When Deciding Which Miles To Redeem Isn’t Obvious…

Filed Under: Advice, Awards

Typically the single biggest challenge of redeeming miles is finding saver level award space. If you’ve found it for your desired itinerary, woohoo, you’re in luck!

Perhaps that makes this the crème de la crème of first world mileage problems. But sometimes when there is availability, the biggest challenge is actually deciding which miles to redeem.

Miles aren’t free…

As we’ve explained here on OMAAT in the past, miles aren’t free, and each of them has some value. The value of your miles is somewhere between the acquisition cost of the miles and the retail value of what you redeem your miles for.

Many of us establish values for miles, just so we have general guidelines when it comes to redeeming them. The value of a specific mileage currency isn’t scientific, both relatively and absolutely. There are some research companies which try to do studies on the value of miles, and they’re almost always wrong.

So I’m certainly “flexible” when it comes to my valuations, as I just use them as a basis for redeeming points.

A specific scenario where you should go against math… maybe?

This brings me to an interesting scenario, where I’m tempted to act against what “the numbers” suggest I do.

Say you want to fly from Los Angeles to Hong Kong in Cathay Pacific first class, stay for a few days, and then fly from Hong Kong to Bali in Cathay Pacific business class. Assume you’ve lucked out and found award availability (that’s usually the toughest part!).


Two popular options might be as follows:

  • Redeem American AAdvantage miles (which I value at 1.8 cents each)
    • Los Angeles to Hong Kong will cost 67,500 miles in first class
    • Hong Kong to Bali will cost 22,500 miles in business class
    • “Cost” of redemption: $1,620
  • Redeem Alaska Mileage Plan miles (which I value at 2.0 cents each)
    • Los Angeles to Hong Kong to Bali will cost 70,000 miles (Alaska allows free stopovers, even on one-way awards)
    • “Cost” of redemption: $1,400

Cathay Pacific first class

Cathay Pacific regional business class

On paper, redeeming Alaska miles seems like the the better value. That being said, assume the following (and I’m guessing this is a situation a lot of people are in):

  • You have 5x as many American miles as you have Alaska miles
  • You’re expecting American AAdvantage to devalue at some point in the not-too-distant future

So what would you do in that situation? It’s certainly tricky, because no matter how much we try to quantify the value of points and turn them into a currency, there’s only so many numbers you can crunch. When trying to establish a value for miles, it’s extremely difficult to establish a global value which doesn’t factor specific circumstances:

  • When valuing miles, do you consider the quantity of a mileage currency you have?
  • Do you consider the potential for a future devaluation when establishing a valuation of miles, given that it’s based on speculation, or do you value them based on what miles could be redeemed for today?

Bali, Indonesia

Bottom line

I’d certainly be curious to hear what you guys would do in the above situation. Not because I’m looking for “free” advice, as I don’t think there’s a right answer. But rather because I think it’s interesting to see how different people approach valuing miles.

What would you do in the above situation?

  1. definitely consider both. the key to hoarding miles and points is balancing across currencies to hedge against travel needs and deval risk.

    say you burn through your alaska MP points, then all of a sudden a juicy EK redemption opportunity comes up, then you’re stuck.

    and I expect the next AA deval to be horrendous. right now, they’re miles and miles ahead of DL and UA in terms of how great their redemption rates are, which says to me it’s very ripe for a deval.

  2. Another cost to consider is opportunity cost. As the other comment pointed out, if you use your last alaska miles you are forgoing a possible emerites flight. You also would be reducing your diversity and diversity is key to booking on the dates you want.

  3. Other considerations:
    Sometimes you can redeem the same number of British Air or Alaska Air points for an Alaska Air flight.
    But British Air miles are not as valuable since they can only be used on Alaska by calling them, not on their website. And they close their phone lines at night. Alaska miles can be redeemed on their website anytime.
    On the other hand, for a flight which might have to be cancelled, British will let you cancel at virtually no cost, so maybe they are more valuable.

  4. Love reading your articles. Quick question on AA elite status. I know you get four 500 mile upgrades for every 10,000 EQM if gold/platinum. What happens when you reach Executive platinum? Do you continue to occur those or do they end since you get the 8 SWU? When do the 500 upgrades expire? I will reach executive platinum soon with my current status challenge. Just curious.

    Thanks in advance


  5. I have a similar dilemma right now – I am confirmed on SQ Suites for an upcoming trip to Singapore, but Etihad F just opened up.

    I have 4x the AA miles than SQ, so now I am considering canceling SQ Suites in order to preserve those miles (refund of 91,375 + $262), and burn 135,000 AA miles and <$100. I am concerned the upcoming AA deval could result in never getting the chance again to fly Etihad F.

    What would (the collective) "you" do?

    (Having written this, I am now strongly leaning towards Etihad F………)

  6. Although not planning a trip to Bali, I am in that situation. I have about 6 times more AA miles than Alaska. I would absolutely use the AA miles, because I expect the devaluation, and I expect its going to hurt.

  7. I’m in this situation. My wife and I (well me mostly as she’s a victim in this “game”) have about 600,000 AA miles and about 100,000 AS, 200,000 BA Avios (not to mention a couple hundred K in United, Chase, etc.). So we are lacking enough in AS for 2 people in a premium cabin on your example so we might do a one type of mile one direction and another type coming back. I agree that AA is set to devalue so I’m in booking mode. This is also hard I we have been traveling a ton lately and only have so much vacation in 2016.
    Domestically it’s easier. I have a pecking order where I search BA first then some odd carriers like Spirit and then come back to AA, United and Alaska. I value my AA miles highest as they seem the most flexible for my personal needs.

  8. If miles were tradeable like forex, then you would see the error in your valuation system despite your proclaimed ‘flexibility’. The market would price the impending devaluation into the price of AA miles and not stick to a fixed value of 1.8¢ and your choice would be clear.

  9. Redeem the AA miles if you want, just don’t pretend they are worth 1.8 cents.

    Since you had a perfectly viable option that you could have chosen that had a cost of $1400, then you are only getting 1.55 cents out of your AA miles.

    Either that, or your AS valuation is too low.

  10. @ Travis — Now hold on a second, that’s not sound logic either! 😉

    Just because something isn’t a good redemption in one instance doesn’t somehow lower the value of those miles.

    For example, if just flying Los Angeles to Hong Kong, American would be a better option than Alaska, especially when you factor in the difference in how I value the miles. Does that make Alaska miles worth less?

  11. All that matters here is how you redeem for this award. If you have an option to “buy” the ticket at $1400, and you choose to redeem miles for it, you’re getting 1.55 cents / mile. If you truly valued them at 1.6 cents, you wouldn’t redeem in this case.

    If next week you redeem AA miles to Japan, and get 1.9 cents out of them, that’s great and you got value above and beyond what you would have been willing to do the deal at. But the fact is, if you pull the trigger on a 1.55 cent redemption, you’re telling yourself that you really only value them at 1.55 cents.

    You’re implicitly pricing in the impending devaluation and / or the fact that you are operating at the top of your utility curve wrt to AA miles.

    And FWIW, 1.55 cents sounds about right to me for AA.

  12. @ Travis — Ah, but this is the “mystery” factor I’m talking about when it comes to valuing miles. If I had a million Alaska mile sand a million American miles I’d redeem Alaska miles. For sure. But at the same time if I have significantly fewer Alaska miles *and* don’t have the option of purchasing them at a discount right now, I’d be using most of my stash. Which doesn’t somehow change the overall value of those currencies, but rather just my willingness to use points at this very moment due to circumstances.

  13. This is called dynamic pricing. It’s how airlines price seats on a plane. When the plane is empty, and the fare buckets are all 9’s, they’ll sell you a seat cheaply. When the plane gets full, and the fare buckets become 0’s, they want more and more for the same seat.

    So you have a dynamic valuation of miles –They aren’t worth the same at all times, and in fact the value is based on how many you have. As your stash goes down, you want to get more and more value out them. When you have a mountain of them, you’ll accept a lower redemption value.

    At the end of the day, there’s no “mystery” here, just numbers and behavior finance. And if you pull the trigger on that AA redemption, on this date, and given your relative mileage balances, you are saying that AA miles are only worth 1.55 cents to you.

  14. I would probably pick American because I would like to save my Alaska miles for Emirates first class 😉 and also if you think they will devalue their award chart soon, I wouldn’t want to save the miles and get less of a redemption later than get a better deal now if that makes sense….

  15. Ben, I think you might be conflating two concepts here: value (i.e., $1 is $1) and utility ($1 is worth more/has more utility to a poor man than to a rich man).

    It seems your value of AA miles may have decreased because of your expectations of a pending devaluation. Moreover, even though the cost of using AA miles is higher, the marginal utility of using AA miles is lower; hence, it seems your overall decrease in utility is lower using AA miles.

  16. Lucky,

    I’m going to take a contrarian view and say that I value AA miles at about 3 cpm. Why so high? Because that’s about the point at which I’ll use miles instead of cash to buy a domestic Y ticket. If I need to get to LA and AA has saver space available, at $500 I’m likely forking over the cash. That means my miles are worth more than that to me. At $750, I’ll fork over 25,000 miles instead of $750. I suppose by that definition, I’d have to be willing to pay $3300 for a CX J ticket to Asia if it were offered at that price. Would I? I donno. But I have paid $2300 for said ticket during an AS sale.

    Does that mean I’d buy AA miles at 2.9 cpm and sit on them? Not necessarily. In the stock market, we all try to buy low and sell high. Same with ForEx the “value” of my US Dollars at a TravelEx stand is different depending on whether I’m offering them up for another currency, or trading that currency back to USD.

    So I don’t think it’s unreasonable to have a “buy” price of AA miles of less than 1 cpp, and a “sell” price of 3 cpp.

  17. Andrew’s points on utility are well made. $1 is always worth a $1, no matter how much money you have. With miles, though, if I have no miles, one mile is worth absolutely nothing to me. I can’t do anything with a mile. How much are 100,000 miles worth? Different question. If I have 54,999 miles, how much is a mile worth to me? I might pay as much as $30, $50, or even $100 to grab that last mile so I can get a CX J award.

    Lots of fun economic principles involved here.

  18. LOL. Tell me about it. Jennifer Aniston and her commercial almost got me to blow my whole stash of Alaska Airlines on a one way Emirates First Class Ticket to JFK-BKK for 100,000 miles and under $20 dollars. Every time I see the commercial, I almost buy the tickets for bragging rights.

    That is stupid because I already have a business class on Cathay Pacific and hope to move into first class at nearer flight date. I have a boatload of AA miles and am expecting a devaluation, so I should use them now. Moreover, since I fly AA to maintain status, my supply of AA miles is constantly being replenished. Also, the more programs one has a sufficient number of points in, the better chance one is not stuck in coach in a crunch.

  19. @CW — EXP don’t earn 500-milers as they receive complimentary upgrades.

    Personally, I’d choose another destination! DPS is closed, AGAIN, due to volcanic activity.

  20. Lucky- its crazy that you are writing this as I dealt with this exact situation yesterday- same destinations, same miles. I could have redeemed 50k Alaska miles all in business on CX with a stopover in HK, or do 67,500 AA miles for first class on CX with just less than 24 hours in HK as Bali is my ultimate destination. Already flown CX first so originally the Alaska option seemed like a better value since their business class is supposed to be so good too. The AA option let me choose Dragonair as my connection to Bali at a better flight time, since Alaska doesnt partner with them. I have way more American miles than Alaska.

    I chose the American redemption. Happy with my decision- will be even happier on my flight tomorrow while eating my caviar! 😉

  21. I think another factor that should be considered is the ease and speed with which you can earn back the AA miles vs. the AS miles. Obviously its easier for you to earn AA miles given that you have so many more of them, so even though you value them more than the AS miles so that the “cost” of the AA redemption is higher, you are probably going to have to work harder to replenish the AS miles you spend (like going out of your way to fly them or to credit miles on other airlines to them or moving spend over to AS earning cards). For someone who has tons of flexibility and travels for a living, this is probably not much of an issue, but for most people it would definitely be something to think about.

    Another factor that I think would be a concern for most travelers (and once again probably less of a concern for you) is where our next redemption after this one might be. For example if I really wanted my next trip to be built around flying the EY Apartment, I might be more inclined to use the AS miles for the Bali trip, just as I would be more inclined to use the AA miles if I was building my subsequent trip around flying EK F. For people like you who take aspirational trips all the time, that’s not as much of a concern, but for those of us who might only have enough flexibility to travel for fun a couple times a year, it’s an important consideration.

  22. @Travis

    I think you are right about Ben not applying his valuation of the mileage currencies correctly, but for the wrong reasons. The problem with Ben’s analysis is that his valuation of the miles is designed to help him evaluate the cost equivalent of earning the miles, not the cost equivalent of spending them. Ben came up with the relative values of mileage currencies to help determine when certain methods of earning miles are a good deal, whether it be purchasing miles during a sale, taking advantage of mistake fares, putting one airline’s FF# down on a given flight vs. another, or even just paying slightly more or taking a different routing on paid travel. And honestly, for those purposes Ben has done a better job at valuation than anyone else out there.

    You just can’t as easily apply that valuation when redeeming miles. While there are other factors to consider that Ben mentions in his post and others have mentioned in the comments, I still think that the only way to value miles when redeeming is to determine how much you would be willing to spend for the ticket if you were paying for it with cash. This may be less true for people who travel as much as you and Ben and actually can treat miles almost like real money, but I still think its the one factor that matters in valuing redemptions more than anything else.

  23. I think that all of those who are factoring in an AA devaluation should also be factoring in a matching AS devaluation. AS & their (possible merger) partner AA very closely align their redemptions. For CX awards AS charges slightly more, but allows a stopover that AA doesn’t allow. AA has rewards on EY & AS has rewards on EK to the Mideast @ the same rate in F and a minor difference in J. Those are the main value awards, and I would expect AA & AS to maintain similar post devaluation rates.

  24. Lucky,
    If you’re concerned about the number of miles you should fly through and fly to Bali on the LAX to HKG miles for free.
    It would also be nice if you flew DFW to DPS and reviewed the AA 787 experience.
    Right? Another CX in first? Are you flying for flying or working and reviewing? Looking for that 787 review as you usually hit the nail on the head and the 787 is not as great as I thought it might be.

  25. Travis is off the scent here. It’s not a pricing problem. It’s an opportunity cost problem.

    Imagine you’re a farmer with 100 cows and 3 sheep, and you value sheep and cows equally. A dude shows up on your doorstep and offers to fly you to Bali in Cathay Pacific First Class in exchange for either 4 cows or 3 sheep. So you agree to give him the 3 sheep.

    The next day, another guy rocks up and offers to fly you to Mumbai in Emirates First Class in exchange for 3 sheep. You tell him you don’t have any more sheep but you’ll give him 3 cows. He tells you he’s Indian and cows are holy so he’ll only accept sheep. You can’t make the deal.

    You’ve just missed out on showering in the sky. Did you really value sheep and cows equally? Well, yes… and no.

    Your overabundance of cows didn’t change their “price.” But it should’ve made you aware of the “opportunity cost” of spending a scarcer resource. There are things you can do with sheep that you can’t do with cows, and vice versa. If you have two resources, one of which is abundant and vulnerable to devaluation, and another that’s scarcer and likelier to retain its value, then spend the former. It doesn’t mean it suddenly has a higher price. It means you’re leaving yourself with more options.

  26. To use Alaska miles the origin of the flight has to start in North America correct? I can’t use Alaska miles for Europe to Asia right?

  27. @Adam

    You can use Alaska miles for flight on Cathay from Europe direct to HKG, but not elsewhere in Asia. It’s possible to fly from HKG to elsewhere in Asia, but that would would be a separate award.

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