The value of frequent flyer miles is something I’ve been calculating for years. I think what makes my approach different is I lay out the theory behind my valuations, I explain a lot of the moving pieces, and I present a comparison between my valuations and the valuations others are giving.
I first laid this out the value of frequent flyer miles in 2014 and then updated values in 2016, 2017 and 2019.
I skipped 2020 due to the pandemic but a tremendous amount has changed. Air Canada launched a new program with the same name (raising redemption prices but eliminating fuel surcharges), Delta and United devalued partner awards more than once, Capital One launched transferrable points mostly at 1:1, and new program Bilt entered the transferable points space – to name just a few things.
Remember When A Mile Was Worth Two Cents?
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. 25 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, since those flights didn’t earn miles or credit towards elite status and couldn’t be upgraded, but on the other hand might be used for expensive last minute tickets.
Fast forward and 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 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 consumers 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.
How to Think About The Value of Frequent Flyer 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 | Value |
| Air Canada Aeroplan | 0.014 |
| Air France KLM Flying Blue | 0.012 |
| Alaska Airlines Mileage Plan | 0.016 |
| American AAdvantage | 0.013 |
| ANA Mileage Club | 0.015 |
| Avianca Lifemiles | 0.014 |
| British Airways Executive Club | 0.011 |
| Cathay Pacific Asia Miles | 0.012 |
| Delta SkyMiles | 0.010 |
| Emirates Skywards | 0.011 |
| Etihad Guest | 0.012 |
| Hawaiian Airlines HawaiianMiles | 0.010 |
| JetBlue TrueBlue | 0.013 |
| Korean Air SkyPass | 0.014 |
| Lufthansa Miles & More | 0.012 |
| Singapore Airlines KrisFlyer | 0.013 |
| Southwest Airlines Rapid Rewards | 0.012 |
| United Airlines MileagePlus | 0.013 |
| Virgin Atlantic Flying Club | 0.010 |
| Hotels | |
| Choice Privileges | 0.006 |
| Hilton Honors | 0.004 |
| IHG Rewards Club | 0.005 |
| Marriott Bonvoy | 0.006 |
| Radisson Rewards | 0.003 |
| World of Hyatt | 0.014 |
| Wyndham Rewards | 0.008 |
| Transferable Programs | |
| American Express Membership Rewards | 0.017 |
| Bilt Rewards | 0.017 |
| Brex | 0.013 |
| Capital One Miles | 0.016 |
| Chase Ultimate Rewards | 0.0165/0.0175* |
| Citi ThankYou Points | 0.016 |
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.
I’ve given two different values for Chase’s Ultimate Rewards which are transferable to miles and points. The higher value applies to those customers with a Sapphire Reserve or J.P. Morgan Reserve card, who can redeem their points against certain categories of charges at 1.5 cents apiece in cash (versus 1.25 cents apiece for other Ultimate Rewards cards with transferable points).
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 1.3 cents for an American mile. I want to accumulate American miles when they’re substantially less costly than 1.3 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.
| Airlines | VFTW | OMAAT | TPG |
| 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 | 0.013 | 0.015 | 0.014 |
| ANA Mileage Club | 0.015 | 0.014 | |
| Avianca Lifemiles | 0.014 | 0.014 | 0.017 |
| British Airways Executive Club | 0.011 | 0.013 | 0.015 |
| Cathay Pacific Asia Miles | 0.012 | 0.012 | 0.013 |
| Delta SkyMiles | 0.010 | 0.012 | 0.011 |
| Emirates Skywards | 0.011 | 0.010 | 0.012 |
| Etihad Guest | 0.012 | 0.012 | 0.014 |
| Hawaiian Airlines HawaiianMiles | 0.010 | 0.009 | |
| JetBlue TrueBlue | 0.013 | 0.013 | 0.013 |
| Korean Air SkyPass | 0.014 | 0.015 | 0.017 |
| Lufthansa Miles & More | 0.012 | 0.012 | 0.014 |
| Singapore Airlines KrisFlyer | 0.013 | 0.014 | 0.013 |
| Southwest Airlines Rapid Rewards | 0.012 | 0.012 | 0.015 |
| United Airlines MileagePlus | 0.013 | 0.014 | 0.013 |
| Virgin Atlantic Flying Club | 0.010 | 0.012 | 0.015 |
| Hotels | |||
| Choice Privileges | 0.006 | 0.006 | |
| Hilton Honors | 0.004 | 0.005 | 0.006 |
| IHG Rewards Club | 0.005 | 0.005 | 0.005 |
| Marriott Bonvoy | 0.006 | 0.007 | 0.008 |
| Radisson Rewards | 0.003 | 0.003 | 0.004 |
| World of Hyatt | 0.014 | 0.015 | 0.017 |
| Wyndham Rewards | 0.008 | 0.007 | 0.011 |
| Credit Card | |||
| American Express Membership Rewards | 0.017 | 0.017 | 0.02 |
| Bilt Rewards | 0.017 | ||
| Brex | 0.013 | 0.011 | 0.017 |
| Capital One Miles | 0.016 | 0.017 | 0.0185 |
| Chase Ultimate Rewards | 0.0165/0.0175* | 0.017 | 0.02 |
| Citi ThankYou Points | 0.016 | 0.017 | 0.017 |
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. For avoidance of doubt I’ll add as well that I have never taken payment for my valuation numbers, and I’ve never felt that I need big numbers to make exaggerated claims about the value of a credit card.
How Do You See The Value Of Frequent Flyer 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 with the value of frequent flyer miles and make your case between me, Lucky, and the Points Guy team for whose valuations are most reasonable.
@ Gary – IHG is not worth 0.5 given that they sell them at this price almost continuously. I value them at 0 4.
I find Hyatt to be worth 1.5-1.6.
Bonvoy is too low – As dumpster fire as it is and the looming dynamic pricing, it has a floor value of 0.7c/p due to it can transfer to practically every airline mile in the world, many being obscure.
And Hyatt is too low too, if it’s 1.4c/p, it wouldn’t be one of best use of UR.
You are missing a zero in the UA and Marriott valuations 😉
AA is too high. It’s rare to get that value. They cost more in miles than DL does most of the time.
When calculating the value of points/miles, I always wonder whether there should be a deduction because of all the time you sometimes need to expend to use them. How many hours do you spend screwing around to get value with some of these currencies? A LOT I wager.
For cash, boom, your deal is done. Often with points/miles, not so much.
It all depends on routes and properties . . . as well as redemption strategy.
For me,
American Airlines = 2.68 cents per point
British Airways = 2.90 cents per point
Marriott = 3.25 cents per point
Admittedly, my numbers are likely outliers.
@jason – the value is primarily derived from partner redemptions
@ethan – I did factor transfer value (3:1, plus bonus) into the equation. that transfer value makes it at good as bank transfer currencies. I think it’s reasonable to argue whether it should be $0.006 versus $0.0055, but $0.007 is definitely too high.
As I reconsider it, $0.006 probably does make more sense when factoring both the breadth of transfer partners and the transfer bonus at 60k Marriott points (into 25k miles instead of 20k with many partners)
would be easier to read to show in cents instead of dollars – just saying
I’ve always appreciated your approach toward valuation as it is more properly rooted in economics. I used to take omaat’s approach, focusing on the value of redemption, but when I think about holding cash v holding points, my valuations tend to decline. Also, now that my travel has shifted from solo travel internationally to family domestic travel, my valuations are going down because I’m not booking business and first class tickets.
Also, I think focusing on the marginal value of points is important, especially for points lacking flexibility. Right now I have more Avios than I can use so I wouldn’t be a buyer unless the price dropped substantially. Chase points, however, being fairly flexible, I’d love to get more of. Still, even if i could buy chase at 1.5 cpp, I’d prefer cash because I’m not traveling enough to get high value from points.
Each person has different travel patterns and different preferences though so under Gary’s methodology valuations should vary from one person to another. That’s normal.
My comments
1) Marriott, Hilton, Hyatt, and probably IHG are all too low given the increase in room rates at popular redemption options. I would put Marriott at 0.8 to 0.9, Hilton at 0.7, Hyatt at probably at 1.6 or 1.7.
2) Delta is 1.1. At minimum is worth 1 cents with pay by miles. You also get 1.3 or 1.4 pretty easily on many domestic routes, including first class. Finally Delta award tickets earn elite miles and are upgradeable.
3) American and United are both rightly around 1.3
4) In terms of transferrable currencies, I would rank Amex > CSR > Cap One = Citi. Amex has the widest variety of partners, frequent transfer bonuses, are easy to use, and in a pinch can be cashed out easily via Schwab or booking FHR at 1 cent per point. CSR has the travel portal and PYB benefits and a solid list of partners, including Hyatt. Cap One has a good list of international partners and unique cash out options (Amtrak). Without AA, Citi seems weakest here nowadays.
I would value Alaska miles slightly higher since (with status) you do have a chance to upgrade on award tickets.
A very useful chart. Thank you for sharing this, Gary! And it’s not surprising that OMAAT and TPG valuations are a bit higher. The bottom line is what flights are available for miles when you need to book and how many miles are needed. As AA has cut back on what flights are available for mile redemption, perhaps their valuation is a bit high. United hasn’t done any favors to the mile redemption community by increasing their mile requirements for flights either. A race to the bottom from what was once highly rewarding.
For a long time, trying to maintain status, it was difficult to use FF miles, as I would barely qualify. Using bargain basement fares my company would require me to pick, it was hard to pick one airline over another, and didn’t have enough personal flying to allow some trips to be on points while paying for enough to get status. At that time, the points just sat. The first time I had a free trip was when American matched an early Midway promotion in the early 90’s, when I got two free tickets for 5 round trips, and earned enough miles for one more free trip. I did not get any flights on points again until a 2020 flight to Hawaii. To be honest, I get much better return on cash-back cards, unless using the card gets status. But, putting limits on how much status one gets per year puts that card in the back of the wallet once that limit is reached.
If you redeem only for F, does that change your values? I find AS is usually 80k one way on things like Lax to Hawaii or Costa Rica. So I think the valuation is a touch high.
Also, I value Chase more than the other transferable because they are the only ones with decent hotel partner for transfersing points at a fair ratio.
@ Anthony — You don’t earn RDM when you pay with miles, so the pay with miles option is only worth 0.9-0.95, depending on your status. Likewise, while you can get redemptions at 1.25-1.40, those are only worth about 1.12-1.33 after you factor in the RDM you do not earn.
Overall, I value DL miles at 1.0-1.1, depending on the day you ask me…This pathetic valuation is why I ceased using their credit cards in mid-2020. I don’t foresee ever putting any significant spending on their cards again.
If you can get 2 cents or 2% back from CC spend and airline miles average rebate of about 1.5 cents per dollar, why continue to collect airline miles unless there is a sweet redemption spot?
@Ken A Mainly because you can get outsized value on J/F on transfers and partner redemptions. Like 125-145K Amex pts for J class Turkish flights via Aeroplan or Avianca. Which give you about 3-5 cent redemption value. Or domestic redemptions on miles and smiles for 15K RT via Capital One or Citi pts. That 2% only ever gets you 2%.
I know the value of the points are fixed, but you should also include Accor here. The points are transferable to a wide range of airline partners and at a surprisingly good rate (better than Bonvoy). The main issue is the difficulty in accruing said points, though that’s alleviated somewhat with Capital One. For non-North American based readers, Accor is a very real, and very ubiquitous option.
@Gene, actually for the rest of the year, flying DL on miles still earns MQMs and MQDs all with a multiplier so for the next 50+ days, I’d definitely value DL > 0.010.
After that, it’s absolutely reasonable to value them at a cent, even if I can very often find more outsized value.
Points/miles have zero value until you redeem them. 🙂
But overall I think your values are much more spot on than either OMAAT or TPG.
@jason, @gary:
My last three AA redemptions have been on domestic AA metal for 2.7, 3.3 and something like 15 cpp (the last one was a 13.5k web special for flagship first.). That value isn’t always available, but frequently enough that I don’t seem to have any trouble keeping our AA balance close to zero.
The bloggers really inflate Hyatt…. There is no way these points are worth that much, but then again very few Hyatts are worth the price one pays to stay there.
One irritating element that has always bugged me is the push to redeem miles for first or business class tickets. I have 5 people in my family and blowing 120,000 points on a single ticket to Europe in first versus 5 tickets for 300,000 points seems like such a waste. Yes, I might get 5 pp$ redemption “value” for a $20,000 first class ticket, but there isn’t an opportunity cost there. I would never pay $20k for ANY airline ticket, so it’s a false substitution. They’ve yet to invent a product at the front of the plane that is worth 10x the value of any seat on the plane, unless you have more money than reason. United is worth 2.5 pp$ because I can get anywhere in Europe for 60,000 pts and that usually equals about $1,500.
Hyatt us my hotel of choice now. Hyatt values loyalty and rewards their customers the best!
Just enjoyed AA valuation of 2.6 cents/mile on a roundtrip ticket sitting in Qatar’s Qsuites.
Garry, given you love Australia sooo much, have you considered a valuation for Qantas points please?
Thank you Gary! Very helpful article and quick cheat sheet for me when deciding which credit card to use.
Point value should be ranges with the low being an easy redemption (like an everyday economy award on UA) and the high being the cpp one would pay for an aspirational award (based on saver J prices). For example, I wouldn’t pay $7k for round trip biz class but I would pay 2-2.5x the economy fare, so I use the latter value to calculate cpp. With this method, UA cpp would be 1.0-1.55 cpp. One consequence of not overvaluing biz class awards is that international economy awards count for better cpp than biz when the biz surcharges are high
VS miles definitely are worth more than VFTW’s valuation of a Penney, if you redeem them on NH First or Business – now available as one-way options.
@Reno Joe: how do you get so much value from Marriott points? I’ve got a load of them so could use your advice.
Does this valuation factor redemptions from their partner carriers? Also, will this account on availability of awards on any given date.
To remove bias, may I suggest picking 4 arbitrary redemption dates (weekday off peak, weekend off peak, public holiday travel and peak travel). Redeem for the same dates all across the board and then report the valuation.
@Ken A – one reason is that while each point/mile may be worth 1.5 cent you can earn multiple points/miles from a transaction. You use the example of a 2% cash back card. However, with CSR you get 3 points per dollar spent on travel so at 1.5 cent a point that is a 4.5% payback.
Amex Gold gives 4 membership rewards points for dining and groceries. At Gary’s value of 1.7 cents each that is a 6.8% rebate which is pretty good and much better than you will get on cash back cards
These look like excellent floor values for points & miles.
Some “externalities” to figure in to the calculation
a) Most of us are never going to “save” money by not spending 800.00/night in the Maldives. Please lets base the assessments on an average, realistic property
b) European airlines charge a premium for business class because it’s a rare tax break for business people. You can’t value points at those prices, that’s not the real value of the seat…
c) Especially on British Airways with its colossal co-pays. And you need to factor in the chance of being bumped off your flight on the day – Heathrow is all logjams and hold-ups and British Airways still maintains its spiteful attitude to latecomers (google “Conformance”)
d) You didnt mention Qantas miles perhaps because they’re damn near worthless. Redemptions few and far between, huge burn rates and walloping co-pays like BA. Today Qantas has a 30% off sale for redemptions but they’re still about 40% higher than AA miles for the same seat.
e) Shonky programs like Lifemiles you have to factor in the chance of something going hopelessly wrong. Horror stories of people buying a stack of Lifemiles for an award then the booking page crashes at the key moment. And the call center, while helpful and friendly, is looking at the exact same page as you.
f) When dealing with tricksters who conceal their price list (United, Delta etc) you’d want to assess a 50% discount on the unknown future value of these miles.
@gary Based on these valuations, would you agree that it if you qualify for Bank of America Rewards top elite program and earn 2.625 points per dollar that are redeemable for a penny a point, it is where you should put most of your spend that only qualifies for 1 point per dollar?
@Shon – these are average valuations but it still depends on how many points you have in a given program and how you’ll use them. For many that will make sense.
Not seeing Turkish miles valuation .