January 14, 2011

Should I Cash in Airline Miles Sonner or Save Them?

I currently have a little over 47,000 miles with Alaska Airlines right now.    A few years ago you could get a roundtrip ticket on Alaska for 20,000 miles but they have since increased the cost to 25,000 miles.   I should have probably used my miles sooner than now.  I figured I should decide on a plan to use the miles rather than hang on to them forever.

Theres a few options I've though of for using the miles:

1) I could use 20,000 of those miles to get $200 off of a reservation to some place like Las Vegas.   Thats about 1¢ return per mile. 

2) If I save up a few thousand more miles and hit the 50,000 level then I can get 2 round trip tickets to a destination in the continental US.   Tickets to visit my wife's family in the midwest would cost us $300 to $400 each.   That would be $600 to $800 total for 50,000 miles.   Thats 1.2¢  to 1.6¢ per mile return.t

3) We could go to Hawaii for 45,000 each ticket or 90,000 total.    Roundtrip to Hawaii is about $420 a ticket.   Two tickets is $840 so for 90,000 miles that would be just 0.93¢ per mile.

4) We could save up even more and get tickets to Europe.   Europe is 65,000 per ticket round trip so that would be 130,000 total for my wife and I.   Using Farecompare maps I can see that I could get tickets to Europe for as low as  $600.   Two tickets would cost us around $1200 so for 130,000 miles that would be a rate of 0.92¢ per mile.

With current costs the #3 and #4 options of going to Hawaii or Europe would not  be beneficial.   I'd have to save up a ton more miles and then the value per mile would be lower.

#1 and #2 options are the preferable choices.   If we save up a few thousand more miles then we could potentially get 1.2-1.6¢ per mile total.  

Option #1 is an easy way to get guaranteed value out of the miles and not have to wait longer to accumulate more miles.   However option #1 only has a 1¢ per mile return.    Option #2 would give a better return on my miles depending on choice of destination and the cost of tickets.

I could also buy 3 thousand more miles for a cost of about $83.    Then if I found a flight we wanted to take we could get 2 tickets using 50,000 miles.    This would be worth it if the price of the tickets were more than $553.   That would give us a return of over 1¢ per mile on the 47,000 miles we've got now.   Simply flying to Vegas would cost us over $500 so that wouldn't be too hard to do.

Bottom Line:  It would be best for me to cash in the points for a domestic flight of some sort.   Waiting for a expensive trip to Europe or Hawaii wouldn't pay off.

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