Earn or Burn your Miles and Points?

A hotly debated topic among frequent fliers is whether to hoard your miles and save them for a rainy day or spend them right away on a flight before the airline can devalue the miles.  Devaluation typically comes in the form of a revision to the program’s redemption rate meaning that you need more miles that previous to get that free flight.  The two philosophies have compelling arguments on either side.

The case for “burning” miles right away is to use the miles for a benefit before that benefit can be taken away.  I find this case applies more for those folks who earn only a limited number of miles each year.  If you only have 25,000 miles and can only get a few thousand each year, then an airline raising their number of miles for a redemption to , say 30,000, really can mess up your plan.  15 yeasrs ago many people assigned a worth of $0.02 per mile based upon a typical award.  Meaning that you could buy a ticket for $500 or spend 25,000 miles to get that ticket for free.  Now you are doing very well if you can get that type of return for your miles.  The rate is more like $0.015 or sometimes less for the value of your mile.  Alaska Air is widely considered to have the most valuable miles and Delta to have the least (they are coined SkyPesos by Gary Leff).  Most airlines have gone to a two-tiered redemption system where you can technically get a domestic coach ticket for 25,000 miles if there is available limited space or spend twice as much and get a ticket on any flight.  This means that there are only a few seats for the lower award redemption on most flights, and if they are taken, you have to fork out 50,000 miles for the exact flight that meets your plans.  Since the popular flights are the first ones taken for the limited available award seats, the remainder are usually off-peak or red-eye flights that are much less fun to take.  Many consider this a devaluation of their miles effectively meaning that you need 50k for any convenient redemption.

The savers (I admit that I am in this camp) believe that it is worth the risk that the return on miles will be lower in the future, to retain many miles so they can use them either for when they are old and no longer traveling much or for emergencies.  It is the latter of these thoughts that make me want to save miles.  As we all know, the most expensive tickets are the ones you must buy at the last minute.  However, in mileage world the flights all cost the same.  Miles are also more flexible when plans change.  Here are some examples.

My buddy at work was on a TDY trip to Iwakuni MCAS when he got word that his brother had passed away.  He had already used UA miles to book a vacation to Malaysia, but was able to call the airline and change the ticket to a trip back to New York without spending any cash.  If he had paid cash for that trip he would have been hit with a change fee of $300 and then paid an exorbitant amount for a last minute trip to New York.

Last week I went back to a Commanders Conference at Ft. Meade.  Two weeks before the event they told me that they would like me to bring my wife along since they were having a Family Readiness Group series of meetings.  I could have said no given that the price tag for a HNL-IAD ticket was $1200, but made everyone happy by spending 80k in miles and even treated my wife to FC going there.

A couple of weeks ago, we found out that my nephew was marrying his Finnish sweetheart in Finland.  My brother and sister-in-law were going, but their grown daughter said she couldn’t afford it.  I looked at the 950k of miles I had on UA and decided that she deserved to be there and got her an award ticket to Helsinki.

I admit that it is easier for me to be a saver since I earn so many miles a year.  If you have a couple of hundred thousands of miles coming in every year, I am in a good position to spend more miles on a flight since I know that I will earn them back quickly.  In the end miles are only worth what you personally value them at.  Let me know what you think and which philosophy you follow.