I don't understand my airline's miles system. Last spring, I purchased a round-trip flight from San Francisco to Washington, D.C., for just under 30,000 miles. But when I tried to purchase the equivalent flight a few months later, my airline asked for 50,000 miles, which seems awfully pricey — I've found flights to Europe for less. Now, I've checked back about the exact same flight, and they're asking for just 25,000 miles. What's the deal? — Brian
Boy, I understand your frustration. Whether you are redeeming rewards miles or buying a ticket, airline ticket prices invariably are a moving target. And as you observe, with rewards redemptions, those price fluctuations can be dramatic.
What gives? When you consider buying a TV, at least you know that the price won't go up overnight. Not so for airline tickets. There are many reasons the miles required for rewards redemption, as well as actual ticket prices, fluctuate so much. Here are a few:
Supply and demand
There are a limited number of rewards tickets available on each flight, and those tickets are issued in different pricing tiers. The first pricing tier offers the best value — usually 25,000 miles for a free domestic flight.
It used to be that, once those seats were gone, you were out of luck, and you would not be able to get a free ticket on that flight. Airlines have since discovered that many consumers are willing to pay a premium in rewards miles to get on their desired flight. Those mid-tier rewards tickets typically go for 40,000 to 50,000 miles for a domestic ticket, depending on the route and the airline. This is why the same route may require 25,000 miles at one time and 50,000 miles at another time.
Because there are fewer rewards seats available in the lowest tier range, these seats go fast. Once you get within three weeks of the departure dates, ticket prices jump substantially, and that is also reflected in the miles needed to get a free flight. The time of year you choose to travel matters, too. There is higher demand during weekends and holidays, and that is reflected in the pricing as well.
Changes in the airline industry
Due in part to the recession, airlines have been consolidating and are flying less frequently in some routes. That means fewer seats overall, and, hence, fewer seats that can be allocated to rewards travel (airlines try to allocate only seats that would otherwise go empty). This, in turn, lowers the number of seats available in the lowest redemption category and means that you are more likely to end up having to pay more miles for your rewards travel.
So, what can you do to protect yourself from fluctuations in redemption value and get the most value out of your miles?
- Plan ahead. The early bird gets the worm. To get the best redemption value, book your rewards trip three to six months in advance if possible. For overseas travel, you may have to book your ticket nine to 10 months in advance to get the best value.
- Check back often. If you don't find a rewards ticket at your target mileage level, try again later. Rewards redemption prices change constantly. People cancel rewards tickets, and some flights don't fill up as quickly as the airline expected, causing the airline to lower the rewards redemption value or open up additional seats.
- Be flexible. The more flexible you are in terms of travel dates, the better your chances of getting a good deal. Log in to your frequent flyer account online to do your research. Most airlines now enable you to see the redemption value required on the same route for different dates. Sometimes, flying on a different day can save up to 20,000 miles on a rewards ticket.
- Calculate the redemption value. Always do the math to determine the true value of the rewards ticket. A rewards ticket at 40,000 miles might be worth it, if the ticket price you'd otherwise pay is $500. On the other hand, you might not want to spend 25,000 miles on a ticket you could purchase for $200. To calculate the redemption value, divide the cost of the ticket by the miles required for the award. As general rule of thumb, only use miles to get a ticket if the redemption value is at least one cent per rewards mile.