We hope to visit both our grandparents in Asia in 2017, so I started exploring options and routes. Since I had some ANA miles from a previous redemption that I ended up canceling (for free due to schedule changes), I wanted to use those ANA miles for this trip.
Award availability on ANA (*A flights) seem to be pretty good for winter 2017 travel. They have a lucrative award chart and good redemption values for both economy and business class travel. I logged into the ANA website and started searching:
I would not pay cash for business class travel, but the award redemption rates are often tempting compared to economy. Furthermore, sometimes only business class redemptions are available, probably because the airline thinks they can sell out the economy cabin, but not the business class cabin. This presents an example of the calculations, opportunity cost analysis, and internal turmoil I am often confronted with while planning. Here is why (this is a typical real-world scenario):
Let’s say a flight SFO-HKG costs $1,000 r/t in Economy and that same ticket can be redeemed for 40,000 miles. The same flight in Business costs $6,000, but with miles its only 80,000. For only two times the miles, you get six times the value.
The opportunity cost is that you could get two economy tickets for the price of one business fare. That’s when you start to consider award availability, your mileage inventory, and the acquisition cost of additional miles. When I have a surplus, or when a program is about to devalue, I often attempt to liquidate using whatever means possible. And if there is business availability, but not econ (which is sometimes the case), using your miles is a better choice than not using them at all.
There is also a common measure for the value of an award redemption called “cents per mile” or CPM. In the above example, you get 1,000/40,000 or 2.5 CPM with one ticket, and 6,000/80,000 or 7.5 CPM. This is an over simplified way of estimative the value of your mileage redemption. I’ll write another post about why I don’t rely on it, but only use it as a starting point when determining whether or not an award is a “good use of miles”.
In conclusion, I normally redeem miles for economy class travel because that is how I stretch my miles. However, occasionally I splurge (with points) a bit and go for the nicer seat redemption when the situation calls for it. That’s another beauty of this hobby, having the option to enjoy experiences that are normally cost prohibitive or an unwise use of cash.
Have you redeemed miles for premium travel?