Author Charles Bukowski said that writing about writer’s block is better than not writing at all. We think the same can be said of the upgrader’s block, so that’s exactly what we’re going to do: write about it with an insight series that will get you to be an Upgrade Maestro.
We’ve often said that the art of upgrading is largely a mental thing–something we call “The Upgrade Mindset.” Upgrader’s block, therefore, just may be the lack of it. But happily, that can be fixed with a little focus.
It came to light in a recent chat with an FCF member. He said he couldn’t understand why people hadn’t come around to this way of thinking about booking premium flights.
So, we thought of providing some of our upgrade mentality and related information and motivation. In this first installment, we look at When to Use Your Miles—which you already have.
When To Use Your Miles?
Let’s say you’re looking at booking a trip to London and wondering, “mmm, should I buy the ticket with cash or use my miles?” That’s a very good question, and the answer could save you a lot of money—and upgrader’s remorse. Many travelers answer with, “Well, I have enough points, so I’ll just use them.” WAIT! You need to use your miles when they’re good value because their value changes relative to the cash fare at hand. So how do you work out the value? It’s really easy.
The value of a mile varies, but the method of calculating it doesn’t. And once you know it, you’ll know exactly what to do.
Calculating the Value of a Mile When Using a Free Award
Money Saved (cost of ticket or cash paid, minus award taxes) ÷ Award Miles Used = Value of a Mile
Just divide the amount of money you saved by the number of miles used to claim the award ticket. “Money saved” is simply the cost of your flight if you had paid for the ticket with cash, minus award ticket taxes.
For example, let’s say the lowest premium fare—cash paid—is $2,200, and it takes 100,000 miles to get that ticket, plus $200 in award ticket taxes, thus on this flight the value of a mile is 2¢: $2,000 ÷ 100,000 miles = 2¢ per mile.
Calculating the Value of a Mile When Using an Upgrade Award
When you’re upgrading from a paid ticket, you calculate a little differently.
Savings ÷ Miles Required = Value of a Mile
Assume an economy ticket with American Airlines costs $500, plus it has a $700 co-pay. That’s a total of $1,200. Say your Business Class ticket costs $3,000. It takes 50,000 miles round-trip to upgrade the paid economy ticket to Business Class.
To calculate the money saved, simply deduct the cost of the paid ticket from the value of the upgraded award ticket:
Business Class Fare – Upgradeable Economy Fare (including co-pay, if any) = Savings: $3,000 – $1,200 = $1,800.
So, the Savings ÷ Miles Required = Value of a Mile: $1,800 ÷ 50,000 miles = 3.6¢ per mile.
What Represents Good Mile Value?
Everyone you talk to will give you a different answer. My answer: At least 3¢.
Why do we recommend at least 3¢? You must consider other aspects, such as credit cards that earn cash back at 2%: Some credit cards earn ~2% cash back. So, for every dollar spent, you get 2¢ back. So why play mileage games if your return on the effort spent is no more than an effortless cash-back card that allows you to do whatever you want whenever you want with the perks?
In other words, if you’re only getting around 2¢ value for your miles, get a cash-back card and never think about miles again.
Don’t you love the decisiveness of math?
Other Factors to Consider and Keep in Mind
You have a lot of miles: Be wary of that one. You most likely have a lot of miles because, thanks to terrible award space availability with your airline-specific program, you can’t use them. Our advice is to have an Amex Rewards, Capital One, Chase, or Citi card because they give you a lot of flexibility; these credit card points accrued can be transferred to many different airlines.
Earning elite and award miles: When using award miles for tickets, you don’t earn award miles OR elite status, so you want a good return.
Examples of Using Miles When Value Is High
All Nippon Airways First Class: Chicago to Tokyo costs $21,273. It takes 150,000 miles (or similar with partners, see link below) to get that award. The math: $21,273 ÷ 150,000 miles = about 14¢ per mile. Great return! And again, here is a recent FCF Sweet Redeem find to that effect: Cash OR Miles > First Class > Single Seat > 2024 Travel> Handful of All Nippon Airways from Chicago to Tokyo.
Cathy Pacific First Class: Los Angeles-Hong Kong costs $20,061. It takes 250,000 miles (or FEWER with partners, see link below) to get that award. So, the chalkboard, please: $20,061 ÷ 250,000 miles = about 8¢ per mile. Ka-ching. And whaddaya know, here is a recent FCF Sweet Redeem find to that effect: Cash OR Miles > First Class > Cathay Pacific> Los Angeles and Many Other Cities to Hong Kong & Beyond > 2+ Travelers.
The High Business Class Fare: San Francisco to Hong Kong on Cathay Pacific is $7,259 in Business Class. It takes 168,000 miles (or FEWER with partners, see link below) to get that award, so for this flight, the value of a mile is: $7,259 ÷ 168,000 miles = about 4.3¢ per mile. Not bad. Here’s a recent FCF Sweet Redeem to illuminate further: Cash OR Miles > Business Class > Cathay Pacific> San Francisco and Many Other Cities to Hong Kong & Beyond > 2+ Travelers.
The Short Notice Business Class fare: So, you book on shorter notice. Tch tch. Fares can be sky-high if you do not have a three- or four-month advance, so using miles can save you a small fortune. A two-week advance purchase fare in Business Class on American Airlines from Los Angeles to Paris is $6,296. It takes 115,000 miles (or less with partners) to get that award, so on this flight, the value of a mile is $6,296 ÷ 115,000 miles = about 5.5¢ per mile. Very good return.
Upgrading to Business Class on a Major International Airline: New York to Hong Kong on Cathay Pacific in Business Class costs $9,431, while the upgradeable fare costs $2,693 (Premium Economy; R). It takes 110,000 miles to get an upgrade, so on this flight, the value of a mile is $6,738 (money saved) ÷ 110,000 miles = 6.1¢ per mile.
Upgrading to Business Class on a Major U.S. Airline: Houston to Santiago on United costs $6,030 in Business Class, while the upgradeable fare costs $2,237 (economy ticket + co-pay cost). It takes 50,000 miles to get an upgrade round-trip, so on this flight, the value of a mile is $3,793 (money saved; $6,030 – $2,237) ÷ 50,000 miles = about 7.5¢ per mile.
Enough Mile-Mania. Here’s When Not to Use Miles:
Of course, it’s when the calculator tells you so. That’s liable to be the case when fares are low. If you’re booking further in advance or you’re flexible with dates or destinations, you can get great low fares for cash. So, save your miles for when they’re worth more—or get a cash-back card and forget about all this miles shhtuff!
For example, the lowest fare we found for New York to Frankfurt on Delta in Business Class is $2,583. It takes 460,000 miles to get that award, so on this flight, the value of a mile is: $2,583 ÷ 460,000 miles = about .56¢ per mile. Mmm, that doesn’t pass our 3-cent test. Scratch Delta credit cards?!
Or take New York to London in First Class on American. The lowest fare is $3,732. It takes 158,000 miles to get that award, so the value of a mile is: $3,732 ÷ 158,000 miles = about 2.3¢ per mile.
Upgrader’s Block Summary
If your return on miles is less than 3¢, consider buying the ticket and saving your miles for another higher-value flight. Of course, sometimes you make decisions that go beyond the simple math, but it’s good to have a ballpark method handy, ready for your smartphone calculator. Why? So, you don’t get stymied or give up or avoid playing upgrade games when the opportunities are indeed often lucrative. That’s all.