Why The Points Guy Systematically Overstates The Value Of Miles

Last month I updated how much I value each frequent flyer currency at and in doing so I laid out how I think about valuing miles. I also compared the most recent values I gave to miles against those from both The Points Guy and One Mile at a Time websites so that you can compare.

The Points Guy site has announced a new way they value miles and they’ve updated their valuations for Delta, United and American Airlines so far.

They look at a bunch of data comparing what miles buy you in terms of airfare at each of those three airlines to come up with a value. It’s an interesting big data project. Reader Nick asks me to go into detail on what I think they get right and wrong,

Longtime reader (since 2014/2015, not sure if that’s long or not actually) of your blog. I also have been reading TPG since the early days and OMAAT as well. Would love for you to do a piece commenting on TPGs “New” valuation. Thoughts on what they get right, and what they get wrong. I realize I am biased as a loyal UA 1K, but their valuation of AA seems wildly high to me. Also there seem to be some major flaws with their new weighting logic, but I’ll let you be the judge of that since you’re the expert.

And hey, maybe you actually agree with them…still would like to hear your thoughts.

How TPG Updates Their Mileage Valuations

First, here are the values they come up with.

  • American moves up from 1.4 to 1.68 cents (I value AAdvantage miles at 1.3 cents)
  • Delta moves up from 1.1 to 1.48 cents (I value Delta miles at 1 cent)
  • United moves down from 1.3 to 1.13 cents (I value United miles at 1.3 cents)

They took “the lowest cash and award prices for a seven-day, Thursday to Thursday round-trip itinerary..for each week and on each route over the three-month period.”

They excluded basic economy fares (redemption tickets on airlines other than Delta are always more flexible, but this means comparing to higher fares and getting a higher points value). They weighted their data 20% business class, 80% economy. And they look at roundtrip itineraries versus one way (with American and Delta this would seem to bias towards higher valuations since roundtrip awards can cost fewer miles).

It appears they looked only at using United miles for United flights and Delta miles for Delta flights, since they note that they did not consider award availability as part of this exercise but that all flight options were available on points at some price. I’m not sure how you can claim to value miles without considering using them on partners.

It’s an interesting exercise using 3 months of data, and they haven’t released the full detail of their findings, which routes for each airline, which prices? That makes it a bit difficult to evaluate. But I think it’s pretty clear that their approach is systematically overstating the value of miles.

They’re Answering The Wrong Question

This exercise isn’t answering the question “what are miles worth?” they are answering the question “how much airfare will miles buy?” They are related, but the second question is only one piece of data you need in order to answer the first.

That’s because even if you can get $14.80 in airfare for 1000 Delta mile you’re still going to prefer $14.80 cash over 1000 miles if you had to choose. They aren’t equivalent.

  • You can buy whatever you want with the cash, but you’re restricted to spending Delta miles however Delta says you can
  • Even in an era of elevated inflation, there’s far greater transparency over how much things are going to cost in money than in miles
  • You can earn a rate of return on your money – outpacing inflation – while your miles are only going to become less valuable.

Answering the question how much airfare do miles buy is one way to start an answer to how much are miles worth, it is not the answer. It’s the maximum possible number you can get to, but then you need to take discounts against current buying power for currency risk (devaluation) and time (discount to present value when you’ll redeem in the future).

Any valuation also has to recognize how contingent it is. For instance the value of a mile depends on how many miles you already have. If you have 23,000 miles and earn 2000 more to put you over the top for a 25,000 mile award, those last 2000 miles have much greater value at the margin that the ones you acquired earlier. (You’d be willing to spend more to accumulate them, since it’s those extra points that make the award possible.)

Finally, something that the TPG analysis overlooks completely is that when they compare the cost of a paid ticket with the number of miles an award costs, the award also gives up earning miles. They should be backing out the mileage-earning foregone from their valuation or that’s another way they systematically overvalue miles. If a mile were worth 1 cent, a general member gives up 5% by redeeming and a top tier elite gives up 11%, which needs to be backed out.

If they simply presented “here’s how much airfare your miles can buy right now” this would be an interesting exercise, enlightening even. However it purports to prove more than it does, and in doing so may lead readers astray overvaluing their miles in comparison to money.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. The Points Guy is for amateurs and social justice warriors. I haven’t read anything from them in years.

  2. @ Gary — I have found that AA has outstanding award prices of late, while United’s are uniformly horrific. Delta is pretty awful too, but at least fairly predictable. As of today, I might value them at AA 1.6, UA 1.1 and DL 1.1. The AA award pricing is too good to last, and I am sure am glad that we have approximately zero UA miles.

  3. The problem with all of these “values” is that they assume one might pay the cash price for the ticket. But that’s not always true.
    For example, if a Business class ticket is $10000 and you pay 300,000 miles for the ticket, the math says its worth 3.3 cents per point. But if you were never even going to consider business class and the coach ticket was $800, you probably would have paid $800 for coach. If you think the upgrade is really worth $9200, you are crazy.

    Additionally, let’s take a hotel example. Let’s say the Hilton is $400 per night and only 40,000 points, it looks like a great value at 1 cent per point. But if you would have easily stayed at the Hyatt across the street that’s going for $150, you aren’t really saving $400.

    Third point… some programs have very consistent values… for example Jetblue and Southwest are basically pegged at 1.3 cents. You aren’t going to get much more than that, and not get less than that. Other programs have wild swings. You might get 0.8 cents on Delta, but you might (maybe 5% of the time), get 2.5 cents. With Hyatt, you might be 1.0 cent, but 50% chance you might get 2 cents, and 10% chance of 3 cents. Would someone rather get a consistent value, or a rare chance at a great value.

  4. I’d love to see this methodology for LifeMiles. I’m guessing not many people use LifeMiles to book Avianca.

  5. The very simple answer why TPG has high values for some points is because they make money pitching certain credit cards over others. It’s simple. They are very biased.

  6. Frequent flyer miles are worthless. Airlines could end or drastically change their programs tomorrow. They are no different than supermarket coupons, when the store hurts for money, they make an excuse to not honor them…..same goes for frequent flyer miles/programs. As soon as the airline execs decide that changing or ending those programs will get them a bigger bonus, they are gone….

  7. Let’s not impugn motives here, they’ve gone through an interesting data exercise. I just wanted to offer the reasons why their approach systematically overvalues miles. I thought it was important to push back on this being some sort of standard or viewed as being somehow a scientific way to do it, because I think it’s wrong.

  8. @Gary: Is the overvaluation a constant? If so, just publish the factor, then we can all “Lefficate” The Points Guy’s numbers.

    He has the best presentation and keeps the valuations up-to-date.

  9. @Gary: Don’t forget, miles can be better inflation protected than dollars as they are claims on real assets.

  10. TPG – TCCG, aka the Credit Card Guy who wants you to donate to every charity he is for. Worst blog out there. Can’t even comment on their posts. What a joke.

  11. If I understand the methodology correctly then the issue of award inventory is graver than just neglecting partner airlines. On Delta for instance the cheapest award out of New York is often a departure from Newark followed by a tour of midwestern hubs while the cash flight is direct from JFK or LGA – depending on circumstances, these are arguably different products. (This can of course cut both ways: on January 2 I am happy to save $500 and get home by any convoluted means.)

    This also presumes that miles are substituting for cash spending that would have otherewise happened – shaky even for mundane domestic economy tickets, let alone aspirational partner redemptions.

  12. TPG is such crap. The deactivated comments because they couldn’t handle being called out for how often they get things wrong.

  13. Gary using words with little sense of what they actually mean. Kinda like his COVID comments. How about a little honesty. Most readers know TPG values do not match their experience. TPG gave you a method but no actual datapoints. Most likely interpretation is TPG simply lied and inputs never generated those values but being dishonest helps hawk more credit cards. Kinda like Gary’s blog.

  14. The only information that TPG’s new “valuations” gives me is which airlines are “sponsoring” them right now.

  15. @L3 – miles aren’t claims on real assets, you can exchange them for things (a more limited set of things than you can dollars). You can’t go to American and say ‘here’s your published award chart you have to give me a seat at this price’ because American has twice as many price levels and only publishes the lowest ones.

  16. @L3 – here I’m referring to the values for UA/DL/AA with their ‘new methodology’ not their monthly values for all programs, which I do think tend to skew high but not at a constant rate.

  17. TPG is just fake news. I would note all of their experienced and trustworthy writers and editors have left in the last two years for people with almost no real travel experience. TPG depends on selling crack (credit cards) to addicts (readers) much more than View from the Wing. Even Ben at One Mile At A Time is getting pretty bad of late, focusing almost exclusively on credit card promos for content.

  18. @Joe

    You’re right about TPG. Any time a website disables comments or censors them, it is afraid that their content or views don’t hold up to scrutiny. I imagine UA-NYC is an avid TPG reader. The LGBTQAI propaganda is too much. 90% of people aren’t represented LGBTQAI.

    TPG used to be good but their content offers no value anymore. Some of the BA blogs do well at sharing interesting tidbits and deals/promotions tangentially related to miles and points. It actually puts money in my pocket or gets me a free meal. Even Gary helped us with the first Cardless card. TPG has become an extension of the airlines’ and cruise lines’ PR.

  19. TPG’s business is feeding the hype cycle around credit cards.

    OF COURSE they are going to over value miles. It feeds the machine. “Sign up for this credit card and get SUP3R HIGH Ultra Mega Value in points. . . according to our valuations”

    It also lets them do endless link backs: “. . . which I value at $X (link)”

  20. @Gary: Sure the range is limited, just as any stock certificate is. But “being a claim on” refers to the asset underpinning its value.That is a flight from A to B which, being a service, goes up in value with the price index.

    Miles are a claim on real assets. No doubt imperfect, but such a claim nonetheless.

  21. @Gary — Whomever one uses for a “point valuation,” it is never anything more than a rough measurement of supposed value that the consumer can try to exceed when spending points on airline tickets, hotel rooms, etc., etc. I’ll admit I feel bad if the point value is below that of TPG (and you, *when* you decide to update them), and I feel good if I can double the alleged value or more.

    That said, the point you make re: gaining points on a paid ticket versus giving them up on an award makes a great deal of sense to me, and is one I will add to my own calculations from now on.

  22. I have actually seen better values on AA and Delta miles recently, and it can be argued they are better than their cash value because of the ease now of getting your miles back on cancellations, where cash only gives you a credit with a year to use on that airline. Not agreeing with TPG just saying sometimes miles are more convenient as well.

  23. I think the utility of miles have been – during the pandemic – that they can be used to book flights that can easily be cancelled if need be, without the risk of locking up substantial amounts of cash in expiring credits or vouchers.

  24. @Gary: “That’s because even if you can get $14.80 in airfare for 1000 Delta mile you’re still going to prefer $14.80 cash over 1000 miles if you had to choose”

    Not so. You could obviously go either way. And the ideaof a price at which the consumer is indifferent has sound theoretical footing.

  25. @L3 I have written that the value of the mile is the price at which you are indifferent to holding cash versus miles.

    And in order to get to that you might start with how much airfare miles buy but discount for time preference and devaluation risk and for the limited set of things you can buy with miles versus cash to come to a lower value where that indifference makes sense.

  26. I’m with @Gene.

    @Gary – I think you’re incredibly generous in your take on TPG, who IMO lacks anything resembling honesty or integrity. While I have seen many instances to support my assertion, I have never seen anything to disprove it.

  27. More noise than signal, as usual, on a subject that not a single self-anointed “travel guru” knows a thing about. It is really rich for this site to find fault with the TPG’s methodology, which is actually more rigorous than anything this site has ever attempted. One can quibble about what should or should not have been included in TGP’s valuations, but I believe that the methodology is generally a good start because points or miles currencies have no value until after they have been redeemed. Until then, they have a “nominal value.” Therefore, a methodology based on something that is reasonably close to assessing the actual redemption values of miles (i.e., based on actual numbers) is way ahead of anything I have seen in travel blogosphere, where point/mile valuations have generally been pulled out of hats.

    The problem I see with TPG’s methodology is that it may not compare apples vs. apples.To do that it would have to select exactly the same parameters: destinations, fare classes including restrictions (e.g., weekend stay required), etc, etc, etc, and then use the resulting cash and point costs to compute the values of miles. The value of the UA mile could be lower in their valuation because the chosen destinations, fare classes, etc, etc, etc, lead to either proportionately lower cash costs or higher award costs, either of which would lower the value of a mile. The methodology is murky about exactly what data are recorded to compute the values that are tabulated and compared.

    Because a US cent is a US cent and, at least for the US “Big Three”, a mile is a mile since all three award approximately the same numbers of miles per cent spend, one can deduce that the monetary values of the mile of each of the US “Big Three” are nearly identical even without doing a “miles currency conversion”, as is required for hotel points currencies, which everyone invariably compares across programs without any attempt to make the spend/point equivalent.

    The reason loyalty programs copy one another is to maintain points or miles equivalence!!!

    I have confused everyone, but there is nothing new there.


  28. The way I use points valuations is to rank each airline on a stoplight chart -Green offers OK value, Yellow so-so value and Red little value. Pretty much year after year the airlines and hotels stay in the same bands. I adjust the value to how many points earned per dollar of MS and whether there are mitigating factors, like SWA’s Companion Pass which might double value. In my basement (Red) are:

    JetBlue, British Airways, Iberia, Aer Lingus, Delta, Frontier, Cathay Pacific, Asia Miles, Virgin Atlantic, Emirates, Avianca, Turkish, Choice, Club Carlson (Radison), IHG and TAP.

    I would not normally MS these programs, unless there was an exceptionally profitable sign on bonus. Some offer buying points or status opportunities that are profitable or the occasional promotion. I have used most of these programs in the past 5 years, but often using other currency to access inventory. Presently The Iberia-BA-Aer Lingus Card Trifecta runs about 300k points for 12k MS. Due to the intensive deposit transaction volume of MS it will be interesting to see what mischief Brandon’s IRS-on-Steroids does. IRS agent heads would have exploded with the billions of dollars moved through the banks in the Presidential Dollar days.

  29. I have made this point before regarding hotel points – right now, with hotel room inflation where it is, hotel points seem to be about 50% (or higher) kore valuable than they were a couple of years ago. This will change with peak/off peak, Marriott’s devaluation, etc, but right now it checks

  30. Miles are actually worth 0$… they don’t belong to us and have no cash value making all of those discussions flat out ridiculous.

  31. I usually compare several sources like the Frequent Miler and various other blogs when looking up the generic value of miles or points. There is no perfect way to value the miles or points. It can even be very personal. For example, an award flight to Hawaii can cost the same in miles from LA as it does from NY but it is two very different cash price equivalents and even products. It is in TPG’s interest to show a higher value so they can entice random folks into opening credit cards through their affiliate links and even to earn affiliate income when point or mile promo sales come along. It’s not a whole lot different than the “Top 10 Christmas Gifts for Travelers” or “Must have Travel items I Always pack” with a million links to Amazon. Actually it’s sort of like Boarding Area’s newish video pop-up ads and lower banner ads we readers just “love”. It’s about making money. Eventually, if it hasn’t happened already, the TPG site will be sold to some media company for a big profit. All that is fine if they are being honest will us and the Tic Tok crowd they are after. It used to be bloggers like that wore bowtie’s, not they wear beards and Hawaiian shirts. Whatever works for them.

  32. I think the sheeple who come to bloggers to get valuations are truly as the name implies.
    Valuations are personal and dependent on so many factors. Why do so many depend on others to tell them the value of a program’s points to them?
    It requires little math skills so that can’t be the reason.

  33. @DaninMCI – “Eventually, if it hasn’t happened already, the TPG site will be sold to some media company for a big profit.”

    TPG was sold to Bankrate nearly a decade ago, and Bankrate was acquired by Red Ventures which is the site’s current owner. Red Ventures also owns TV Guide, CNet, ZDNet, Chowhound, and others

  34. The value of miles and points is indeed very personal, depending on many factors. I value coach travel to Africa, so United miles are very useful to me for flying Ethiopian to multiple destinations on routes that are really expensive for cash and usually available for miles. I imagine at least 98% of the readers of this blog seldom if ever fly coach to Africa.

    For those who are aware of their personal uses and how they match up with the the various programs, blog-published valuations are not particularly useful. For the general public that dabbles in it, the TPG valuations can have some educational value in comparative terms (Hyatt points are more valuable than IHG points), though the fact TPG has a broad general readership that mostly isn’t expert at maximizing value means their relatively high valuations don’t correspond to what most of their readers actually get.

  35. The value of a point does not have a fixed specific position (as in classical physics). The value of a point is a fuzz ball (as in quantum mechanics) until observed by a specific observer at a specific point in time.

    Based on Mary’s routes and cabin class in December, AA points are worth X.
    Based on Fred’s routes and cabin class in January, AA points are worth Y.
    Based on Alice’s routes and cabin class in February, AA points are worth Z.

    Based on my actual routes, cabin class, and dates, AA points are of substantially greater value than what is published. Same for other carriers.

    It might be better to say something like:
    – if you’re realizing Z cents per point, you’re substantially out-performing

  36. Simple readers get simple data analyses and are happy. The Points Guy is doing just enough to keep his followers clicking. He’s staying one step ahead of his audience. Why do more?

  37. I think more worrying is the decision of TPG about a year ago to remove reader comments – almost like they are afraid of what their audience would say

  38. For the general public that dabbles in it, the TPG valuations can have some educational value in comparative terms (Hyatt points are more valuable than IHG points)

    – DaveS

    That is simply wrong, so here we go again…

    When adjusted so that one earns the same number of Hyatt and IHG (or any other program’s) points for the same spend, it is not at all true that “Hyatt points are more valuable than IHG points” or any other program’s points currency. Therefore, the purported “educational value [of TPG valuations] in comparative terms” is nonexistent. Instead , it perpetuates a colossal fantasy.

    You do not compare “kilograms/FAHRENHEIT degree” vs. “kilograms/CELSIUS degree” without first doing a unit conversion because, while a kilogram is a kilogram, a Fahrenheit degree and a Celsius degree are different units of measurement, even though they both measure the same quantity (degrees). A “kilograms/FAHRENHEIT degree” vs. “kilograms/CELSIUS degree” comparison makes sense only if Fahrenheit degree is first converted to Celsius degree or vice versa, which is trivial to do.

    If you agree with the above, then why would you compare “cents/HYATT point” vs. “cents/HILTON point” and claim that the Hyatt point is worth more (because the ‘cents’ is bigger) without first doing a points currency conversion, so that you would be comparing apples vs. apples rather than apples vs. oranges? You see, while both Hyatt points and Hilton points are a measure of the same thing (points currencies), like “FAHRENHEIT degree” and “CELSIUS degree”, they are on different scales (it’s why you earn 3x less HYATT points than you do HILTON points for the same spend; why awards in the two programs require different numbers of points; and why you cannot use Hyatt points to book award stays at Hilton properties)!!!

    Comparing ‘cents/HYATT point’ vs. ‘cents/HILTON point’, without first doing a points currency conversion (as you would, in fact, be required to do for hard currencies, like SG$ vs. US$) is just nonsensical.

    See how everyone, including self-anointed “travel gurus” who constantly peddle them, is confused about the relative values of points currencies, despite the concept being utterly trivial to grasp?


  39. Barclays AA cards give much better promotional offers and better sign up bonus but not pay for advertising

    TPG always chats up Citibank because they pay and basically ignores Barclays

  40. @DCS I hate to be the guy who says “Hey, everyone can be right” but I think your talking about the value of the loyalty PROGRAM and other folks are taking about them bake if an individual point.

    A program (A) that inflates both earning and spending by the same amount as compared to program (B) has an equal value as a PROGRAM while having a point value 66% lower.

    Which number is more useful depends on whether you’re trying to evaluate the program as a whole or just a pile of points (as in a CC bonus).

    Most “interesting” blogs turn things like credit card bonuses into “first year value” and ongoing program spend into “percent rebate” numbers.

  41. @LarryInNYC – I have no idea what you are talking about. Where do you think the bogus notion, repeated ad nausseam, that Hyatt points are more valuable than any other came from? Is it referring to the program as a whole? No. It refers to that one bogus claim (same one that was claimed about the now defunct SPG program), which is based on the universally misunderstood relative values of points currencies, as I just explained above for the millionth time.

    With respect to individual programmatic features, it should be YMMV, but even there, misconceptions and bogus claims pervade, like how the Hyatt Globalist status has no equal in the industry, which is just nonsense considering that the status is (a) one of the most expensive to attain, which anathema to the whole idea of the miles/points game, and (b) it does not get the 4th or 5th award night free, the single most valuable perk in hotel loyalty enjoyed by elites of programs that considered subpar.

    So, I have no idea what you are talking about when the pure bunk that I am pointing out is all over the place.

  42. Article title should be “How TPG’s System Overvalues..” not “Why TPG Overvalues…” Everyone knows “why TPG overvalues” – cuz they’re corporate shills. The “How” the is what the article is about, but Gary titled it the way he did for the amusement factor of everyone invariably trashing TPG in the comments. Well played Gary

  43. That’s a completely nonsensical methodology. For instance, money isn’t valued by how much dirt you can buy with it. No one with any sense is going to use a large amount of miles that way. It’s international travel, business class or first class, where all the value lies.

  44. I read at least 6 bloggers. TOG and OMAT pimp credit cards deals that give them the most. For example this week TPG pumped a 100k x10 Platinum offer instead of the much better Resy offer. I rely on frequentmiler and Doctorofcredit for honest best deal info but you are not bad as well.

  45. It seems to me that the starting point is to unambiguously. defining the question.

    If the question is I want to fly from A to B on airline C in class D in a defined date or time period, then a simple comparison of money and miles spent, including the hidden miles lost from BOTH the lost miles from spending less on a credit card and from not earning on the flight itself is sufficient. All of that is factual.

    If you add any dimension of individual choice, such as I would not pay that price, then no standard answer exists unless buying that same product at that price is a real and achievable option on this or any other carrier.

  46. TPG likely posted this methodology because it fits and supports their marketing narrative. Think about this for a second: if they came up with what they thought was a fair mechanism that gave them 0.85cpp valuation for United miles would we ever see it?

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