Sunday Reader Email Question: What Mile to Cent Ratio Is a Good Deal for Awards?

TPG reader Chris writes:
"My question: When booking an award ticket at what mile to cent ratio makes it a good deal? I recently booked a roundtrip domestic ticket on Delta using 25,000 points (their lowest tier) that would have cost me $420; therefore I got 1.68 cents per mile. Additionally, is it better to use points for upgrades rather than economy seats?"

The answer is: it depends on your situation. I know many people who are miles rich and cash poor and would prefer to use miles to book flights that will save them money. I have been in this situation before and (gasp) have even used miles for domestic coach flights when funds were tight.

What would I recommend as a general guideline? For most US airlines, I'd personally want at least 1.5 cents per mile to feel good about the redemption.

For me, I value airline elite status, so I pay for all of my domestic flights since I get upgraded on them. Nowadays on my awards, If I'm not getting 3 cents per mile in real value (not face value of the ticket), then I don't redeem.

What do I mean by real value? It's an internally calculated and completely unscientific number of what the award is valued to me. For example, my 120,000 Delta mile business class trip to Spain and Mauritius had a face value of over $9,000 if I bought it outright online. I never would have paid $9k, so I can't claim that my 120k Skymiles had a value of 7.5 cents a piece. However, I conceivably would have paid $3,600 for this trip - maybe more, but probably not. It's really not an exact science, but you get my drift. In the end, I had the miles and I wanted to go to Spain and Mauritius so I pulled the trigger. Simple as that. I probably wouldn't have done 5 nights in Mauritius if I couldn't fly business class (and since I won't spend $9k for a ticket), my miles opened doors I never would have walked through. That makes me happy.

What I recommend is to go with your gut. If you feel good about an award, then book it! Miles are meant to be used. Generally they devalue over time, so if you find something that looks good to you and it's going to save you money and you are happy, then book, book, book! Too many people are pack-rats with their miles and are holding off for unrealistic awards. Sometimes redeeming for a domestic ticket can make a lot of sense - don't feel bad about it as long as it satisfies your needs.

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As for upgrades, I generally do not find them to be worthwhile. There are so many co-pays and fare restrictions nowadays, it can be cheaper to buy a discounted business class ticket. Plus, if your flight is canceled or messed up in some way, you can be reaccommodated in coach and you only earn miles on the coach fare purchased. Spending a little more on business class or just using miles for business can make a whole lot more sense (of course this varies domestic vs. international), but I generally don't recommend mileage upgrades (though Delta K fares to Hawaii plus 30k to upgrade roundtrip can make more sense than their crazy mileage amounts needed for awards).
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