of getting too heavily “invested” in points. Premium cabin fares are more reasonable than ever before.

Why do low premium cabin fares matter?

Let’s keep in mind why many of us play this “game.” While there are some out there looking to travel for “free” (which I certainly respect), for me it’s about traveling in comfort and style at economy prices. For years the reason I’d earn miles was because it allowed me to travel internationally in flat beds, something I could otherwise never afford to do. And that’s indeed true, when you look at some of the crazy business class fares out there.

Expensive-Business-Class-Fare
I could never imagine paying $12,000+ for transatlantic business class

We’ve seen airlines get better at running the core of their businesses, and part of that has been trying to sell premium seats rather than upgrade people. For example, Delta has gone from selling 31% of first class seats in 2011, to 57% of first class seats in 2015, to hoping to sell 70% of first class seats in 2018. It’s not purely about revenue (of course that’s the long term goal), but it’s also about shifting customers (and especially frequent flyers) away from the mindset of premium cabins being “upgrade” class. They want to condition people to pay for the product they actually want.

Part of that is heavily discounting premium cabins at times, so that leisure travelers can take advantage of great premium cabin fares without discounting the product too much for business travelers (this is done by adding Saturday night minimum stay requirements, advance purchase requirements, etc.).

Qatar-Airways-A350-Business-Class-30
Qatar Airways has lots of great business class fares

Examples

Let’s look at a few of the deals we’ve seen over the past couple of years. For example, through our award consulting service, one of the most common places people want to redeem their miles in premium cabins is Europe.

Over the past year we’ve regularly seen sub-$1,500 business class tickets to Europe. To give a few examples:

Europe-flash-sale-9

Those are just a few examples. Over the course of the past year I’ve written about all kinds of other amazing deals.

In many cases there are also great one-way business class fares for travel originating outside the US, especially out of South Africa, Southeast Asia, etc. This presents a great opportunity to book an award ticket in one direction and a revenue ticket in the other.

“But I’m not as flexible as you are”

“That’s great, Lucky, but I’m not as flexible as you are. We can’t all travel anytime.”

And I totally agree, and that’s why these paid fares are so valuable. Say you have kids and have to follow a school calendar. That’s perfect, because when these deals pop up they generally have availability over a wide range of dates, so as long as you’re ready to book, you should have no trouble taking advantage of the deals.

Heck, I’d argue these fares are more valuable for people with fixed schedules. It’s not often you find nonstop flights with miles on exactly the routes you want for multiple people; that’s considerably easier to do on paid tickets.

American-Business-Class
American 777 business class

Bottom line

The above are just some examples, but I do think it’s very important to point out the trend we’re seeing with premium cabin fares. For those of us who value premium cabins but could never afford to pay “sticker price,” the large discounts we’ve seen for premium cabin leisure tickets can’t be understated.

The key to taking advantage of them is to keep an eye on the sites which share flight deals, and then be ready to book once the deal arises, as they often don’t last for more than a couple of days (and often even shorter than that).

More than half of my upcoming revenue itineraries are in paid business class, and that’s not because I’m throwing money out the window, but rather because the premium was so minimal that it made sense. Miles have a value as well, as in almost all cases there’s an opportunity cost to the miles you’re accruing. This is a trend I expect we’ll continue to see, and at least in my case it slightly shifts my strategy of when to redeem miles.

So I guess to sum it up in one sentence: miles have always been most valuable to me because they were the only way I could travel in premium cabins at a fraction of the cost, and with premium fares as reasonable as they often are, that’s not the case anymore.

Have you used discounted premium cabin fares to supplement award tickets?


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Comments

  1. Miles are less important because you are rich now!

    Signing up for two Citi credit cards with waived annual fees and using those miles for a business class trip to Europe on AA is still way way cheaper than even a $1000 business class ticket that earns miles.

    For constant travelers like you, I get it. For occasional leisure travelers who can still get nearly free miles for almost all of their trips from signup bonuses, even a $1000 ticket is still expensive.

  2. I had this issue pop up on a recent award travel booking. I couldn’t find the award I wanted from Europe to San Francisco, but I could find it from Europe to Chicago. I opted just to buy a 1st class ticket from Chicago to San Francisco rather than to settle for the mixed cabin award I could get through Aeroplan. And booking through Aeroplan saved me from paying fuel surcharges that would have cost almost as much as the supplemental paid fare.

    Right now people can afford marginally more expensive business class fares, so airlines are smart to monetize the cabin to take advantage of this. If the economy tanks again and people have less to spend on premium travel, award availability will go back up.

  3. The real question is are you going to try to re-qualify for Executive Platinum in 2017 once AAdvantage is revenue-based for the entire year. I think I know the answer…

  4. Let me know when you see cheap business class out of MSP. Then I will agree that miles are not that important anymore.

  5. I do think it’s rather ironic that airlines are moving to a system in which spending money on plane tickets is less important for earning points than credit card spend. An extreme example is Amtrak, where you only get 2 pts/$ on the ticket, but 3 pts/$ for buying it with their credit card.

  6. Could the cheap business class fares we are seeing right now be because OIL is so low ?
    Airlines can afford to reduce fares at this moment in time and still make money.

    I will still collect miles, because I don’t see Oil prices being low forever and then in my view the fares will start to go up again in a few years.

  7. I agree entirely. It’s not just airlines realising that sensible F/J pricing is worth it. Train fares on East Coast main line from Leeds to London used to be hugely expensive, you can now pick them up for 20 quid in a sale if you’re quick. Even outside of a sale there are some bargains to be had if you’re at least a bit flexible.

    Last year I bought my first paid J ticket on Qatar, it wasn’t stupidly more expensive than Y and well worth the cash. The food and service were both fab.

    I’ve recently purchased a F ticket on Emirates flying CHC/SYD. It was less than twice the price of Y. It’s only a 3 hour flight but why not! Good opportunity to try Emirates F.

    Major business heavy routes without weekend stays are always going to be rinsed for every penny. But for the more flexible leisure traveller there’s value to be had if you hunt around.

    The massive devaluation in earning for deep discount fares is disappointing, bordering on distressing! However when travelling regularly for business it’s the status ‘quality of life’ improvements that are actually worth more than the miles. Having lounge access and better seats etc makes all the difference to the experience. The extra miles are just a bonus.

  8. Lucky I think it’s also because you are much wealthier now than you were when you started this blog so you can afford to pay for premium revenue fares rather than only being able to do it on points. You think nothing now of buying a J or F revenue ticket just for a review or inaugural flight.

  9. Miles are still valuable since the cheap business class fares usually only appears to transatlantic routes and the routes to South Pacific and Asia still remain high. One exception, Colombo and Cairo remains pretty much less, however you have to position yourself to there, which costs.
    I get the point for a traveler like you miles seem less valuable, but the majority that read OMAAT does not travel so frequent like you and probably stick with miles for a long time.

  10. I’ve been shifting slowly to more paid premium tickets, for just the reasons you are stating, both international and domestic travel. I have at least 3 transatlantic trips that I need to do each year, plus other international trips, so that’s at the very least half a million miles I need to ‘find’ each year, via sign-up, spend and purchase of miles. I wouldn’t pay $4,000 for LH across the atlantic in business class but if i can do it for $1,200 ex DUB I’ll go for it. I lost my AA plat status so no more domestic 500 mile upgrades etc, that has made me buy more premium tickets to travel within the US. But, what makes sense to me might sound stupid to others ….

  11. Wow! You are out of touch! Most of us want to travel for waaaaaaay under economy prices (or free) which have been possible so far.

    On the other hands you fly so much that you must “buy” your miles so for YOU it actually makes sense, but for most of your reader it does not.

  12. Totally off topic and nit-picky, but it irks me when it’s claimed SQ’s suites class has a double bed. It does not, and advertising as such is fallacious. It’s two twins – at most – pushed together with a divider still existing between them to some degree. Until you can roll from one side to the other on the same mattress without separate sheets or a wall, it’s not a double bed. Sorry…that’s the end of my rant.

  13. @Tom — it is not cheap, but in recent years it’s been hard to find roundtrip tickets from the US to Europe in peak season for less than ~$1200 roundtrip, and that’s generous — a lot of markets the floor is more like $1600-2000. If someone was going to pay that anyway for a coach ticket to Europe, these business class fares are a great deal.

  14. The rules always change , we just have to be flexible and learn how to maximize them. I just score CLT-LAX-SYD o AA J, SYD-HKG-FRA on CX, J/F. And then home on AA J. There is no way I would ever do this in economy, and certainly can’t afford to pay premium cabin fares, but with Miles I can. Just relearn the rules and keep on keeping on!

  15. I’m also pretty sure that you treat these airfare purchases as a business expense on your tax return since you provide a review for them.

  16. I think after reading enough of these blogs after the last few routes, premium cabin deals only exist in high traffic routes e.g. Transatlantic, Intra-US, etc.

    Finding deals like that in Australia is impossible. Like the cheapest business deal I’ve found is PER-DPS (a 3.5hour flight) in VA J (recliner J, not flatbed) for $550 one way. Now in most peoples analysis, that isn’t worth the money. For a data point on long haul, QF SYD-LAX had a deal where if you booked for two people, you can get return QF J for $5k. Still not great value when economy was maybe a grand return.

    A lot of the value of miles is in long haul travel or shrinking overpriced airfares e.g. Australia-HKG in CX J often retails at $6k (limited sample size on that, hopefully its not quite so bleak). And as such, I follow the same rule, style and comfort for economy prices or a bit less if possible. I think this is an instance of its all relative. In the US, the airlines are competing and better managing how they sell seats to ensure greater revenue/profit measures whereas in other markets, theres no actual competition and as such, little incentive to discount premium cabin travel.

  17. Between around 2009 to 2014, I flew long-haul paid J 2-3 times a year. I also did long-haul paid F the once as a treat as the prices were semi-reasonable. However due to discovering miles, I’ve now flown F on 5 different airlines over 15 times in less than 18 months. You say “premium cabins”, but to me I don’t get any pleasure in doing something that I already did. I’m excited to try F products and in most cases these are still very expensive and that is where miles are hugely beneficial. Unfortunately a lot of the airlines are now making it so you cannot upgrade a heavily discounted business class ticket into F with either miles or cash.

  18. Well, when you’re making $10k+ a month and writing off the trips (yes, I understand how deductions work since I own my own business) it’s easy to fly on revenue premium tickets. Am I jealous? YES! If I could do what you do I would do it exactly the same as you without changing a thing.

    Keep doing what you’re doing for as long as you still can while saving money as you go. One day this will all be gone, and then you can write books, consult, etc to fund your future.

  19. Don’t fool yourself Ben:) Of Course you’re a wealthy man now, but you surely wouldn’t take this more or less fun Trips with Ford, your das, Mum etc anymore without Miles in F Class. I for Myself also Book more and more Cheap QR Fares, but when I Deal with F fares, i Would Never ever Pay the Prices they charge to sit in the Front.

  20. I would put it slightly differently: The original idea of miles being a loyalty program, rewarding frequent travel with an airline or alliance, is pretty much dead. The exception might be for a small group of people who travel full-fare, full-flex J or F very very regularly, most likely on company expenses. Everyone looking at this economically today is way better off just buying the cheapest ticket for every flight, regardless of airline and reward program.

    Of course it can still make sense to collect miles by means other than flying, or by making use of special promotions. But in the longer term, i don’t really see how this makes any sense from the airlines’ perspective.

  21. I’ve bought those discounted J fares that you mentioned earlier, but I first started reading your blog because I wanted to fly in First, not in J. 😉 And unfortunately it’s extremely hard to find F roundtrip fares at economy prices. Collecting miles is still the most effective way for me to fly in F. As I’ve always said though, the only way to appreciate F or J is to fly in economy, and yes I still fly economy (mostly when I can’t find premium cabin award space during peak season.)

  22. I think you are spot on here. I believe its not just your financial position, rather it is the new way the points game is. Will I still collect points.. of course, but their value needs to be readjusted.

    The 140K United miles to fly JFK-FRA, is barely worth $2000 with frequent fare sales and deals. In fact it is not only easier to find a $2000 Europe fare then it is to find a flight with multiple business class seats available and when you want to fly.

    The reality is the 140K miles are barely worth over a penny each even on a business class redemption. Sure there are some sweet spots and routes that points really come in handy, but the value of points has sure dropped.

    I always tell my friends who see big sign up bonus points, or shopping portal bonus points, to put a value of 1 cpm, and if they can get them for less, jump on it, but if not, think hard about it.

    So that 60K sign up bonus for a credit card that costs you $500 is like getting a free $100 bonus. Jump on it. Another example Air Canada has a bonus 30K points for buying a new car. 30K points – $300 off for buying that new car.

    However points can be very valuable when you are stuck. For example, I had a friend who was on a cruise in Europe, and the boat had issues and ended up arriving 6 hours late to port. By the time they arrived at the airport for their flight home it was gone. Delta told them it was their fault and would not honor their ticket or rebook them on any later flights from Europe. They were almost going to pay $2500 each for a one-way last minute coach fare home, when they contacted me and I managed to find them both last minute non-stop business class flight home for just 60K miles each, so there is some excellent points value. A true 4cpm redemption.

  23. Let’s hope that there are more mileage seats available after the devaluations! It’s a win even at more miles. You can go where and when you want… You jus need the miles…
    Let’s hope they start congestion pricing for cars in Manhattan! Same principle applies.
    I will be happier to use more miles and see others drop out of the programs. Hey if it’s travel you’re really after then you can always buy an economy ticket and go. Stop trying to beat the system. At least stop crying about it!

  24. its all about lifestyle too, do you want to fly long haul in eco/biz or 1st ?. i was able to buy 1mln asia miles miles at .0.016c = us$16k – was able to redeem 150k asiamiles to fly hk-lhr in F over CNY(super busy time), cost of a 1st ticket is us$15k , so to me there is value. Only buy miles when you have a specific trip in mind

  25. I also find that European airlines have started offering paid last-minute upgrades at the airport, which can often be a great deal. Premium cabins have become much more accessible to people who aren’t millionaires (money or points wise), which I think is a great trend. I’m happy to pay a reasonable premium over coach prices (2x to 4x) to travel in a fully flatbed on a 10 hour flight.

  26. @Lucky — I agree with most of what you say, but there’s one major point you’re missing: that family on a fixed schedule (and with kids in school) who you say can now take advantage of less expensive premium fares also has to purchase 4 or 5 tickets (they’re a family), which is too heavy to handle for most families. (Remember to factor in two hotel rooms, a large van for transportation…just more of everything.) Hence, even though the individual fare is “affordable” they’re still stuck in coach.

    That’s exactly my case. I’ve been flying for much longer than you (only because of my age — I’m not questioning your dedication!) and I have status and miles everywhere. Yet, today I’m married and have two kids so taking the family on vacation is: a) not affordable outside of coach, and b) the miles are generally useless as we follow a rigid vacation schedule and it’s impossible to find 4 awards in biz/first during the dates we need (which are rush vacation days to begin with).

    So despite my status and miles cache, I only use those when I travel alone or with my wife.

  27. What A.S. said is exactly right. I am in the same situation as he is. Wife and 2 kids. Have been travelling for work going on 20 years and using miles for as long as that.

    Used to be very easy to fund 2 trips a year in J cabin for me and the family with miles. The earnings rates were good and redemption levels reasonable and the availability was always there, at least with AA/CX etc.

    But at some point, the availability went to heck and now the airlines are giving us haircuts on earning while simultaneously upping redemption rates. Couple that with generally poor predictability of availability and a competitive global market place for fares at all levels, and miles are indeed worth less.

    And of course…while $1500 in J to Europe is a great fare, It is really $6000 for a family of four (and we can’t write that off come tax time either I may add). Coach may be closer to $3000. That $3000 I would personally rather spend on a nicer hotel at the destination where I’ll spend 10 days with the family. And what if I want to take 2-3 vacations a year? $20k in airfare to Europe only? For Asia those fares don’t exist with the same frequency and if they do, one has to position to Colombo etc. Has Lucky ever traveled with young children? Has he had to worry about their health and safety or if nothing else how quickly they become bored? As a parent, I will fly Y on the most direct routing with the least stops over a convoluted itinerary in J or F. I’ve done both with my kids and I understand the trade-off. Lucky doesn’t (no disrespect meant…it is simply what it is).

    This post certainly shows that Lucky isn’t married, has no kids, and doesn’t understand in the slightest what travel is like for families. I suggest we all view his posts through the lens he writes them….as a single male self-employed person without kids, little to zero schedule to follow and plenty of money to spend.

    For 99.9% of us in the real world, the real world is very different. Accordingly, some of his attempts to debunk “excuses” families have come across as condescending and douchy. My 2 cents.

  28. I look at the costs and availability from yesteryear as kinda like “sunk costs.” They are done, gone, and really not relevant to what we have today. Yes, it may take more miles to get an equivalent – though, as you note, better – premium cabin product than it did 10 years ago. However, for me, I started really focusing on miles and points about a year ago when I discovered this blog and others. It inspired me to start my own blog, but what is the same for me is that I really can’t do more than one big trip per year. Most of my travels are weekend road trips with a few fly-away weekends for which I can tolerate economy and are cheap enough to pay for. Since I am not constantly doing international trips that I would prefer to do in business or first, I am ok with having to pay more per seat in miles. There are methods to earn enough miles for such a use. My goal is to do a blow-out dream trip to Asia in a few years and I am trying to build a balance of ThankYou Points, Amex Rewards and Chase Ultimate Rewards toward that goal. Of course, if I want to use them before – or if program changes prompt me to do so – can put them to use before that time.

    So I don’t consider the game over, but rather just different. And for someone who is fairly new to the “hobby” of points and miles, I don’t have a big basis of comparison. It is what it is and I still see a ton of opportunity. Keep up the good work on the blog with information and inspiration.

  29. The game for wealthy bloggers, and executives with huge amounts of reimbursable expenses, goes on pretty much unaffected. The game for folks with only moderate incomes, who by getting 15 to 20 credit cards a year, and doing extensive study of award programs and loopholes, could fly TATL in FC and stay at big city Hiltons with free full breakfasts, paying only airport taxes, museum tickets, train passes and meals, is over. One still can, as Derek said above, amass enough miles and points for one future blow out dream trip. It’s being able to affordably do that every year that has come to an end.

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