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Business Travel Travel Industry Travel Tips

Top 3 Mistakes People Make With Their Airline Miles

I recently came across an article by The Points Guy that identified ten mistakes business travelers often make with their frequent flier miles. It was so helpful, I wanted to share what I thought were the top three mistakes and how to avoid them. For the other seven mistakes, visit The Points Guy.

Top mistakes business travelers make with their airline miles

  1. Letting Miles Expire – Leaving miles unused for a period of time can result in expiration of those miles, rendering them useless. The expiration term is different for each airline; some may only be 12 months, others are seven years. An easy way to avoid losing thousands of earned miles is to keep them active by making a cheap purchase in your program’s shopping portal, something like a DVD or an iTunes song. At this rate, you’re “spending” 99 cents or maybe a few bucks to hang on to your miles!
  2. Redeeming Miles for Merchandise – If you are contemplating a new big screen TV or hanging onto the miles you earned on that spontaneous trip a few years back, you might decide the TV holds more value for you. However, before unloading all of those miles on merchandise, make sure you understand the value of the exchange that is taking place. You’ll likely get a better deal using your miles on airfare and purchasing the TV with your airline credit card.
  3. Hoarding Them – Earlier this year, Christopherson Business Travel published a blog post about the recent changes to United Airline’s MileagePlus® program. Delta too has introduced updates to their SkyMiles® program and American Airlines is right behind them. My advice is: Don’t hoard your miles. Unlike some assets, miles typically lose their value over time. With airlines’ evolving award schedules, mileage requirements are rarely decreased to obtain your next reward.
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Travel Management

How to Manage and Get the Most Value Out Of Your Mileage

As airlines grow smarter with rewards programs so should you.  Award seats are harder to come by because airlines are tightening their belts, and taking advantage of all ways of accumulating miles and redeeming awards.  Arm yourself with the best information on how to be a savvy frequent flier in today’s climate.
KNOW THE VALUE OF A MILE  The key to redeeming miles lies in how the airlines value them.  The industries rule of thumb has always been that a mile was worth about two cents.  The underlying formula:  25,000 miles were required for one round-trip coach ticket, which was estimated to have an average price of $500.00.  $500.00  ÷ 25,000 = $0.02.  But discount airlines and Internet fares have forced ticket prices down:  the average domestic round-trip fare was $362.00 in third quarter of 2008.  One mile has depreciated to around 1.5 cents today.
DO THE MATH  To decide how much an award ticket is worth, make some basic calculations.  Redeeming award seats makes the most sense when the cash value of a ticket is roughly in line with its cost in miles. For instance, when you find a last minute flight to a popular European destination that costs $600.00, and use 60,000 miles – or 1 cent per mile to buy it.
USE A MILES-CASH COMBO  Half the battle of using award miles is finding available seats.  Some newer programs offer a compromise:  Delta’s Pay With Miles program allows you to “purchase” seats with a combination of miles and cash without having to worry about award seat availability.  With Delta’s Pay with Miles you can use 10,000 reward miles to knock down the cost of the ticket by $100.00. 
Finally, be aware that the miles you will – or won’t – earn are a factor in the “real” cost of the trip.  While crunching the numbers is more subjective than ever, at least now you have some options for spending a little less (in miles) in exchange for certainty.
DH