Why I don’t always book the cheapest award tickets

Dec 14, 2019

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When you go shopping for any product, be it a new phone or a piece of clothing, you want to look for the cheapest price possible. Assuming you can get the same item for less money, it’s a no brainer. But this logic doesn’t always work when it comes to booking award tickets with your frequent flyer miles.

In fact, there are a number of times where I’ll consciously go out of my way not to book the cheapest possible ticket. Even once I’ve decided on the flight and route, I’ll occasionally choose to spend more miles than I have to. Here are a few reasons why.

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Value of the miles

It’s important to understand that 1 mile from airline A and 1 mile from airline B are rarely worth the same thing. TPG publishes a points and miles valuation each month from different airlines, hotels and credit card companies, but this is only meant to be a starting point. You’ll have to look at your own travel and make necessary adjustments. For example, American Airlines AAdvantage miles and United MileagePlus miles are valued almost equally at 1.4 and 1.3 cents apiece respectively. However, if you live in San Francisco you’re likely to value United miles much higher, and if you’re based in Miami you’ll get more out of AAdvantage.

But those differences are pretty minor. Let’s take a look at a more extreme example, where spending more miles actually costs you less. Japan Airlines offers one of the world’s best first-class experiences aboard its fleet of 777-300ER aircraft. You’ll find these flying to a limited number of destinations, including New York (JFK), Chicago (ORD), Los Angeles (LAX) and San Francisco (SFO).

Related: Spa at 35,000 feet: A review of Japan Airlines in first class from New York to Tokyo

(Photo by Samantha Rosen / The Points Guy)
(Photo by Samantha Rosen/The Points Guy.)

You can book one-way first-class awards from the U.S. to Japan at the following rates:

Now before I get too nitpicky I have to say that either of these options represents an incredible deal, and if you only have one type of miles available to you you shouldn’t think twice about jumping at any chance you get to fly JAL first class. But assuming you have plenty of both Alaska and American miles available, which option is better for booking?

On the surface, 70,000 is less than 80,000, so Alaska looks like the better option. But let’s dig a little deeper and look at how much those miles are worth. TPG values Alaska miles at 1.8 cents each, making 70,000 miles worth $1,260. Meanwhile, at 1.4 cents each, 80,000 American Airlines AAdvantage miles are worth $1,120. This means that from a value perspective, you actually end up saving about $140 by spending an extra 10,000 miles and booking through American Airlines AAdvantage.

Related: Choosing the best credit card for American Airlines flyers

Another way to think about it is that JAL first class is one of the best possible uses of American Airlines miles. Between the quality of the product and the amount of miles it’ll cost you, it’s really hard to do better. Meanwhile, JAL first class is a great use of Alaska Airlines miles, but it’s just one of many good redemptions. After you book your JAL trip, those Alaska miles will give you more good options down the road.

Ease of replacement

The value of any object is directly related to its supply and demand. In the case of airline miles, supply would be how easy it is to earn them and demand would be the high-value redemption options that make you want them in the first place. Both of these factors weigh on TPG’s valuation of different mileage currencies, but I think most people would do well to focus more on the supply side when they’re deciding what type of points to use to book a given ticket. In fact, this JAL first-class flight is a perfect example of why.

Related: How to earn American Airlines miles

Even though they’re the most valuable individual airline miles, Alaska Airlines Mileage Plan miles are some of the hardest to earn, much more so than American Airlines. Neither Alaska nor American partner with any of the major transferable points currencies except for Marriott Bonvoy, so the easiest way to earn these miles is by signing up for travel rewards credit cards. Alaska has two credit cards, the Alaska Airlines Visa Signature® credit card and the Alaska Airlines Visa® Business credit card. Both cards are offering a welcome bonus of 40,000 miles after spending $2,000 in the first 90 days, meaning the average person can easily earn a maximum of 80,000 Alaska Airlines miles.

By comparison, American Airlines has a much larger portfolio of cobranded credit cards issued by both Citi and Barclaycard:

The information for the Citi AAdvantage Platinum Select card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

This means that the average person can easily rack up well over a quarter million AAdvantage miles through credit cards alone. Once you spend down your Alaska Airlines miles you’re going to have a much harder time rebuilding that stash, but topping up your AA balance is comparatively easier. All else being equal, that’s a pretty solid reason to spend your AA miles and saver your Alaska miles when given the chance.

Related: How to earn miles with the Alaska Airlines Mileage Plan program

Fuel surcharges

While the goal of collecting points and miles is to travel for free, every award ticket you book is going to have some degree of taxes associated with it. These might be minor, in the ~$5 range, or they could balloon to $1,000 or more depending on what program you book with. I’ll happily spend more of my points and miles if it means I can hold on to my hard-earned cash instead of paying hefty taxes and fuel surcharges on award tickets.

A prime example of this is Lufthansa first class, one of the best possible ways to travel between the U.S. and Europe. The cheapest way for most people to book this ticket from a pure miles perspective is through Aeroplan, which charges 70,000 miles, worth $1,050 based on TPG’s valuations. However when you get to the checkout page you’ll see that there’s also about ~$785 in taxes, nearly doubling your cost.

You could book the same ticket through Avianca LifeMiles instead, for a modest 87,000 miles, worth $1,479 based on TPG’s valuations. After adding in the $5.60 in taxes, your total cost is still about $350 lower than if you booked through Aeroplan, and most importantly you can book this award with practically no out of pocket cost.

Related: Ultimate guide to taxes and fees on Aeroplan award tickets

Bottom line

Deal hunting is always a good thing, and there are plenty of ways to save money on award tickets by leveraging limited-time transfer bonuses or partner award charts.

However, you shouldn’t just settle for the ticket that costs the fewest number of miles. You also have to consider how much those miles are worth, how easy they are to replace, and any taxes or fees associated with the award in order to truly pick the best value.

Featured photo by Eric Rosen/The Points Guy.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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