How I Bought American Airlines Miles For 67% Off!
As COVID-19 cases continue to surge in the United States, travel bookings have once again declined. It is almost certain that travel won’t return to normal in 2020. So during this downtime, I will share a little secret about how I buy American Airlines’ AAdvantage miles for almost 70% off!
I know what you’re thinking: this is crock and it involves some kind of illegal / frowned upon purchase / trade and it would result in your AAdvantage account being shut down by AA. Well, I can tell you this is completely legit; it does not involve you opening any credit cards; also, you would be getting the miles deposited into your AAdvantage account by American Airlines directly.
Want to know more? Read on!
How I Did It
I stumbled upon this by accident when I attended a charity event a few years ago. During the silent auction portion of the event, I noticed American Airlines was putting up 50,000 miles for bidding. To my surprise, it did not attract a lot of attention, and the few early bids were pretty low. I immediately took out my phone and researched the valuation of AAdvantage miles, and realized I had a chance to buy the miles at not just below retail pricing (as in purchasing directly from American Airlines), but even lower than the fair valuation as set by the top travel bloggers.
All I had to do at that point was to remember how I won too many eBay auctions in the past: wait until just before the end of the auction, make sure the price is still acceptable, and I put in a winning bid at $550 USD.
After paying for my winning bid (Note for those thinking about getting airline purchase bonuses on their credit cards: as this is a charity event, technically AA donated the miles, so the payee was the charity), I received a certificate with a code to deposit 50,000 AAdvantage miles:
Redeeming the certificate was pretty straight forward. I was a little surprised I got away with getting these miles for a great price (see below). And to prove to myself that this was no fluke, I won the same auction the year after.
The Math
As I bought 50,000 American Airlines AAdvantage miles for $550, let’s work out the cost per mile. Simply divide $550 by 50,000, and you get $0.011, or 1.1 cents per mile (cpm).
For those in the know, that is an outstanding value. According to The Points Guy, each AAdvantage mile is worth 1.4 cpm while Ben (Lucky) at One Mile At A Time puts its value at 1.5 cpm. Let’s continue with an example using Lucky’s 1.5 cpm valuation.
To work out how much 50,000 miles is worth when using those valuations. Simply do 50,000 x 0.015 and you have $750. I paid $250 less!
But Wait, There's More!
Good luck getting American to sell you miles at prices as valued by TPG and Ben (let’s call them fair value). You cannot buy airlines miles at fair value. Airlines will always sell miles to you at more than what they are really worth. After all, isn’t that how they make money? (For a case study, look at how United Airlines mortgaged their MileagePlus program last month to shore up their finances due to COVID-19)
Here is a great example: American is having a sale on AAdvantage miles this month. As Ben posted on OMAAT, AAdvantage miles are being sold at 1.76 cents per mile. But that is somewhat misleading: These sales are usually tiered, and you only get the maximum bonus or discount when you make a purchase in the highest discount bracket as dictated by the promotion. For this particular sale, the maximum savings (45% off) only kicks in if you purchase 150,000 miles or more. Sticking to 50,000 miles, this promotion gives a bonus of only 25%. Therefore, in reality, to buy 50,000 miles from American, it would cost you $1,278.31, and that’s during a promotion!
What is the CPM in this case? We can calculate that: 1278.31/50,000 = 0.0256, or 2.56 cpm! Not only is that atrocious, but at that price, you should only purchase miles if you actually need to top off your account in order to make a redemption and you have no alternative to get the miles you need. How much did I save in comparison to this pricing? $728.31, or 57%.
If we take away the discount, we can see that American is selling AAdvantage miles at 3.4 cpm regularly. Such price is extremely marked-up when you realize the top travel bloggers value 1 AA mile at less than half of that.
Comparing to purchasing miles directly from American Airlines without any promotion, I saved $1,154, or 67% off the ‘retail’ price!
What Can You Do With 50,000 AAdvantage Miles?
There are many ways you can use 50,000 AA miles. A few examples:
- 1 first-class or 2 economy round-trips from contiguous US/Alaska/Canada to Hawaii on American or Alaska
- 1 trip from Abu Dhabi to Singapore on Etihad’s 787 or 777 first class
- 1 trip from Singapore to Kuala Lumpur on Malaysia Airlines’ 737 business class
- 1 trip from Kuala Lumpur to Tokyo on Malaysia Airlines’ A350 or A380 first class
The above were just very quick examples. For more ways to spend 50,000 AA miles, see American’s flight award chart here.
Final Two Cents
So there’s my little secret. Go to charity events, have a good time, and stay for the auction! If you win, not only will you support a good cause, you will also feel like a million miles bucks after getting a great discount on buying miles (but don’t overbid, do your homework and know your limit and don’t go above it – otherwise it will no longer be a deal).
While this strategy is not always going to be available (Can you find many charity events with airlines auctioning off miles?), it isn’t limited to American Airlines either. I will be writing about a similar deal I got with another airline soon. Stay tuned!
