Bargain Basement. How to Choose Between a Flash Low-Cash Fare and a Discount Mileage Deal?

Follow our template and make a decision in 2 minutes.

You’re probably aware of those high-end outlet stores like Saks OFF 5TH and Nordstrom Rack. They try to get people excited with promises of 50%, 60%, 70%, or more off top labels like Chanel and Versace. It’s one thing to get big discounts off top labels and another to get the styles, sizes, and colors you want. One is the fishing hook and the other is the fish.

It’s the same with travel. It’s a bit like hearing the airlines are having a big sale but the airline, route, and date don’t suit you.

That’s especially the case when you’re flying long haul. You really want something that’s as close as possible to a perfect fit.

Until recently, it was much harder to find great premium travel deals on the airline you wanted to fly on—with your desired route and dates of travel. Times have changed. Now airlines are often pricing fares and mileage-award tickets at outlet center prices—and they have space.

These are golden days to shop for sweet deals. But now the question becomes, how do you decide between two seemingly equal bargains? Need to choose between a discounted low fare or a low-mileage award ticket?

FCF’s Three-Question Decider Provider

FCF has reported on many unprecedented mileage deals over the past few months for travel to Europe. During that time, we’ve also published many low-fare deals for both flash sales and Thanksgiving, Christmas, and Easter (holiday) fares to Europe in Business Class and many other dates as well.

To have low-cost fares and low-cost mileage-award space at the same time is like having to choose between winning the lottery or inheriting a fortune from your long-lost uncle. So, how do you choose?

Many travelers instantly default to, “Well, I have enough points and/or miles, so I’ll just use them.” Hold on. You should wait to use your points or miles when they’re of the highest value. Most often, First Class, high-priced Business Class destinations, and short-notice Business Class tickets offer a high-value return on your points and miles. FCF published a special report on when it’s best to use your miles here.

But don’t be quick to jump to a decision when you have an option between a low-cost Business Class fare and low-cost mileage-award space. Instead, here’s our three-part process for decision making:

• First: Know the relevant questions to ask
• Second: Get the answers to those questions
• Third: Make an informed decision

Simple, right?

Step #1:
Know the RELEVANT questions to ask

You don’t have to use all the questions listed below. In fact, you might have entirely different questions. The point is to ask enough to ensure that you can make a confident decision based on your own personal preferences and priorities.

Below is an example, based on finding two great flight options to choose from, one paying in cash and the other paying with miles.

Example for picking between cash and miles

For travel on:                              United

Between:                                     Newark and Dublin non-stop

Dates:                                          March 30 to April 6, 2021

When the cash fare is:               $2,087

When low-cost availability is:   120,000 miles + $45 in taxes

Primary questions for cash fare tickets:

1. What is the risk factor when using cash if I decide to cancel my trip?
2. Must I earn elite credit on this particular trip?

Primary questions for mileage-award tickets:

If it’s for a flight for which you
already have miles:

1. What is the risk factor when using miles if I decide to cancel my trip?
2. What is the return on my miles (ROMs)?
3. Do I have a lot of miles and not care very much about the return on miles?

OR:

If it’s a flight deal with partner miles I can
transfer my points to:

1. Can I get a lower mileage-award rate with a partner airline?
2. Does the partner airline offer space for the same date and flights?
3. If partner award space is not available on the same dates, am I willing to change my travel date enough to get a cheaper deal?
4. Do I have access to points that I can transfer to the cheaper airline’s program?
5. What is the return on points (ROPs) with the partner airline program?
6. What is the risk factor when using miles if I decide to cancel my trip with the partner program?

Again, this all assumes you did the work and found a choice between a low-cost Business Class fare and mileage-award space on the same airline, same date, and same route (I can’t believe I just wrote that—it’s like the holy grail of premium travel—and it happens often nowadays). You don’t have to use every question listed above, just enough to help you decide.

Step #2:
Get THE answers to your questions

Again, this example uses a United traveler flying from Newark. He found two great deals to fly non-stop to Dublin: 120,000 miles plus $45 in award taxes or a cash cost of $2,087 (including all taxes).

Steps 1 and 2: Questions and Answers Summarized (Details Below)

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Let’s dig deeper into each one
Questions/Answers

For cash fare tickets

Question: What is the risk when using cash if I decide to cancel my trip?

Answer: Most often when buying a discounted fare the ticket is nonrefundable and has change fees. However, the risk is currently low if you cancel your trip. That’s because most airlines have a cancellation/change waiver policy for new tickets purchased (which waives change fees).

for mileage-award tickets

If you already have miles
for the flight deal you found:

Question: What is the risk when using miles if I decide to cancel my trip?

Answer: If you pay with miles there is no risk if you cancel your trip. The current policy waives the redeposit fees for award-ticket cancellations made more than 30 days before departure for the remainder of 2020 with United. United’s normal fees vary depending on when you cancel and/or if you have elite status, and range from $0 to $125.

Question: What is my return on miles?

Answer: First, keep in mind that a good rule of (Mr. Upgrade’s) thumb: If your return on miles is less than ~3¢, you should consider buying the ticket and saving your miles for a higher-value flight. This is based on the fact that you can get a cashback card that gives you ~2¢ (i.e. don’t even bother playing miles-and-points games if you get less than this) and the fact that if you need to buy miles when not on sale they can cost you 2.5¢ to 3.5¢ per mile. Of course, sometimes you make decisions that go beyond the simple math, but it’s good to have a ballpark method to guide you. The value of a mile may vary, but the method of calculating it doesn’t. If you have a zillion miles—as many have more than they will ever use—then you might just consider burning them regardless.

Money Saved (cost of ticket or cash paid, minus award taxes) ÷ Award Miles Used = Value of a Mile

Based on our New York Dublin example above, the total cash paid is $2,087, and it takes 120,000 miles to get that ticket—plus $45 in award-ticket taxes. Thus, on this flight the value of a mile is 1.7¢: $2,042 ($2,087 – $45) ÷ 120,000 miles = 1.7¢ per mile.

If you want to use points
with partner miles for the flight deal:

Question: Can I get a lower mileage-award rate with a partner airline?

Answer: Based on our sample trip, yes. All Nippon charges 88,000 miles round-trip vs. 120,000 United miles.

Question: Does the partner airline offer space for the same date and flight?

Answer: Yes, based on our sample trip, All Nippon did have space.

Question: If there’s no partner award space on the same date, am I willing to change my travel date to get a lower partner mileage rate?

Answer: In our example, we did not have to change the travel dates. However, when using points with partner program miles, this is not always the case. So a deciding factor could also be how flexible you are with dates, airlines, and even the route, when it comes to getting a lower partner rate.

Question: Do I have access to credit card points that I can transfer to partner airline miles?

Answer: Based on our sample traveler, yes. He has Amex Reward points, which he can transfer to the partner airline, All Nippon.

Question: What is the return on points with the partner airline program?

Answer: Based on our example, cash paid is $2,087, and it takes 88,000 miles to get that ticket, plus $83 in award-ticket taxes. So, on this ticket the value of a point is 2.3¢: $2,004 ÷ 88,000 miles = 2.3¢ per mile.

Question: What is the risk when using miles if I decide to cancel my trip?

Answer: First, keep in mind you cannot transfer All Nippon miles back to Amex points. If you cancel your trip the miles remain in the All Nippon mileage program and you would have to use them another time.

The fee to cancel an award and redeposit your miles is 3,000 miles per ticket, so it’s a very small price to pay to put miles back in the All Nippon account.

Step #3:
Make an informed decision

Let’s now dive deeper into your decision-making process, based on what’s important to you.

FCF 2-Minute Decision Cheat Sheet

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Let’s elaborate on this decision guide:

Do you need to earn elite credit when you fly? Pay cash.

Do you want the highest return on your hard-earned miles? Pay cash. As our example shows, buying the low-cost Business Class fare is the better option because the return on miles in this case is 1.7¢ or 2.3¢.

Do you want the lowest award mileage cost and have access to Amex points? Pay with All Nippon miles because All Nippon charges 32,000 miles less than United.

Do you have lots of miles and/or points and not care about the return on miles or points so much? Pay with All Nippon or United miles.

Do you want zero risk if you decide to cancel your trip? Pay with miles, because with non-refundable cash tickets you never get the cash back.

So, it’s a personal decision, depending on your situation and what is most important to you.

Sweet Dreams Are Made of These

You’ve got some thought processing to do. But in the current fare-and-miles availability climate, you can’t lose. It’s just a matter of maximizing the win. Go for it.

[aside headline="MORE ON WHEN TO USE MILES AND TACTICAL FARES" alignment="aligncenter" width="big" headline_size="default"]

Using Miles When Value Is High: Often when comparing using miles for First Class to buying a ticket with cash, miles is the best value as the return is high. For example, Cathay Pacific First Class: New York to Hong Kong costs $34,100. It takes 250,000 miles to get that award (plus about $133 for award taxes). The math: $33,967 ÷ 250,000 miles = about 13.6¢ per mile. Not bad.

In short, I say use miles for dream trips–big dream trips. Use miles for tickets you’d never pay cash for, like a $30k New York-to-Hong Kong on Cathay in First Class. I’d be much less inclined to use miles for garden-variety trips, unless the fare creeps up very high and I’m not very flexible.

More examples: All Nippon in First Class with Amex Rewards transfer points on the San Francisco-Tokyo of $19,000+, or Singapore in First Class using Amex and Chase transfer points from San Francisco to Hong Kong for $12,000+, or Cathay Pacific in First Class using Amex and Citi transfer points from New York to Hong Kong for $34,000. [/aside]

[aside headline="Airline Tactical Fares" alignment="aligncenter" width="big" headline_size="default"]

The Tactical Fare Mindset can be a game changer, as these fares can often be much better value than using miles. So the best time to get out FCF’s template for decision making is when your destination has a tactical fare.

Various types of tactical fares include seasonal fares (Christmas, Easter, Thanksgiving, and certain summer months), low-cost destinations, low-cost departure cities, low-cost airlines, and low-cost advance-purchase fares.[/aside]