Sunday Reader Question: What is the Best Strategy for Domestic Travel?

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TPG reader Mike writes:

"What is the difference in strategy in reward cards and programs to sign up for if your goal is more domestic travel vs international travel. A lot of articles I see you write explain how to maximize the benefits of international travel since it can be so expensive. But for myself, I have a tendency to do mostly domestic travel. Is there a different approach to using the the rewards programs if you are focused more on travel (flights and hotels) in the US? I think others may appreciate an article on that topic."

I do like to use mile for international trips, but I also redeem for domestic trips, in coach and first class, too which has allowed me to visit family and friends when fares were prohibitively expensive. I don't think the concepts are much different if you prefer to redeem for domestic versus international flights - the bigger considerations are things like your home airport and what class of service you like to fly. That being said, some programs and credit cards are better for domestic flyers, so here are my 5 tips on building a strategy that will maximize your domestic awards.

1. Evaluate whether fixed value programs like Capital One and US Bank Flexperks provide more value than traditional mileage programs. Having a Capital One Venture card basically gives 2% of your spend back in the form of travel. If you spend $30,000 a year, you'll get 60,000 points, which is worth $600. Fixed value programs are better for people who redeem for cheaper flights and need the flexibility of booking any flight. The main downside is that expensive flights, especially those in business and first class, become exorbitantly expensive using fixed value points because the redemption is tied to the cost of the ticket vs. traditional mileage programs where first business is usually about twice as many miles - even though it may cost 5-10x more to purchase.

2. Of the four major domestic carriers, I'd rank domestic saver award availability as follows (from best to worst): American, United, US Airways, Delta. Of course this all depends on your home airport and where you fly, but that's been my experience. Delta tip: Redeem on partner Alaska Airways where possible. They have better award availability and will always price at the saver level.

3. Leverage one-way awards. I prefer to focus on building up American, British Airways, Alaska and United miles because they allow me to book one-way awards at half the price of a roundtrip. Other programs, like Delta, US Airways, and Aeroplan charge roundtrip prices, no matter what. Having the ability to book one airline on an outbound and another on a return greatly increases the chances of booking a saver award.

4. Consider Southwest - especially for their companion pass. Southwest's frequent flyer program is a hybrid fixed value/ traditional program, that offers the ability to buy any flight, but at three different tiers depending on capacity controls. Points are worth the most when redeeming for Wanna Get Away fares- I recently got about 1.8 cents per point on a redemption. The companion pass is an incredible benefit you get when accruing 110,000 points from their credit cards- which isn't too hard to do since you can get 100,000 points from getting both the personal and business Southwest Plus credit cards (50,000 each). For more on the companion pass, check out this post. For a short time, Southwest will let you transfer to Airtran and then back into old Southwest credits, which can be a good value for domestic awards.

5. Consider British Airways Avios. British Airways may be the flagship carrier of the United Kingdom, but they have an incredible frequent flyer program for domestic US flyers. BA is known for huge fees on award tickets, but they don't apply to domestic US awards on oneworld partner American Airlines - plus they have a distance based award chart that starts at just 4,500 Avios for a one-way flight. Plus you can book one-way awards and there are no last-minute booking fees (vs. $75 on American and United).

The key to a successful points strategy is building one that gives you many options. Credit cards and airline frequent flyer programs have their strengths and weaknesses so leverage each to their full potential. Whether you fly international first class or domestic coach, I still think having transferable points like American Express Membership Rewards and Chase Ultimate Rewards is a smart move because you get the best of both worlds: the ability to transfer to airline partners in all three major alliances as well as the option to use the points at fixed value rates for "anytime" flights when needed.
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