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United and American are both currently offering promotions on purchased miles, so I thought I would take a look at each promo and whether they are worth considering.
Now through 11:59pm CT on May 20, 2013, United is offering up to a 30% discount on purchased United miles. Here’s how it works, MileagePlus members will save 30% on the purchase of 15,000 ore MileagePlus award miles or more, or save 20% on the purchase of 5,000-14,000 miles. You can buy miles for yourself, or you can gift miles to others. You can buy up to 100,000 miles per calendar year.
Purchased miles usually cost 3.7625 cents each, but with this offer purchases of 5,000-14,000 miles cost 3.01 cents per mile, and purchases of 15,000 miles cost 2.63 cents per mile.
So let’s say you wanted to purchase enough miles for a roundtrip domestic economy ticket. Those 25,000 miles would cost you $658.44. Not worth it at all since you’d be hard pressed to find a domestic economy ticket that costs that much that you’d be able to redeem a saver level award for. If you were to buy 100,000 miles, you’d pay $2,633.75. That’s enough for a roundtrip business class ticket from North America to Europe, but unless you have a specific redemption in mind that you know you are going to use these for, I would suggest steering clear until there’s another buy miles bonus or discount at a higher percentage.
Also, compared to the frequent 100% bonuses on buying miles from United’s Star Alliance partner Avianca (the most recent one ended April 30), where you can purchase miles for as low as 1.5 cents each, this isn’t a bargain at all.
American Airlines is also offering a bonus on purchased miles of up to 30% now through May 17, 2013. You’ll earn 5,000 bonus miles if you purchase 20,000-29,000 miles; 8,250 miles if you purchase 30,000-39,000 or a 12,000 mileage bonus if you purchase 40,000 or more miles.
You can buy up to 60,000 miles per account per calendar year. This is only good on a single transaction of 20,000 or more miles. Also remember that you pay a 7.5% tax and a $30 processing fee.
So to take an example, if you were to buy the maximum 40,000 miles, you’d end up with 52,000 miles for a total cost of $1,100. That works out to 2.11 cents per mile.
By comparison, AA miles usually cost between 2.3-2.95 cents each, so you’re not getting an amazing deal here but it is a decent discount. However, that $1,1000 is still cheaper than some 50,000-mile redemptions like a one-way business class ticket to Europe, which can run in the range of $2,000-$3,000, or a roundtrip transcontinental business class ticket, which is going for over $4,000 for much of May.
However, neither of these offers is that exciting, even compared to buy miles promos these airlines have offered in the past. If you are close to an award ticket and need a few extra miles, then this is something to consider, but I generally wouldn’t buy these miles just to buy them unless I had a specific award available and put on hold. The standard sign-up offer for these co-branded cards is 30,000 miles after you spend $1,000 in the first three months, so the current bonus is a significant step up. TPG values United miles at 1.5 cents apiece, so this 50,000-mile sign-up bonus gets you $750 in value.
The standard sign-up offer for these co-branded cards is 30,000 miles after you spend $1,000 in the first three months, so the current bonus is a significant step up. TPG values United miles at 1.5 cents apiece, so this 50,000-mile sign-up bonus gets you $750 in value.