A couple of weeks ago a reader asked whether it made sense to stick with an airline or hotel program after achieving status, or is it better to switch programs and achieve status somewhere else?
In other words, do you enjoy the benefits of the status, or do you reach for more status?
And my answer was that it depends on what next year’s travel plans are likely to be. How much value are you going to get out of your elite status — either the first one you’ve achieved, or the second one you would go for?
You have to figure out what status is actually worth to you, in order to determine whether it’s worth going for.
Today Lucky declares on his One Mile at a Time blog, “I Think Elite Status is Worthless” … he realizes that mileage running to earn more status and more miles is tough, it takes up time, it comes with a cost that is in addition to the price of tickets.
He was looking at flying 150,000 miles on American because of their Elite Rewards program which offers a ton of extra miles for doing so. And he was looking at earning Alaska’s MVP Gold 75k status because of big incentives that Mileage Plan offers.
Lucky, like me, is an American Airlines flyer. He also lives in a Seattle suburb, making Alaska Airlines useful to him.
But he’s ‘behind’ on his paid flying. He contemplated several back-to-back Beijing trips just for the miles — in American’s old angled business class (upgraded from lowest price coach) without internet. It’s not that comfortable and it’s tough on the body and costs real productivity.
Then he thought about spending more money to fly the new, more comfortable and internet-equipped, Boeing 777-300ER to Brazil. And he realized – wow – he’s spending a whole bunch of money now.
At that point I got frustrated and just asked myself why I even bother going for status. I have roughly four million miles and points across programs (nothing compared to others, and sadly quite a few of them are Hilton HHonors points), and they’re constantly devaluing. So why on earth would I sit myself down on a plane with an angled flat business class seat for almost a week straight so I can start to get close to my mileage goal, when I could be redeeming millions of miles for Singapore Suites and similarly awesome products.
And the answer, which he sort of realizes, is that status is valuable for complimentary upgrades on his domestic flying which one is actually going to be doing anyway.
But that flying for extra redeemable miles doesn’t just cost money, it costs time. There’s lost productivity. And tradeoffs with other things you could be doing.
In other words you have to accurately figure out both the benefits and the costs. And a “six cent per qualifying mile” rule of thumb is a mistake.
There is no rule of thumb that works for everyone to determine whether taking a mileage run is worth it. That’s because everyone is going to get different value out of the status they earn, and because everyone has different tradeoffs – they value their time differently.
So when he was young and in college, the opportunity cost of his time was pretty low. Being up in the air was cool, it was enjoyable, and there weren’t too many other things he needed to get done that all the flying got in the way of. The costs were lower. Now he has to factor in the value of his time.
And when you’ve got a big mileage balance, the value of those incremental additional miles is much lower as well.
As I explained earlier in the week, the value of miles is not the cost of the ticket you buy with those miles divided by the number of points the ticket cost.
That’s especially true at the margin.. If you won’t ever use your very last mile, then the value of that last mile approaches zero.
(As I’ve debated with Ben in the past, the value of a mile is the cost at which you are indifferent to holding miles versus holding cash.)
- I believe that a mileage run — an extra trip for the purpose of earning redeemable miles or status — can make sense at the margin, when you’ve flown most of the way for status already and just need to put yourself over the top. And it’s rarely worth it just for the redeemable miles.
But that’s based on some embedded assumptions —
- that status is valuable based on flying you are going to need to do in the future, but
- that the opportunity cost of time is pretty high so you are spending more (ticket cost plus the value of time) than the redeemable miles you’ll earn are worth.
Someone who isn’t going to be traveling much (mileage runs aside) in the coming year won’t benefit from status.
Someone that isn’t working, that doesn’t have family obligations, may have a lower cost of time — and could still profit by earning miles through flying.
From what I know about Lucky, he should make sure he flies enough to earn American’s Executive Platinum status and probably Alaska MVP Gold status. And then he should stay home. He shouldn’t do extra flying to earn redeemable mileage bonuses.