Today is March 22, which is probably the most dreaded day of the calendar for us American AAdvantage loyalists. American’s huge award chart devaluation just kicked in, and many of my favorite awards went up in price by 60%+.
Doing an award search this morning and seeing that a US to Asia first class award now costs 110,000 miles one-way is pretty brutal, given that previously you could book such an award for just 67,500 miles.
For reference, here’s what American’s new first & business class saver level award chart looks like for travel to/from the US:
|Contiguous 48 U.S. To:||Business Class||First Class|
|Contiguous 48 U.S. States||25,000||50,000|
|Canada & Alaska||30,000||55,000|
|South America Zone 1||30,000||55,000|
|South America Zone 2||57,500||85,000|
|Middle East / India||70,000||115,000|
|Asia Zone 1||60,000||80,000|
|Asia Zone 2||70,000||110,000|
With the above in mind, I figured I’d share how much I think American AAdvantage miles are worth post-devaluation. As a point of reference, before the devaluation I thought American miles were worth 1.8 cents each.
How to value miles
Before I share how much I think AAdvantage miles are worth, let me share my general methodology for valuing points. I provided this explanation when I talked about my valuation of SPG points the other day, and will share it again.
Aside from fixed value points currencies (where each point is worth a certain dollar value), there’s no scientific way to value points. Everyone will have different valuations based on their redemption patterns, so the best I can do is share how I value them, and then everyone can crunch the numbers for themselves.
Last year Travis wrote a series explaining how to value points based on your earning and redemption patterns. He’s much more of a scientific thinker than I am, so check out his series:
- Miles Aren’t Free: How To Value Your Redemptions
- Miles Aren’t Free: How To Value What You Earn
- Miles Aren’t Free: Establishing An Overall Value
The simplest way to explain it is that miles are worth some amount between your acquisition cost and your redemption value. Where in that range your valuation falls depends entirely on how you choose to redeem points.
In a simple diagram, here’s how he explained his methodology for valuing miles:
In other words, in the instance of AAdvantage miles, I know people who value them at one cent each, and I know people who value them at three cents each, depending on how they earn and redeem them.
I think the important to keep in mind is that miles are only worth as much as you’d otherwise be willing to pay for a ticket. In other words, if you redeem 100,000 miles for a ticket which would cost $10,000 in cash, you’re not actually getting 10 cents per mile of value. The value you’re getting should be correlated to what you’d otherwise be willing to pay for the ticket.
Etihad’s first class is nice, but is it really “worth” ~$25,000 roundtrip?
What do I think American miles are worth now?
Previously I valued American miles at ~1.8 cents each, while now I value them at ~1.5 cents each.
You might be saying “wait a second, an award from the US to Asia in first class just increased from 67,500 miles to 110,000 miles, so shouldn’t the value of miles change correspondingly?
Not quite, because I think a large part of our redemption patterns are based around where the good values are. In other words, if awards to the Middle East on Etihad and Qatar had cost 200,000 miles one-way all along, I doubt many of us would basically feel like locals in Abu Dhabi. 😉
Instead award chart changes often shift how we choose to redeem our miles. For example, more realistically, what will I be redeeming miles for now?
As I look at the chart, I’m realizing that most of my redemptions will be in business class from hereon out. When you look at the actual costs post-devaluation, they’re not that bad (all one-way in business class), at least compared to the first class increases:
- US to Europe costs 57,500 miles (up from 50,000 miles)
- US to Southern South America costs 57,500 miles (up from 50,000 miles)
- US to Asia 1 costs 60,000 miles (up from 50,000 miles)
- US to Asia 2 costs 70,000 miles (up from 55,000 miles)
- US to Middle East costs 70,000 miles (up from 67,500 miles)
- US to Africa costs 75,000 miles (unchanged)
Obviously first class redemptions have largely increased in price substantially, which sucks, but it doesn’t change the fact that there are still plenty of great uses of American miles.
A roundtrip LAN business class award between the US and Southern South America now costs 115,000 miles. At a valuation of ~1.5 cents per mile, that’s like valuing such a redemption at ~$1,725.
A roundtrip Japan Airlines business class award between the US and Japan now costs 120,000 miles. At a valuation of ~1.5 cents per mile, that’s like valuing such a redemption at ~$1,800.
A roundtrip Cathay Pacific business class award between the US and Southeast Asia now costs 140,000 miles. At a valuation of ~1.5 cents per mile, that’s like valuing such a redemption at ~$2,100.
A roundtrip Qatar Airways business class award between the US and Africa still costs 150,000 miles. At a valuation of ~1.5 cents per mile, that’s like valuing such a redemption at ~$2,250.
A lot of my favorite AAdvantage redemptions are going up in price significantly, which I’m of course not happy about. But when there’s a devaluation I think it’s important to step back and look at the whole award chart and which redemptions become comparatively good values. In the case of this devaluation, first class awards were hit hardest, which is unfortunate, since that’s how many of us enjoyed redeeming our miles.
At the same time, there’s plenty of value to be had for business class awards. So with the devaluation in place, I’d say I value American miles at 1.5 cents each. There’s no science to that, but rather it’s just a number which feels right to me. Could I make an argument against 1.4 cents or 1.6 cents, or even 1.3 cents or 1.7 cents? Nope.
But that’s the beauty of miles — their values are very subjective.
How much do you think American miles are worth, factoring in the devaluation?