Consumer Reports: Spend Airline Miles Wisely

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As with many stocks, the value of frequent-flyer miles has been falling, and experts are offering timely advice.

Tim Winship, FrequentFlier.com publisher, notes that the relative value of a mile is down from its longtime rate of 2 cents to about 1.2 cents, based on what a frequent flyer would have paid for a free ticket in dollars. With a prediction of 41 million fewer passengers on domestic airlines in 2009, there may be more frequent-flyer seats available. Winship suggests cashing in miles.

WebFlyer.com chairman Randy Peter-sen points out that if you hold on to frequent-flyer miles until fares rise again, the miles retain their value. But with higher fares, he adds, free seats can disappear. Petersen's advice: Use miles when you need to, and look for deals that make it easier to get a free seat.

To make your own decision, do the math. Large U.S. airlines typically charge at least 25,000 miles for a round-trip domestic flight. At 1.2 cents per mile, that's $300. So if a flight costs less than $300, don't "spend" 25,000 miles. If it costs much more, go ahead.

The real challenge might lie in getting a free seat in the first place. WebFlyer's Award/Upgrade Index tracks travelers' redemption success rates by airline and month. At press time, Midwest Airlines (69%) led the major carriers.


Most programs offer a two-tier redemption system, and for twice the usual miles you can obtain a seat on a domestic flight without worrying about blackout dates or being bumped. That generally makes sense when a fare is more than $600.

Of course, you can also use mileage to upgrade to business or first class. WebFlyer's Index indicates that members have had better luck securing an upgrade than a trip. But new rules make upgrades more expensive: As of July 1, United joins American and Continental in imposing a cash co-pay for upgrades of $50 to $500. Your decision depends on whether you think a premium-class ticket is worth six to 10 times as much as a coach ticket.

Bottom line
Spend miles when your ticket would otherwise cost more than $300. Book early and have flexible travel dates. Last, collect miles for a major airline. If it files for bankruptcy, its frequent-flyer program will probably be bought by another airline. Members of a smaller airline's program could be stranded, as Aloha's were last year.

 

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