This is a post I wrote earlier last year but decided to revise the numbers since the United devaluation to once again look at the value of premium cabins for travel.
Are Premium Cabins Worth the Premium Miles?
If you read travel blogs, you will notice after a while the emphasis that is placed on premium travel – premium travel being flights in business class or first class. This is a natural perspective because it demonstrates the incredible value that can be obtained from miles and points. But are those premium redemptions worth the premium in miles for everyone or should economy be redeemed for instead? Your mileage may vary but here is an analysis on the question to help you in your decision of how you plan on redeeming your miles and points.
Reasons For Premium Redemptions
Let’s face it – premium travel is just cool! It is an amazing experience when you are separated from a couple of hundred travelers into a group of about a dozen or a little more. Travel no longer becomes a drudgery but opens the door to the trip being part of the whole experience instead of a means to an end. The ground service is significantly better (lounges, shorter check-in lines, better customer service on a whole but especially with travel problems, priority boarding to be situated and relaxed) and offer additional perks depending on class of travel and whether it is the main airport for your airline. Once you board the plane, the on-board experience is definitely better – the seats are nicer, wider, more comfortable, more recline, better food, better service, better amenities. These are all things that can take some of the hassle and stress out of your travel experiences. To obtain this level of travel with cash is a significant increase in cash. To do so with points may not be all that greater of an amount and you can always earn more points! Here are just some of the reasons outlined to redeem miles for premium travel:
- Fewer passengers in your cabin
- Better food
- Better service – on the ground and in the air
- Better seat products
- Great recline for better sleeping
- More space for storage and seating
- Better amenities
- Tremendous value for your miles/points
Probably the number one reason that people travel in premium cabins with miles and points is great value that can be obtained. Let’s breakdown what type of value is typical for a miles redemption based on cabin type. For our example, I will use my (July) Singapore Airlines flight from Frankfurt to JFK.
|Cabin of Travel||Miles Required||Taxes for Award Ticket||Cost of Revenue Ticket||Value of Miles|
Point Value Analysis
As you can see in the table, the best redemption value for your miles is the Suites Class at a stunning 11 cents per mile! I deducted the cost of the tax before calculating the value of the miles so that is why the valuation is lower than it would be with an airline that didn’t charge as many fees/surcharges. So if you were to redeem your American Express Membership Reward points as Singapore miles (they are a transfer partner), you could get 1.9 cents per point out of your Membership Reward points. That is pretty good! However, if you wanted to go for the top redemption value with Singapore, you would redeem your Membership Reward points for Suites class gaining a value of 11 cents per point/mile! That definitely makes you feel good about your points! To make it simple, if you were to redeem miles earned from a typical 50,000 Membership Reward point offer (again, they have to be transferred to Singapore first and they transfer 1:1) and you redeemed those for economy tickets, you would see a value of $950 for your credit card sign-up bonus. That is a lot of money! What if you were to redeem them towards a Suites Class ticket? That would see you getting $5,500 value from that same sign-up bonus. That is huge!
However, is the value really that great? Bloggers talk a lot about the value of points and miles and you can see what type of value you can get from your own points and miles. But sometimes there are different bits of information that play in the valuation and calculation of those points and miles. For example, would you pay the cost for a Suites class ticket? Probably most of my readers would say no (including me!). So can you legitimately value those miles at 11 cents per mile when you would never pay that much in the first place?
One of the ways to figure value would be to consider what you would pay for that seat. However, I always look to pay the least amount possible so that wouldn’t work that well for me in my valuations. In my case, I would not pay a lot extra out of pocket for that seat simply because I try to travel as cheap as I can. Others may be willing to pay $1,800 for a Suites class seat. If that was the case, that would make the value of the miles for a Suites class sit at 3 cents per mile. Still a great redemption!
What if you were to only calculate the value at what you were planning on paying? Obviously, there are some vast differences between the quality of your travel in economy and Suites class so that wouldn’t be completely fair. So to balance it out, we can add some of the features into our valuation formula. One thing is baggage. For Singapore Airlines, the difference in cost between Economy allowances and Suites allowances is $520. If you need to take advantage of the maximum baggage, you can add that $520 to the price you were planning paying (say, the economy ticket price). With that price, we now sit $1,143. With other airlines, the cost and allowances of luggage may be greater. In addition, other airlines may offer certain perks such as chaufferred pick-ups/drop-offs. That may save you $50 in transportation costs. You may also have lounge access that you might not have otherwise. You can figure another $50 or so for that. Now you have the extras – customer service, comfort of the seat, quality of the food, value of a better night’s sleep, etc. Depending on the purpose of the trip and how much better you sleep in a Suite versus Economy, this number may add another $300 to the cost. So now we have a total value of $1,543 for our actual value in Suites class. This cost puts our points valuation at 2.7 cents per mile. We are still ahead of the economy redemption value!
One more data point
There is one additional data point that I didn’t even mention above that would come into play in the valuation of miles. If you were to pay for the revenue ticket instead of using miles, you would actually earn award miles to use on a different trip. By using award miles, you are forgoing the opportunity to earn those miles. Depending on the airline you credited the flight to, you could earn a few thousand miles that may be worth almost 2 cents per mile each themselves.
Reasons Against Premium Redemptions
Above we saw the reasons for redeeming for premium cabins with airlines. There are many! But let’s look now at the reasons against making those premium redemptions.
The Amount of Miles
First of all, the premium in miles themselves. Every airline is different, but in our Singapore example above, it takes about 190% more miles to redeem for business class as it does for economy class! For an even more eye-popping number, it takes 237% more miles to redeem for Suites class as it is does for economy! Fortunately, the difference between business class and Suites class is not too different, only 17% more miles for Suites class vs business class (and the difference is actually worth a lot more!). To put this in real life terms, for the miles required to book one ticket in Suites class, you could actually book three tickets in economy with a few miles to spare! That is significant!
Let’s look at another example. For this example, we will use a Lufthansa award ticketed with United miles. Note, because Lufthansa First Class seats can only be booked with United miles within 15 days of departure, the revenue cost of these tickets is significantly higher than it would typically be.
|Cabin of Travel||Miles Required||Taxes for Award Ticket||Cost of Revenue Ticket||Value of Miles|
First of all, Lufthansa First Class is nice but definitely not worth $11K! I don’t know who is paying that! But, when looking at this table, we see that point valuation increases tremendously when miles are redeemed for the premium cabins. We can also see that difference in mile value from Business to First class is not that much.
So, let’s first break down the argument against flying First class versus flying Business. Unless you are traveling a longer distance than just the short 7 hours of this flight, I do not believe the difference in First class warrants the 57% increase in miles. True, you get pajamas 🙂 and better food, better bedding, and a nicer seat, but the difference in miles here is much greater than I would prefer. In our example above with Singapore Airlines, the difference was 17% and the differences in travel between Singapore Business and Singapore Suites is definitely worth the extra miles. Singapore Suites is amazing! When it comes to redeeming for a premium cabin, if you have already decided to do so, it will be very much up to you to determine whether or not the difference in miles on a particular airline is worth choosing first class over business class.
What You Get for the Miles
Another argument against premium redemptions would be what you are getting for the large difference in miles may not be completely worth it. Let’s use another example to break down the real world value of redeeming for business class on Lufthansa (using United miles) versus redeeming for economy class. The difference is 20,000 miles (for Europe – 30,000 one-way in economy and 50,000 one-way in business) one-way. In my example above, the length of the flight is 7 hours and 50 minutes. Of the length of that flight, you can only have your seat reclined into a bed for about 7 hours of that. While I enjoy the food in business slightly more than I do the food in economy, I certainly do not feel that the taste alone is worth the extra miles. Focusing just on the in-flight aspect of the mileage redemptions (and forgetting things like baggage and lounge access), for a couple to fly one-way in business to Europe, they will have to use a total of 55,000 more miles (if flown on United Business) than just flying in economy. A lot of people rave about the benefits of being able to stretch out and lay down on the flight over and how relaxing it can be. While I whole-heartedly agree with how nice it is, I have spent many thousands of miles driving on the road for 12-16 hours in a day and I am never reclined while doing so. Somehow or another, I survived.:) For some reason when it comes to flying, we have to lay down for a few hours when most people actually work longer in one day than that one flight is!
Let’s take those 55,000 miles back and fly economy instead. I know, we won’t be able to sleep as comfortable. But now, what if those miles had been transferred from Ultimate Rewards? Instead of transferring them to United to fly in business class, we could transfer them to Hyatt and be only 5,000 points shy of staying in the best Hyatt hotels in the world – for two nights! Would you trade a few hours of less comfort on an airplane for two nights of supreme comfort in a luxury hotel? I certainly would!
Or, instead of a hotel reservation, what if we put those 27,500 miles a piece towards another trip. That is enough for each person to get a free award trip in the US! All for sacrificing a few hours of more comfort on the plane on the way to Europe!
Biggest Argument Against Premium Redemptions
Now, all of these arguments agains premium redemptions is assuming that you have been conservative in your credit card applications and do not travel so much that you acquire massive amounts of frequent flyer miles. If you have award miles in the high six figures or can earn them faster than you can burn them, then this post is not for you! But, if you pickup about 100,000 miles per year, then this post may help you with your choice of travel.
So, the biggest argument against in my perspective is what you could get instead of the premium cabins. Consider, for example, not redeeming for Lufthansa First class. If you chose to fly economy instead, you could actually get another ticket in economy! If you were flying Singapore Airlines, you could get 3 tickets in economy for choosing to not fly Suites. Or, instead of transferring Ultimate Reward points to United for a premium round-trip redemption to Europe (115,000 miles in business class / 160,000 miles in first class if flown on United, 140,000 miles in business class / 220,000 miles in first class if flown on partners with United miles), you could transfer them to Southwest for about $2,100 – $4,000 in Southwest airfare. That would mean two round-trips for my whole family to Florida instead of one round-trip business class ticket to Europe! That is definitely something to think about!
When I have to travel by myself, I miss my family immensely. If it was possible to bring them with me, I would in a heartbeat. From the time I take-off until I land again at home, it feels as if I have been gone for ages. Yes, premium travel is fun and everyone should experience it once, but if your premium redemption means that you have to travel alone, no amount of airline luxury will make up for the loneliness you will feel for not having family/friends with you.If you have a limited amount of Ultimate Reward points and you are feeling pressure to achieve the highest value of miles from those 115,000 points, just remember that the value of miles cannot ever take into account the value of being with loved ones. That 115,000 Ultimate Reward points could give my whole family a trip to Florida AND pay for 4/5 nights in a nice hotel so that we could all be together. I would take that over a business class seat to Europe any old day! Business class will be there forever, family is here now.
Again, if you are able to get points quite frequently through credit card bonuses, category bonuses, and spending then this post may not be for you. But if you have saved up points for a while and you feel the need to splurge because you want that high value of the points, I urge you to consider whether or not premium redemptions are worth it for you. I have flown a few hundred thousand miles in international economy and I am still alive :). It will not not that long to recover from flying economy, I promise.
Now, there will be times when it makes a lot of sense to redeem for premium cabin redemptions for the reasons I had listed in the first section. That worked out well for my family on our recent trip to Europe. Quick Note: I do not think First Class is really worth it for families with small children because of how separated the seats are apart to give each passenger a level of privacy. It can make it more difficult to keep an eye on your children and help them to feel comfortable with that environment. For them, business is best. I redeemed 200,000 United miles (before the devaluation) for our family to fly in business class (as opposed to 120,000 for economy) because I wanted our children to have a comfortable trip over (last year, it was very difficult for them to get comfortable enough to sleep on the way over) and because we needed to take a lot of luggage.
I am not trying to tell you how to redeem your miles that you have spent time earning. I am just trying to outline some perspective that may help you in the decision making process! Hope it helps!
Editorial Note - Opinions expressed here are author's alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
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