What is the value of American Airlines Advantage Miles?
The American Airlines AAdvantage (“Advantage”) Rewards program is the 1st and world’s largest frequent flyer program, or so their website claims. Travelers earn miles when they fly on American Airlines, American Connection/Eagle, or more than 20 other airline partners. The American Airlines Advantage program offers several different types of awards:
- AAnytime (“Anytime”) Awards provide you with maximum travel flexibility, no blackout dates, and no capacity constraints. In other words, you can use the awards to buy airline tickets last minute.
- MileSAAver (“MileSaver”) Awards (both on and off-peak) offer excellent value, but you need to deal with American Airline’s infamous blackout and availability restrictions. In other words, you need to be able to purchase well in advance in order to take advantage of this great value.
- Upgrade Awards enable you to upgrade to either business or 1st class. Oftentimes, you are also required to throw in some real cash along with the miles in order to secure the upgrade. As PlasticIQ tends to be most concerned with maximum value at minimum price, we won’t spend much time evaluating the value of upgrade awards.
Estimating the worth of American Airlines Advantage Miles
So let’s get down to business. In order to calculate the value of Advantage Miles, we need to make some assumptions on the following variables:
- MileSaver versus Anytime Awards: As you can see from the mileage table below, MileSaver Awards (both on and off-peak) require far fewer points than Anytime Awards. Since PlasticIQ is focused on the real cheapskate trying to save money and maximize mileage value, we’ve assumed that all redemptions will be via Off-Peak MileSaver Awards. This does mean that you would need to plan your trips well in advance, and be willing to travel (at least once in a while) during off-peak times.
- Cost of Flights and Destinations: PIQ relies on its Detailed Analysis of Flight Costs in determining the going market rates for flights to various destinations.
- Percent of travel by continent: Because the dollar value per Advantage Mile is quite low for travel within the US, we allocate 90% of travel to EU, and 10% to Tokyo, Japan.
- Non-Cash Penalties: Per our Rules of the Sky, PIQ assesses a baseline 5% non-cash penalty.
- Partner Airlines: AA belongs to the OneWorld Alliance, and passengers do have the ability to redeem awards on major carriers such as British Air, Cathay Pacific, and JAL. However, after conducting some research here, availability seemed so sparse and unpredictable (example: for a flight to Tokyo 3 months out, they had 1 seat available during the entire month, and this was an off-peak month!), that I decided to exclude partner redemption values from the analysis.
| From | To | Award Type | Miles Req’d (RT) | Avg Ticket Cost (pre-tax) | $ val/mile | Travel Alloc % | $ Contribution |
|---|---|---|---|---|---|---|---|
| US | US | MileSAAver | 25,000 | $270 | $0.0108 | 0% | $0.000 |
| US | US | Anytime | 50,000 | $337 | $0.0066 | 0% | $0.0000 |
| US | Europe | MileSAAver (off-peak) | 40,000 | $570 | $0.0143 | 90% | $0.0128 |
| US | Europe | MileSAAver (peak) | 60,000 | $839 | $0.0140 | 0% | $0.0000 |
| US | Europe | Anytime | 120,000 | $839 | $0.0070 | 0% | $0.0000 |
| US (NYC, IAH, ATL, ORD) | Tokyo | MileSAAver (off-peak) | 50,000 | $758 | $0.0152 | 10% | $0.0016 |
| US (NYC, IAH, ATL, ORD) | Tokyo | MileSAAver (peak) | 65,000 | $861 | $0.0132 | 0% | $0.0000 |
| US (NYC, IAH, ATL, ORD) | Tokyo | Anytime | 130,000 | $861 | $0.0066 | 0% | $0.0000 |
| Pre-penalty Total | $0.0143 | ||||||
| Post 5% penalty | $0.0136 |
The Final Analysis
As you can see from the table above, your best value is the trip to Europe or Asia on MileSAAver off-peak, whereas the worst values are for flights within the continental US. In the final analysis, PlasticIQ estimates the value of American Airlines Advantage Miles at $0.0136 per mile.
If you want to see how the American Airlines Advantage Program stacks up against its competitors, check out our Frequent Flyer Mileage Valuation Comparison.
Tags: AAdvantage, miles, travel, Value of points
June 19th, 2009 at 3:57 pm
You’ve done good research – Ive always wanted empirical data but it would be nice if you could build in a couple of more parameters in the model. I think you might have to exclude London from Europe. When I compare a UK award tickets tax with a same day published fare, the tax on the award ticket is always much higher. Perhaps the tax for an award is based on a higher fare than the current lowest fare. I hate to buy a 200USD award ticket when the going fare might be 500-600 on the cheapest airline. So I often buy to London and if it happens to be AA then use the points to award myself in the US where the award tickets have very little tax or surcharge (I am EP).
Now, we also have a baby and its basically the same issue. On a published fare to London the ticket for an infant under two might be 80USD but for an award ticket its sometimes 150USD! At this point the award ticket starts to look more like a discount versus a freebie. Another reason to buy international for the lower infant fare and use awards domestic (where there are no infant tickets).
Travelling with infants is a small group, but I would be interested in comments about the tax issue to the UK as that is where probably a good chuck of transatlantic traffic.
THanks!
June 23rd, 2009 at 3:27 pm
Raj, thank you for your thoughtful comment. Regarding the London tax issue, yes you are correct, taxes to Heathrow are significantly higher than most other countries. My own analysis indicates that, on average, the taxes+fees are around $150 (based on an analysis of travel between 5 different (major) US cities and LHR). In our calculation of the ticket price (visible in the table in the above post), we have already netted out the tax from the price of the ticket, thus resulting in a lower value per mile due to the out-of-pocket requirement to pay these taxes. That said, tickets to LHR from the US tend to be marginally more expensive than tickets to the other European destinations I priced out (namely, Madrid, Paris, and Frankfurt)–after backing out the various taxes to each destination–so even if you were to do all of your travel just to London, the estimates in this post for Europe would be directionally quite useful.