A lot of people in the award travel world will go back and forth with what value they were able to obtain with their miles or points. We use a valuation of cents per point (cpp) or cents per mile (cpm). The purpose of that valuation is to ensure that we are getting the best bang for our miles/points. So what is the value of your miles?
The problem with it is what the valuation is actually rooted in. Is it the actual value of the ticket, or is it the value of what you would be willing to pay for that ticket, or is it the value of what it would have cost you for that ticket?
Here is an example:
You have a first class ticket to Singapore and then Australia. That ticket shows a cost of $21,000 if you were to use cash to purchase it. You use 140,000 miles.
– Actual Value of Ticket – That would mean the actual value of the ticket to determine your mile valuation would put the value you are obtaining at a staggering 15 cents per mile! That is huge!
– Value of What You Would Pay – Say you are willing to pay $2,200 for that ticket (in coach, of course). This puts your mile valuation at 1.5 cents per mile. A greatly decreased number from what the actual value determination would be.
– Actual Cost of Ticket – This is what the ticket would actually cost you (again, in coach). In the above case, that is what you would be willing to pay. In this case, it is what you would have to pay for this ticket. Let’s say it is $2,500. That puts the valuation at 1.7 cents per mile.
So which is the correct valuation to use? Obviously, if you want to feel really good about obtaining the greatest value from your miles, you would want to use the actual value of the ticket. The truth is, none of us would ever actually pay that amount to fly first class, so it is not the best metric to use. Most bloggers prefer to use the valuation of what you would be willing to pay. That makes it a little unfair, though, when you are redeeming for premium cabin tickets. In the above example, if booked on United, you could redeem for coach for that itinerary for 65,000 miles instead. That would be what you would probably want to use your value metric based on what you would pay since that is the actual ticket you would be purchasing. It is a little unfair to use that same metric for every award redemption since award redemptions for premium cabin tickets require many more miles.
So why is this important? It has importance when you begin looking for the best way to spend your miles. Some people will want to get the absolute most from their miles and will use their miles for premium class travel for that reason. For other people, the value that they are looking for is to be able to take as many people with them on the trip so that means redeeming for coach tickets. I have recently booked tickets for people who flew in business and for people who flew in coach. It all matters what you are looking to get out of the experience. If you want to experience the most comfortable air travel possible as you make your way half across the globe, then you will redeem for business or first class. The problem with that is that it normally takes 1.5 times the miles required for a coach ticket to the same destination (for business) and around 1.8 times the miles for first class. If you have the miles and are looking to book only for yourself, then by all means book in business. However, if you want to travel with family or friends, it can be hard to book business/first when you compare what you are getting out of it. For example, a recent itinerary I booked was for two friends that were traveling to Europe together. It cost 60,000 miles a piece for their itinerary. For business class tickets, it would have cost 100,000 a piece. So, for the two of them in coach, it cost a total of 120,000 miles instead of one business ticket for 100,000 miles. If you will benefit more from being able to share the experience with a friend or family member than enjoying the ultimate out of the experience, then you will want to redeem for coach.
As with many things, your mileage may vary (I’ve been waiting for a place to throw that pun in!), but hopefully this writeup will help you with that decision a little bit as you plan your trip with your hard-earned miles.