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How much is a mile really worth? It’s one of the fundamental questions of the points and miles hobby, and there is no shortage of blogs out there that will tell you what they think.
We’ve always been skeptical about the conventional wisdom on point values. Where are these guys getting their numbers? Is there anything more than a subjective gut feeling backing them up? So we decided to take a look at real trips booked with points by AwardWallet members.
Our goal was to come up with an objective, data-based valuation. How much do AwardWallet members actually save when they redeem each type of points? We still have a long way to go to get this right. But now that we’ve got a basic framework, it’s time to share some results.
In this post, I'll take you behind the scenes to share our current methodology and what we have planned for the future.
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How to Calculate Point Values
When we talk about mile values, we’re really asking ourselves: “how much did I save by using points instead of money?”
First, you need to find out how much it would have cost to buy (with money) the same travel you’re considering booking with points. With paid travel, this price includes all taxes and other fees.
However, with award travel, there is often a cash component to your booking. Points or miles typically cover the base airfare but not taxes and carrier-imposed surcharges. For example, let's say you need to decide between paying $783.50 for an economy flight from the U.S. to Europe or booking an award for 30,000 miles and $65 in taxes and fees.
To determine how much you saved by using points, you need to account for the out-of-pocket cost.
- $783.50 = Cash Price
- 30,000 miles + $65 = Award Price
If you pay cash, your total cost is $783.50—which includes all the taxes and fees. But if you book with miles, you’ll still have to pay $65. So, to calculate your savings, you need to subtract $65 from the cash price.
- $783.50 – $65.00 = $718.50 (Savings)
In this example, you saved $718.50 by using 30,000 miles to book your trip. When we put mile values in a “cents-per-point” format, we’re really just breaking down the question above into “how much did I save with each point I spent?”
Take your savings from the previous step and divide by the number of points you spent.
- $718.50 / 30,000 = $0.02395
This equation gives you dollars per point. Since the savings per point is generally quite small, it’s usually easier to multiply by 100 (or move the decimal two digits to the right) to get cents per point.
- $0.02395 x 100 = 2.395 cents per point
This basic formula makes it possible to compare the value of points across loyalty programs—and make better choices when you redeem.
Using Real Bookings for Mile Value Calculations
As you probably know, AwardWallet helps you keep all of your travel reservations organized in one place. You can view your upcoming (and past) reservations any time you like on your personal travel timeline. This feature works by monitoring for new reservations in all the loyalty accounts you track in your account list. You can also give AwardWallet permission to scan one or more email accounts where you receive booking confirmations.
To calculate mile values, AwardWallet looks at all the travel reservations that are booked with points or miles. We check how many miles were redeemed, how much was paid out of pocket, and what it would have cost to buy a “similar” itinerary for the same travel dates. Then, we find the average value per point using the formula described above.
How Do We Find the Cost of a ‘Similar' Paid Itinerary?
The trickiest (and most subjective) part of calculating mile values is finding the right paid flight to plug into the “cash price” part of the equation. The rest of the equation is just math.
Ideally, we'd ask each traveler to pick the flight that they would have booked if they had to pay cash. But there isn't a one-size-fits-all solution because every trip is different.
For the short term, we decided on a basic set of rules to pick a paid-ticket price:
- the paid flight is in the same class of service
- the paid flight departs on the same calendar day
- total travel time that is no more than 20% greater than the award flight.
When an award ticket is added to your travel plans, we use pricing data from Skyscanner and Kiwi to find the cheapest ticket that meets the three criteria above. Overall, I think our results hold up pretty well when you average lots of trips together. Some prices for individual trips may be a little high or low, but those errors should cancel out as our data set grows.
Of course, our current method is far from perfect. We wanted something we could build and share quickly—and this round only took nine months! I'll address some of the key issues at the end of this post. But first, let's take a look at the initial results.
Mile Values for 11 Airline Programs, Using Real Bookings
For each loyalty program, we've calculated an average value using the formula above. For the initial launch, we decided to calculate mile values for 11 airline frequent flyer programs. I've added a recent screenshot for reference, but you can also check our live mile-value results for the most current data.
What the Mile Value Averages Mean
Here are a few notes to help you understand the numbers we’ve published so far. Instead of sharing only a single average for each program, we decided to break our award flight data into four additional groups based on the class of service and whether the flight is short- or long-haul.
Class of Service
When we first started looking at the data, we realized that some of the best programs for premium-cabin awards weren’t all that great for economy tickets. If you only look at the total average in the leftmost column, it can be easy to draw the wrong conclusions about which programs will be the most valuable.
We decided to aggregate the data for awards in basic economy, economy, and premium economy into one group and all business- or first-class awards into another.
Regional (short-haul) vs. Global (long-haul) Flights
We also noticed some big differences in value when comparing short- and long-haul award tickets. On a short, regional flight, first class usually means a slightly bigger recliner seat with some extra legroom. On a long-haul flight, a business or first-class seat will normally convert into a lie-flat bed. It didn’t seem like a great idea to put those vastly different products into the same average.
We didn't expect a big difference in the mile values for economy awards when we made the short- vs. long-haul distinction. The seat and cabin experience are pretty similar, regardless of the length of the flight. So, we were surprised to see some significant differences.
With Alaska Mileage Plan and Air France/KLM Flying Blue, long-haul flights seem to be a much better value. On the other hand, regional economy awards booked through Air Canada's Aeroplan program look like a better deal than global economy awards so far.
What About Transferrable Points?
To estimate the value of transferrable points, we've combined the value of each flexible bank program's airline partners into a single, weighted average. This calculation only includes data from the airline programs that are also shown in our “Airline Mile Value” averages. Other transfer partners are not yet included, so the transferrable points averages aren't reflective of your full set of options.
What's Next?
We wanted to share initial results as soon as possible. So, we picked a few basic criteria that wouldn’t require a huge number of data points to be meaningful. Long term, we’d like to create a tool that lets you check our mile value averages (and see the underlying award prices and taxes) for specific trips.
You'll notice that it's possible to save your own mile value by overwriting the left column on the mile values page. This gives you additional control over how mile values are displayed as we start to use them in more places. You'll see mile values showing up in our Credit Card Spend Analysis tool and in the summary popup for programs you track in your account list.
A Few Areas for Improvement
As noted above, getting a more accurate mile valuation for an individual trip requires additional input from the traveler.
Getting the Right Itinerary
In some cases, the best option is to check the price of the exact same itinerary you booked with miles. If your award ticket is exactly what you wanted, the price to buy it gives you the most accurate mile valuation.
More often than not, the award tickets you end up booking are simply the best itineraries that were available to book with miles. If you could have happily booked any of several itineraries, using the price of your exact trip may cause us to overvalue your redemption.
On the other hand, if you need to arrive at your destination for a meeting at noon, we could be seriously undervaluing your redemption by picking a cheaper red-eye flight that departs at 10 pm. That's not going to work for your meeting, but our current formula treats that as a similar itinerary for valuation purposes—at least for now.
Related: Which Flights Can I Book with Miles?
It's Only Savings If You'd Actually Buy It
There are also situations where it doesn't make sense to use the full price of a paid ticket to calculate mile value. For example, it's not uncommon for a first-class ticket from the U.S. to Asia to cost $10,000 or more—especially on some of the nicest carriers like Cathay Pacific, Japan Airlines, or ANA. But did you really “save” $10,000 if you used miles for a flight you would never buy?
It's hard to put a value on aspirational award redemptions. Is a $10,000 first-class ticket worth $1,500? $2,500? It really comes down to the individual traveler. So we're working on an update that will give AwardWallet members more control over the price we use to calculate the valuation for each award trip.
Overvaluing One-Way Awards
One-way award tickets are another significant weak spot in our initial release. We haven't yet adjusted our calculations to account for round-trip itineraries booked as separate one-way award tickets.
Most loyalty programs will let you book a one-way trip at half the mileage requirement of a round trip. On the other hand, most airlines charge a premium for one-way travel.
If you book two one-way awards around the same time, a better mile valuation would recognize those as two parts of a ticket that could be booked for less as a round-trip cash ticket. This turned out to be a little trickier than we first thought, but it's on our radar for a future update.
Final Thoughts
Right now, our mile valuations are interesting, but not especially helpful for planning your personal points strategy. If you want to make more informed decisions about earning and spending miles, you’ll need to account for personal factors like where you plan to travel and how to value your savings each time you redeem.
Our team is hard at work to fix existing issues and build some of the new features I’ve mentioned in this post. We're hoping to launch some initial results for hotel valuations in the near future. In the meantime, your feedback and ideas will be especially helpful at this early stage of the project.
Please let me know what you think in the comments!
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I would be interested in seeing if you guys would “grade” our redemptions. Could that be shown under more details on a booking on your site?
Eric – what do you mean? Like adding a valuation to how good a redemption was?
Thank you. Your numbers are helpful, even if only relative.
That is a helpful analysis of points value across different programs. It helps me in finding the best return for acquired points.
This is great — any chance you’ll make another column on the main page showing all accounts that shows the value of the points held for each account, and then a total at the bottom?
Thank you for the suggestion! We will consider this.
Are first class or business class award tickets worth the valuations, even if one would never buy such a ticket? Yes, for sure! Just because, one would not pay $10K for roundtrip business class ticket, does not mean that one is not getting that value out of the award. If you are AA Exec. Platinum, one gets premium upgrade instruments, but they are not good for First class on Cathay. You have to be on AA to use them. So by using miles/points, one can get an award that they could not get any other way, other than cash! Being in a lie flat seat on a 16 hour flight adds value to your experience, even you cannot afford that ticket in cash!
Such a good post. People have wondered why I use the Chase portal and just buy the tickets there with my UR points instead of transferring them to airlines sometimes. I explain that after doing the evaluations like you talk about that it just makes sense sometimes to do it that way.
Also, another thing you have to figure into how much you save is the cost of the card you use. Not really something Award Wallet could use to tell everyone as there are different offers and personal situations, but it is important to understand.
Very insightful article. I will definitely share with friends, since sometimes they dont understand that is better to spend money, and other to use the miles. And also, nice job with the site guys! Helps a lot to manage the accounts of all my family in just one place.
“It’s hard to put a value on aspirational award redemptions. Is a $10,000 first-class ticket worth $1,500? $2,500?”
I always use the cash price of the ticket for my points valuation, because that is the value received, and I (and I am sure many other award point travelers) always fly first or business for international long haul, and NEVER buy the ticket (always use award points) since those flights are the only reason I save points. So far in life, I could never afford to pay cash for premium long haul. I even purchase all my short and medium haul flights, whether economy or premium, since those are so inexpensive but earn both airline points and multi-airline credit card points to use for long haul premium travel.
Love the analysis! Sometimes there is a human aspect to it too, like if someone had an emergency trip to make, but the person did not have the cash flow at that point in time, so they may redeem miles/points instead out of necessity. So not all trips may be to optimize the value.
Definitely. But, I’d also say, with ur example of emergency travel, that trip can actually be a case of optimizing miles value. Those last minute flights can be very expensive and thus can be a very sensible redemption scenario. I know I’ve done that in the past.
Even if redeeming in business give more value to miles I almost always use the miles in economy class, which makes sense only in some cases.
This is valid for me because I don’t accumulate a great number of points or miles.
This is quite interesting. I appreciate the depth of the analysis. It does seem for many of the programs, going with Business/First equals a better rate of value per point, but as you point out, one may not want to pay the actual cash rate. Though, it does give “bragging” rights. I will be curious to see how you value some of the more flexible points such as AmEx. I am also curious if the Alaska value took into account the various airlines you can currently use their miles for (pre-OneWorld)?
Good point re: Alaska. I’m curious (afraid?) to see what happens to their award charts after joining OW.
This is great. I look forward to when it is all up and running. Thanks for the work that you guys do.
Why is AA missing? Anyway, great work gathering and publishing this data!
AA is missing for two reasons. First, we don’t get information on the number of miles spent / taxes paid on some of the AA redemptions. Secondly, we have to get permission based on previous agreements with AA. It’s likely the first can be resolved, but we’ve prioritized other programs since we’re still working on the second item.
This is really helpful! thank you! Now I think I understand how ya’ll figure out how and when to use points. I usually just pay if the ticket cost and redemption amount first number is the same. But I can see how this is better. lol!
The evaluation seems way too high.
I suspect that it is caused by using one way prices. The comparison should be with half cost of return ticket.
Any particular reason the American Airlines AAdvantage program is completely missing? You never once mentioned the AAdvantage program, even if that mention was to explain why you excluded AAdvantage miles from the valuations you’ve done so far. Even in your “Areas for Improvement” section you didn’t mention including additional programs.
-Bob
Hey Bob, great question. With some programs, including AA, we have to get approval based on our relationship and agreements with them. Other programs are missing because we haven’t been able to get enough data from travel reservations, or we’re still fixing bugs to make sure our calculations are right. But rest assured, we’re working on adding more programs and a lot more data for the programs that are currently live.
This is something I’m always trying to explain to friends while redeeming points if it is worth redeeming or just spending cash. Thanks for the guide I can send to them now!
You fail to include the value of the miles you would have earned for the flight by paying cash for the ticket and the miles you would have earned by paying for the purchased ticket with a cash back or mileage credit card.
In addition tickets purchased with miles have much more flexible cancellation rules.
Yeah, that’s absolutely true. Skyscanner and Kiwi don’t give a fare booking code for many of the paid itineraries we use in the calculation, so it’s more of a technical barrier at the moment. There are several tools we could use to check mile earning potential across multiple programs, but we need to know what fare class each segment would book into first.
The data is available, but I think it would probably have to be an AW Plus feature if we wanted to automate it. We could certainly make it possible for you to adjust the mile value for your own trips based on miles you would have earned paying cash. Would you fill that out for all your trips if we did? Also, do you have any ideas about how to incorporate cancellation flexibility into mile value?
That’s a very interesting point, but I wonder how that could be standardized with all the different bonuses, credit card extras, class modifiers, etc. that tickets tend to come with now
I’m very much looking forward to your hotel valuations. One takeaway I have from the airline valuations is just how valuable the Chase/Aeroplan partnership will be next year.
Solid and well thought-out post. Some may have some quibbles here and there on minor details, but I like the explanations and quality of the analysis.
Interesting take on the premium for purchasing a 1 way ticket. I have never incurred a premium for 1 way flights. I started booking two 1 way flights instead of a round trip so I can purchase the return home ticket at a later date. I’ve always checked the overall R/T price with my 1 way tickets and it is the same assuming your fare prices don’t change as the date gets closer to booking.
Indeed, there isn’t really a premium on one-way flights when flying domestically anymore. But long-haul international flights can still be much more expensive one-way than round-trip. And since these itineraries require a lot more miles, it really affects our average valuations.
Wow, thanks for putting together this data. What was the start date of the data? Would be nice to see how the average changes over time.
Hey Matthew, most of the data is from this year, but there are some bookings from 2019. I believe the earliest is March 2019. In addition to comparing data over time, we need to figure out exactly how to deal with devaluations or major program changes. For example, right now, there is data from Aeroplan’s old and new pricing mixed together. We have all the info we need to separate them out and show before and after, but it’s still a work in progress.
Very cool to see valuations based on real people instead of travel bloggers constantly looking to maximize value. If I have no plans to travel internationally, this is the most useful resource I’ve seen to understand how much I should really value those miles!
Has there been any thought into making a “valuation ticker” of some sorts. Reward stock used to have something similar before they were gobbled up by Experian. It’s nice to see the history, especially for people that fear the inevitable “devaluation”.