Airlines don’t make it easy to evaluate your options when it comes to redeeming miles. Instead of giving you a single price in miles, typically you have to evaluate multiple options under a variety of scenarios. I typically fly American Airlines. As I planned for an upcoming trip, I found myself wondering whether it was a better deal to buy a ticket and upgrade to first class with miles or to use miles for a first class award ticket.
It turns out the answer depends on the cost of the ticket and the availability of 3 different types of award tickets (Saver, Anytime 1, Anytime 2). What a headache! I take readers through my evaluation of those options for a recent trip and offer some thoughts on how to make the best choice.
Using the Award Chart
To see how challenging this exercise can be, lets take a look at the award chart for each option. Rather than go through every possible scenario, let’s keep it simple and focus on a domestic flight in first class.
Upgrade with Miles Chart
Redeeming Miles for First Class
I’m planning to take a short trip to Cabo San Lucus in Mexico. Since I have a limited window to use my vacation days, I wanted to maximize the limited time available and fly domestic first class. My choices were to upgrade a domestic economy ticket to first class or use miles for an award ticket.
To keep things relatively simple, my example will focus on a round trip flight from the east coast to the west coast. Option 1 will represent purchasing an economy ticket and upgrading to first class with miles. Option 2 will represent purchasing a first class award ticket with miles.
Most people flying economy purchase discount tickets, so we will exclude full fare economy ticket prices in this example. Discounted economy tickets cost 15,000 miles and $75 to upgrade into first class. In the rare case you purchase full fare economy tickets, the upgrade cost is just 5,000 miles. For the sake of simplicity, we’re going to assume the airline ticket is purchased as a discount economy ticket.
Domestic upgrades with miles also require a $75 processing fee for non-elite members if booked less than 21 days before travel. The fee is waived for gold through executive platinum members. I hold gold status with American, so I don’t pay the fee. I’m not going to include the processing fee in the example, but just be aware that you may be required to pay if you book less than 21 days in advance.
Or Upgrading to First Class with an Award Ticket
Option 2 would be to book the flight entirely with miles upfront. This guarantees you will be in first class since you don’t have any risk of upgrades not clearing. A one way domestic first class ticket on American Airlines requires 25,000 miles for a Saver award, 45,000 miles for an Anytime 1 award, and 55,000 miles for an Anytime 2 award.
In most cases, the choice will be between a Saver award and an Anytime 1 award. If you get lucky with the dates, you could find Saver level awards on both legs of a round trip flight. Your best chance of finding Saver award space is to start looking early. If you book closer to your flight, you may have to purchase a combination of Saver and Anytime awards.
In order to answer the question, I looked at flights from Philadelphia to Phoenix, one month in advance. A round trip ticket costs $387 (discounted economy fare) and a first class ticket costs $1,065.
If I purchased the economy ticket and immediately requested a round trip upgrade with miles, the cash cost would increase by $150 to $537. I would also pay 30,000 miles.
If I decided to use miles for the full cost, I would be required to pay 3 potential amounts of miles. Assuming I’m lucky and Saver tickets are available on both legs, a round trip ticket would cost 50,000 miles. If a Saver award is only available on one of the two flights, the total cost would be 70,000 miles. Assuming no Saver awards are available, the total cost would be 90,000 miles.
Evaluating the Options
One way to consider your options would be to assume the $1,065 first class ticket represents a reasonable market value of a first class ticket to Phoenix. By purchasing a discount economy ticket and upgrading with 30,000 miles, your miles represent $.0176 of value ($528 / 30,000).
If you instead purchased a first class award ticket, your miles would be valued at one of three potential values. With two Saver awards, your miles represent a value of $.0213 ($1,065 / 50,000). One Saver and one Anytime award represent a value of $.0152 ($1,065 / 50,000). With two Anytime award redemptions, your miles represent a value of $.0118 ($1,065 / 90,000).
So Which is Best?
Since upgrading with miles represents $.0176 of value, it makes sense to use miles for a domestic award if you can achieve a better value than $.0176 per mile. In my example, the only scenario that exceeded that value was a round trip flight with two Saver award tickets. The 2 Saver award tickets represented a value of $.0213 per mile.
Any Other Considerations?
The average frequent flyer typically doesn’t have large balances of American Airlines miles available to spend. They are far more likely to have enough miles for a few 15,000 domestic upgrades rather than enough miles for a few 25,000 to 45,000 mile domestic first class award tickets.
For those people with enough American Airlines miles to consider multiple domestic first class award tickets, I believe your far better off using those miles for international business or first class flights (Singapore Suites, Etihad Apartments, and Emirates first class).
My example is simplified and makes some overly general assumptions about ticket prices. However, I think you can draw some reasonable guiding conclusions when redeeming miles.
- For last minute decisions, upgrading an existing economy ticket to first class offers better value than purchasing an award ticket in miles.
- The one exception to this would be if two Saver level award tickets priced at 25,000 miles are available on both legs of the trip. Saver level award ticket space generally has more availability when booking greater than 20 days in advance.
When spending miles, I always try to extract the most value possible. Just keep in mind, miles routinely devalue over time. Spending your miles on anything is always better than letting them expire.