What is the value of miles and points by airline, hotel and credit card program? Miles used to be thought to be worth 2 cents. I think that conventional wisdom developed out of the idea that a cross country flight cost about $500… or 25,000 miles. 20 years ago that was generally true, and award availability wasn’t really a problem either.
That was long before:
- Airline alliances opened up huge possibilities to earn miles.
- Mileage programs increased the cost of many awards.
- Awards became tougher to get with flights full.
Plus the 2 cent number probably wasn’t ever a true value of miles to begin with.
Today the CEO of Delta talks about their miles being worth a penny. When American Airlines awards a mile for travel they book one cent of liability on their books under new accounting rules adopted for 2018. Those rules required the airline to accrue the expected value of transportation to be provided in exchange for their miles.
The genius of miles is that they are worth more to us than they cost an airline to issue, because frequent flyer programs are the largest purchasers of airline seats. They buy distressed inventory at a huge volume discount and sell those seats to us for points.
Many different folks have taken a stab at how much miles are worth. For this post I’m not going to give you a single number. I’m going to share my own rough and ready number for several different programs. And I’m going to explain how I think about the value of miles — why they are different for different people, and for different circumstances of how you plan to use them. And then I’m going to compare my values to those others are assigning to the same currencies.
I haven’t published updated valuations in nearly two years so it seemed like a good time to look at the value of miles. Plenty has changed affect the value of the underlying currencies since I looked at this last.
How to Think About The Value of Miles
Here’s how to think about the value of miles and points by airline, hotel and credit card program.
It depends on how you redeem them. What value are you going to get for your points? The important thing here is not to use the retail price of a ticket you’re getting, since
- with premium cabin rewards you might not have been willing to spend that much cash.
- Frequent flyer tickets aren’t necessarily worth as much as a paid ticket. They don’t earn miles. They may not be upgradeable. And you can’t necessarily just pick whatever flight you want, you have to be flexible and worry about award availability.
It depends on when you’re going to redeem them. You don’t earn a rate of return on miles and points like you might with cash in a bank or investment account. And you need to discount to present value if you’re going to use the points later. Plus there’s substantial risk of devaluation with many points currencies.
It depends on how many you already have. The value of points at the margin is different than an overall average value. As you approach having enough points for an award, the marginal value of a few more points goes up substantially — since those extra points are what make the award possible. On the other hand, once you have more points than you’ll redeem in the near-term the value of additional points falls since you may not ever use them, or may not use them under current award charts.
The value of a mile is the amount at which you are indifferent to holding miles versus cash.
If a mile is ‘worth’ 2 cents you should be equally happy with a mile or two pennies, if you’re offered a mile at a price of 1.9 cents you would be a buyer — you’d consider yourself to be earning a 5% margin.
Put another way, when we put a charge on a credit card, that doesn’t earn any bonuses (it earns 1 mile per dollar spent), we’re effectively buying that mile for 2 cents since the opportunity cost is putting the charge on a 2% cash back card. You’re revealing a preference through your behavior that you believe the mile is worth two cents.
Here Are the Valuations
| Airlines | |
| Air Canada Aeroplan | 0.014 |
| Air France KLM Flying Blue | 0.012 |
| Alaska Airlines Mileage Plan | 0.016 |
| American Aadvantage | 0.014 |
| ANA Mileage Club | 0.015 |
| Avianca Lifemiles | 0.014 |
| British Airways Executive Club | 0.012 |
| Cathay Pacific Asia Miles | 0.013 |
| Delta SkyMiles | 0.011 |
| Emirates Skywards | 0.011 |
| Etihad Guest | 0.012 |
| Hawaiian Airlines HawaiianMiles | 0.010 |
| JetBlue TrueBlue | 0.013 |
| Korean Air SkyPass | 0.015 |
| Lufthansa Miles & More | 0.012 |
| Singapore Airlines KrisFlyer | 0.014 |
| Southwest Airlines Rapid Rewards | 0.013 |
| United Airlines MileagePlus | 0.014 |
| Virgin Atlantic Flying Club | 0.010 |
| Hotels | |
| Radisson Rewards | 0.004 |
| Hilton Honors | 0.004 |
| World of Hyatt | 0.014 |
| IHG Rewards Club | 0.005 |
| Marriott Bonvoy | 0.007 |
| Wyndham Rewards | 0.008 |
| Bank | |
| American Express Membership Rewards | 0.018 |
| Chase Ultimate Rewards | 0.018 |
| Citi ThankYou Points | 0.016 |
| Capital One Miles | 0.011 |
The most valuable points, at the top of my currency list, are transferrable points. That American Express, Chase, Citi and Capital One (Venture/Spark Miles) points. You can transfer those into a variety of programs. Earning those gives you tremendous flexibility and optionality.
How to Use These Valuations
Since valuation here is the amount at which you are indifferent to holding miles versus cash this figure is useful for:
- Comparing when to spend miles or cash. Should I spend 50,000 miles for an award ticket or $700?
- Comparing when to spend on airline’s miles versus another for the same award. Should I spend 25,000 United miles or 35,000 Delta miles?
- Comparing the value of different credit card signup bonuses. Is an 80,000 point offer from Marriott better than a 75,000 point offer from Hilton? In fact, I view a 50,000 point offer from Chase Sapphire Preferred better than both.
- Determining which hotel chain offers the better value reward when you’re considering staying at two different hotels. Should you spend 12,000 Hyatt points or 35,000 Hilton points?
- Deciding whether to buy points when there’s a big bonus promotion.
- Figuring out how much extra you might be willing to spend to earn points through a bonus promotion, or figure out whether a hotel promotion should influence your decision about where to stay
But since the value of miles isn’t precise I won’t actually pay 1.4 cents for an American mile. I want to accumulate American miles when they’re substantially less costly than 1.4 cents apiece. And I know I am clearly not a buyer at 2.5 cents.
In practice these are fairly blunt tools that tell me “1 cent a point for American miles is a really good deal” but that I’m not going to spend 2 cents unless there’s a very specific scenario — like a few points at the margin to top off an account for an award I’ve put on hold — where it makes sense (and in that scenario, my valuation of each point is higher since they’re helping me to save with a real redemption).
How My Valuations Compare to Others
I thought it would be interesting to compare side-by-side how One Mile at a Time and how The Points Guy value miles in comparison to my valuations.
| VFTW | OMAAT | TPG | |||
| Airlines | |||||
| Air Canada Aeroplan | 0.014 | 0.014 | 0.015 | ||
| Air France KLM Flying Blue | 0.012 | 0.013 | 0.012 | ||
| Alaska Airlines Mileage Plan |
0.016 | 0.018 | 0.018 | ||
| American Aadvantage | 0.014 | 0.014 | 0.014 | ||
| ANA Mileage Club | 0.015 | 0.014 | |||
| Avianca Lifemiles | 0.014 | 0.014 | 0.017 | ||
| British Airways Executive Club |
0.012 | 0.013 | 0.015 | ||
| Cathay Pacific Asia Miles | 0.013 | 0.012 | 0.013 | ||
| Delta SkyMiles | 0.011 | 0.012 | 0.012 | ||
| Emirates Skywards | 0.011 | 0.010 | 0.012 | ||
| Etihad Guest | 0.012 | 0.012 | 0.014 | ||
| Hawaiin Airlines HawaiianMiles |
0.010 | 0.012 | |||
| JetBlue Truelue | 0.013 | 0.013 | 0.013 | ||
| Korean Air SkyPass | 0.015 | 0.015 | 0.017 | ||
| Lufthansa Miles & More | 0.012 | 0.012 | 0.014 | ||
| Singapore Airlines KrisFlyer |
0.014 | 0.014 | 0.014 | ||
| Southwest Airlines Rapid Rewards |
0.013 | 0.013 | 0.015 | ||
| United Airlines MileagePlus |
0.014 | 0.014 | 0.014 | ||
| Virgin Atlantic Flying Club |
0.010 | 0.012 | 0.015 | ||
| Hotels | |||||
| Radisson Rewards | 0.004 | 0.004 | |||
| Hilton Honors | 0.004 | 0.005 | 0.006 | ||
| World of Hyatt | 0.014 | 0.015 | 0.017 | ||
| IHG Rewards Club | 0.005 | 0.005 | 0.005 | ||
| Marriott Bonvoy | 0.007 | 0.008 | 0.009 | ||
| Wyndham Rewards | 0.008 | 0.007 | 0.012 | ||
| Bank | |||||
| American Express Membership Rewards |
0.018 | 0.017 | 0.020 | ||
| Chase Ultimate Rewards | 0.018 | 0.017 | 0.020 | ||
| Citi ThankYou Points | 0.016 | 0.017 | 0.017 | ||
| Capital One Miles | 0.011 | 0.011 | 0.014 |
Overall I think you’ll find that I value most currencies a bit lower than others do. That’s perhaps because I’m not saying just what can you buy with the miles but I’m taking a discount for time (when will you use them? they don’t earn a rate of return like cash does), a volume discount (if you have a lot the value of the marginal mile falls, pulling down the average) and a risk discount (miles are more likely to devalue than US dollars). I have a stronger preference for holding cash than miles than others do. Overall I’d say that Lucky’s valuations are closer to mine than the TPG team’s are.
How Do You Value Your Miles?
What is your value of miles and points by airline, hotel and credit card program?
Let me know if you think I’m off base on any of my valuations and make your case between me, Lucky, and the Points Guy team for whose valuations are most reasonable.
How did you calculate the Rapid Rewards Program in WN ( Southwest )? Is it an average or only weighted towards non companion pass travelers? Seems that the Companion Pass should be a boost? Wife and I LUV that program. I can book a flight on points and she comes alone for ~ $6.
I cannot figure out why Amex is given the value you give it. Several months ago I received an Amex card and quickly amassed more than 50,000 points. When I checked to determine what those points could be used for, virtually everything of interest priced out at .75 – 1.0 cents per point The exception might be Delta miles, which can be obtained at 1:1 exchange, but you do not give Delta a very high value. I wrote to TPG, complaining of its evaluation, but did not get a response. Possibly, through some “exchange” with another program, someone can find a fare on a foreign carrier that prices higher, but for me I am looking for easy ways to redeem points.
@James: As long as airlines have a fixed rate of exchange between points to tickets there will be times when airfares are relatively high and point awards are worth more than one point.
@Ryan Totally disagree with you. You’re only getting 28c/mile if the true value of the ticket is $20k. Given the games they play with ticket prices, that exact ticket might be $20k cash but one very, very similar might be $4k. So using $20k is falsely inflating your value, unless you actually would have paid $20k because that specific flight truly had that much more value to you. Few people would pay $20k for a seat when a similar one is available for $4k. But they’re your miles, and you can value them however you want.