Use dollar or miles to book? A simple example
There are many schools of thought on calculating when it makes sense to use your miles instead of paying outright to book a flight. Here are a couple quick examples:
Instead of focusing on international first class travel and last minute travels, I will just show a simple formula I use to figure whether to use miles or points to book ordinary flights.
1. Figure out the worth of 1 mile or point (in USD) of the loyalty program you intend to redeem
This is pretty straightforward if you use a trusted source such as The Points Guy’s Mile and point value series. It is updated monthly, and includes many major Airline loyalty programs.
2. Get the cost of your flight(s) in USD
You can use anything to figure this out. I recommend Google Flights and Kayak.
3. Determine total mileage and fees (taxes, fuel charge, etc) for redemption
Those can be found easily using your award search features on your loyalty program’s website. In some instances, you do have to call the loyalty program.
4. Multiply total mileage required for redemption by a single mile’s worth (in dollars, not cents), then add the associated booking fees / taxes, etc needed to book the award ticket, and compare to cost for booking outright.
And if the total is less than the outright cost, that’s good enough for me to use my miles!
Here’s an simple example:
I am interested in booking a flight from Los Angeles to Denver in mid-February. I can see on American Airlines for $124 USD. If I use British Airway’s Avios, flying on American Airlines, it will cost me 7,500 miles + $.7.18 USD in taxes and fees. 1 Avio is worth $0.015 according to The Points Guy.
Knowing all this information, I simply plug the variables into the formula:
7500 * 0.015 + 7.18 = 119.68.
So, there we have it. $119.68 is what I have to look for. If the outright cost is less than $119.68, I should book using cash. If it costs more, such as in this example, I should book using miles! Now this of course is just a simple example and does not take into account of fluctuating ticket prices, as LAX – DEN should most certainly fall in prices from now between mid-January.