What exactly are airline miles, anyway?
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Airline miles. You’ve certainly heard of them. Maybe you rabidly chase them. Or maybe you view them akin to snake oil, in that they entice you but don’t ultimately turn out to be as valuable or useful as you might have hoped.
Or, if your job doesn’t require you to travel on a regular basis, and you make most of your purchases with a debit card or non-travel credit card, you might not be familiar with the massive world of airline points and miles.
But no matter which of those buckets apply to you, know that airline miles are a big business.
It has been over 40 years since the modern airline loyalty programs were launched — and plenty has changed in those decades. Commercial air travel went mainstream and airline miles underwent a major transformation of their own. Long gone are the days where you earned them just for flying. These days, you can get them for buying your mom flowers or buying yourself a toaster. With airline co-branded credit cards, you can earn miles for anything you can charge on a credit card.
Let’s cover the basic playbook you need to know to take advantage of airline miles no matter your situation.
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When and why were airline miles created?
In the beginning, an airline mile earned was, well, a mile flown.
The miles were earned mostly by business travelers making the weekly slog from Atlanta to Topeka or a hundred other cities. It didn’t take long for that to change.
Today, airline miles come in many shapes, sizes and values and can be earned (and redeemed) without you ever needing to step foot on a plane.
It’s been just about 40 years since the first airline mileage programs started, at American Airlines and shortly thereafter at United Airlines. At that time, and for a number of decades thereafter, any time you boarded a flight you’d earn miles based on how far you flew. Fly a few round-trips and you could redeem your miles for a free airline ticket.
Over the years that equation got a lot more complicated (though one surprising benefit of the pandemic was more relaxed rules surrounding the use of airline miles).
In the decades prior to the creation of frequent flyer programs, U.S. airlines had been regulated by the government, which restricted their ability to compete.
In the new era of deregulation, airlines were eager to keep their customers coming back and to acquire new ones. Airline miles were a way to keep road warriors from having a wandering eye. For a period of time, some airlines were so worried about a customer cashing out their miles and moving to another carrier they would actually deposit some fresh miles in accounts when a customer redeemed their entire balance.
What is an airline mile now?
It’s been quite some time since a mile was awarded for each mile flown across most programs.
In some cases, airlines aren’t even calling them miles anymore. You’ll find Southwest Airlines Rapid Rewards program issuing “points,” just like JetBlue’s TrueBlue loyalty program. It might be easier to think of miles (or points) as a form of currency. Just like saving up for a new TV, most people save up their points and miles while planning a dream vacation somewhere.
But these points and miles can also come in handy for a quick trip to grandma, family emergencies or a weekend away.
It used to be much easier to understand how to redeem airline miles, with only two published “prices” for most flights: standard and some sort of less expensive, “saver” pricing.
Back in the early days, 25,000 miles was a “magic” number, in that if you had 25,000 miles that was the price for a saver award ticket anywhere in the domestic U.S. Going way back, those awards also used to come with a certificate for a hotel and rental car that you could potentially redeem for a whole vacation. Generally speaking, flights were less full in the early days, which meant you had a reasonable shot of finding that 25,000-mile award for your whole family, whether you wanted to head to Disney World or Hawaii.
When you did need to fly during busier times, the most expensive seat you’d find would require 50,000 miles round-trip for a domestic flight. For the most part, this was “last seat availability,” meaning if there was an empty economy class seat to Hawaii, 50,000 miles would get you there. These days, the busiest flights can cost you double that 50,000 miles one-way.
Current award flight pricing is much more dynamic, as airlines set the number of points needed much closer to the cash value of each flight. Airline miles are also awarded in many different ways and only rarely based on how far you fly.
Most airlines award miles based on how much you spend, and even that can depend on complicated formulas. Generally, you won’t earn miles for any portion of your ticket that’s a government tax or fee. Buy the cheapest ticket and you’ll earn significantly fewer miles than if you bought that snazzy seat in first class at the last minute.
These days, travelers earn more airline miles from activities other than hopping on an airplane.
Credit cards are a huge part of earning miles. You can earn miles for shopping through online portals that include hundreds of retailers you already patronize. You can also earn miles for renting cars, staying in hotels, paying your energy bill, filling your car up with gas and applying for insurance.
For example, instead of just shopping online at Macy’s and earning credit card points, if you click through a shopping portal first, you can also earn a multiple of 2 to 4 American Airlines AAdvantage miles per dollar for those purchases. United offers hundreds of bonus miles if you book a rental car through their website (though you want to be careful to check the price versus booking your rental car directly).
You can redeem those miles to buy a blender or steak knives or magazines – but please don’t unless that’s really want you want. The price, in miles, is generally pretty horrible for merchandise relative to what you could get from travel redemptions.
The value of an airline mile
Just to make things more complicated, not all airline miles (or points, as the case may be) are created equally.
The least valuable miles or points are generally those where the airline has given them a defined value. Southwest Airlines and JetBlue are two airlines that have essentially fixed the price of award tickets to the cost of buying a ticket outright. Some airlines, such as Delta, moved away from fixed award charts years ago. While there are still plenty of ways to get great value from Delta SkyMiles, they aren’t worth as much as American Airlines AAdvantage miles.
A few programs that have chosen to maintain some form of published award charts, such as Alaska Airlines Mileage Plan or Air Canada’s newly re-imagined Aeroplan have miles that are worth even more.
Part of the reason for the higher valuations from those airlines who maintain award charts is that there’s generally a maximum number of miles you need to redeem for an award, whether that’s a “saver” award or a more expensive standard award.
Need an example? If a round-trip flight from New York to Los Angeles will set you back 25,000 miles, it’s a much better value when the cash price of that same ticket is $800 versus $300. For programs that have a fixed value for their miles, or even dynamic pricing where there’s generally no cap on how many miles a ticket costs, it’s just hard to get as much value since a dynamically priced program will charge far more points when the cash price is $800 than $300.
All of these factors drive the methodology behind TPG’s valuations of various miles and points.
How to use airline miles
How much time do we have?
The list of ways to use your airline miles is virtually endless. As you know by being here at reading this, there are entire websites, apps and more dedicated to this topic. On top of being able to redeem miles for travel to virtually any airport with commercial service in the world, you can use them to upgrade paid airline tickets to a better class of service.
There are the most basic options to redeem miles, such as for a family trip to Disney World. In a world of dynamic pricing for award flights, a trip to Orlando can be one of the most affordable you’ll find due to the sheer volume of flights.
Hawaii has plenty of flights as well but can be incredibly popular during the holidays. For those who live on the East Coast and would prefer not to fly 10+ hours in economy class, you may need to put in a bit of elbow grease searching for flights.
International travel presents many more options.
For starters, the major U.S. airlines – American, Delta and United – all offer premium economy as an extra class of service on many international flights. Premium economy can, in some cases, be a much better experience than economy without the steep price of a business-class or first-class cabin. The seats are akin to a domestic first-class seat, with more legroom and sometimes footrests. Additionally, you’ll usually enjoy better food, baggage allowances and comfort items like a pillow and blanket.
Where international travel gets incredibly interesting is when you leverage airline alliances. All three major U.S. carriers belong to one of the three biggest worldwide alliances. American Airlines is part of Oneworld, Delta is part of SkyTeam and United is part of the Star Alliance. Each airline in these alliances has its own award charts (or just pricing if it has eliminated charts) and the prices can vary widely.
These alliances can help you in two primary ways. First, they can serve as additional award inventory for a flight from the U.S. to a major international gateway. For example, United Airlines operates flights from San Francisco (SFO) to Tokyo’s Narita Airport (NRT). In addition, their Star Alliance partner ANA operates flights from SFO to NRT as well as flights to Haneda (HND), a second Tokyo airport closer to the city center.
ANA flies to dozens of destinations from Tokyo’s airports that can be booked as connecting itineraries along with a United or ANA flight from the U.S. to get you to secondary or tertiary cities all on the same award ticket. So while United doesn’t fly to Bangkok (BKK), you can still fly there with your United miles by connecting through Tokyo on an ANA flight.
Why you should care about airline miles
If you’ve made it this far in life without investing time and energy in learning the advantages of airline miles, you might be wondering why you should start caring now.
One of the biggest reasons to care is that it’s easier than ever to earn airline miles. Credit cards have bonus categories that can allow you to earn bonus miles that can far exceed the value of a cash-back credit card or a debit card.
Another major reason to get into the points and miles game is the destinations they can unlock. Even some of the stingiest programs have phenomenal award opportunities from time to time.
Delta is famous for flash sales that can make a trip across the country or to Europe or Asia incredibly affordable. When you reduce the cost of an airline ticket to virtually zero, you have so many options. It opens up your budget so you can splurge on a special dinner on your trip or cut the cost enough to make that dream trip a reality.
You can also use your miles to upgrade to business class or first class, which means you can treat yourself to incredible lie-flat seats, fine wines and dining on your way to your chosen paradise. Also, points and miles are not an all-or-nothing proposition. If you only have enough miles for one airline ticket, you can still cut the cost in half for you and a loved one to head to Hawaii. This is especially key for families, where the price of four airline tickets may literally be the barrier to even being able to plan a vacation.
There are unique opportunities with airline miles as well, like United’s Excursionist Perk, which means you may not have to choose between Spain and Rome on a European trip – you may be able to do both for the same amount of miles.
The upshot: Just a small amount of attention can score you a flight for less than 10,000 miles to Orlando. A bit more work (and maybe a credit card sign-up bonus) can unlock a trip to Bora Bora that might not otherwise have been in the budget.
Would it be a bit cheeky to say that airline miles can make your travel dreams come true? Maybe. But there are reasons airline loyalty programs issue billions (with a “B”) of miles every year. Customers with even a tiny bit of strategy can come out miles ahead when they use them – and by default that includes you, because you’re here.
Points and miles can change your life, or at least your travel frequency and costs. They literally can open up the world and allow you to take more trips, visit more far-flung destinations, bring along friends and family or simply enjoy the good seats every once in a while.
That said, airline miles don’t generally get more valuable over time, so don’t hoard them for a retirement trip many years down the road and expect them to still be worth later what they are today. Big sign-up bonuses and lucrative bonus categories make it easy to build up enough points or miles now to redeem them for a flight quickly.
While airline miles aren’t what they were in the early 1980s, they are now much easier to earn and easier to use in everyday life – which means even infrequent travelers can unlock an award trip to a destination they never thought possible.
Featured photo by Somyot Techapuwapat/Getty Images.
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