Advice: An actually very simple Introduction to Airline points and miles.

I have taken a few flights over the years. No doubt a modest amount from a business traveller’s viewpoint who may travel weekly, but quite a few nonetheless. I have circumnavigated the planet in one direction a couple of times, I have flown back and forth to Australia and New Zealand, and then again to Indonesia. Countless flights around Europe, North America, and the Caribbean. I have had the good fortune to fly everything from a small ‘puddle-jumper’ to an A380 – behemoth of the skies.

During all of this time, I have been committing a sin. A sin that lots of people commit, from seasoned travellers to once-a-year vacationers. We have all clicked the ‘continue as guest’ button when booking a flight and failed to enter a frequent flier number. Many of us haven’t even got a frequent flier number, I only got mine last year. No matter which way you slice it, I have been throwing away ten years worth of free flights, upgrades, and more.

It’s easy to understand why. The world of airline points and miles is dynamic, complex, and often downright confusing. For many, myself included, the perceived barriers to entry are too great, and it’s simpler just to treat flying as exactly that, getting from point A to point B in the quickest manner that we as a species have yet come up with.

Fortunately for you, during the last 6 months of having lots of free time due to lack of work, I challenged myself to teach myself this industry to improve my future flying experience. I have spent countless hours reading blogs, creating itineraries on airlines’ websites, doing calculations, and more. I have sifted through the noise and boiled this industry down into some very simple basic principles.

Read on to see what I found out. Note that this is a very basic introduction. If you like what you read, then continue your own journey into this world by reading more complex material. I will include links at the bottom to the websites that I personally found the most useful.

Enjoy!

Note: For simplicity’s sake, I have stuck with American Airlines throughout this whole article. This is not favouritism, but it’s simply that American have offered the best and most convenient routes from my home in Grand Cayman, to the US and beyond. They are also a partner airline with British Airways, and I am from the UK. Loyalty to American Airlines as BA’s partner is an obvious choice.

Firstly, you need to earn miles. To begin with, I will explain the various methods you can do this.

Method One: Flying!

The most obvious and well known method is to simply fly on the airline. Each airline calculates how many miles you will earn for a given flight differently, but one of the simplest to understand is American Airlines. They simply state that for every USD spent on a ticket – you will earn five miles. Note that if you earn status with American, the amount of miles earned per dollar increases. More on status later!

Eg: If your ticket was $500, then you will earn 2500 miles. Easy.

2500 miles sounds like a lot. However, if you imagine that a transatlantic ticket in economy class on American is around 30,000 one way, that’s a lot of $500 tickets you would need to buy. For this reason alone, many people could be put off from getting into collecting points and miles thinking that it’s just too unattainable. But, actually taking flights should be used in conjunction with other methods of earning miles too.

So, how else can you earn the miles?

Method two: Airline affiliated credit cards

The next option is credit cards. The second cardinal sin of the points and miles game is buying things with a generic debit card. Many credit card issuers partner with airlines to offer you miles based on your everyday spending. Not only this, but they often offer hefty welcome bonuses for signing up. I was once offered a credit card sign-up bonus of 70,000 miles – just for getting the card! That’s a business class flight from New York to London – for free!

But, I don’t want to accrue credit card debt!

Me either! Pay off your credit card each month and never spend more than you have. Simple.

Most airline affiliated credit cards offer between one and five miles per dollar/pound spent. Considering all of the ‘everyday’ costs in your life that could easily be put onto a credit card, and you can start seeing how those miles could add up. Car insurance. Household bills. Groceries. Going out for dinner. Netflix.

Thousands of potential airline miles and thus, free flights, wasted every year! Literally giving away free vacations!

Also, know that you can also use the credit card to buy flights. Double up! You get miles for physically taking the flight, and also miles for booking it with your credit card. Some providers such as Chase in the US, offer bonus miles when you use their card to book airfare.

Method three: Online shopping portals

Thousands of everyday retailers and household names also partner with airlines and offer miles on the things consumers buy from their websites. All a user has to do is sign up for the airline’s portal, then click through to their desired retailer. The cookies placed on your device tell the airline when a purchase has been made from the affiliated retailer and then boom! More miles!

Most well known brands are represented. As an example, I just replaced the anti-virus software on my computer. I clicked through to the software provider’s website through a portal and earned 750 miles for a purchase I would have made regardless.

To really hammer home the importance of these shopping portals, let’s take a look at another real example:

From time to time, Apple offer six miles per dollar spent through online portals. (Note: This happens roughly once every month, and then only for one day – so you have got to keep your eyes open for when the deal comes up!)

Let’s say then that you were in the market to buy a sweet new MacBook Pro, 16″ edition. This will cost you $2400 for the base model in the United States.

Option one: You go into an Apple store or order it online. You pay with a regular card (or cash?!) and walk away a proud owner of a new MacBook.

Option Two: Order through an airline’s portal during a six mile/dollar event and use a credit card that offers three miles/dollar spent reward.

Let’s do the math of option two:

2400 x 6 = 14,400 (buying through the online shopping portal)

+

2400 x 3 = 7,200 (using the airline affiliated credit card)

Total: 21,600 Miles

What can I buy with 21,600 miles? This was a simple search I did just now on the American Airlines booking page clicking ‘redeem miles’ first.

Awesome! That’s more than you need to book a round trip flight from New York to Los Angeles. A free vacation for buying something you probably would have bought anyway.

Sound good? Here are some links to portals. If your chosen airline is not featured, just google ‘airline name + shopping portal’

USA

American Airlines

Delta Airlines

Canada

Air Canada

UK

British Airways

Virgin Atlantic

Australia

Qantas

New Zealand

Air New Zealand

Method Four: Hotel/B’n’B Stays

A number of airlines have partnered with sites such as booking.com and AirBnB to offer miles based on hotel stays. This screenshot below shows a search I did on booking.com via the American Airlines portal. (www.bookaahotels.com)

And the same search using British Airways too. (www.booking.com/britishairways)

British Airways also have partnered with AirBnB…

Book the hotel with your affiliated credit card and earn even more miles! Are you starting to get the picture how all of this adds up fast? Double up on flights. Double up on the hotel. Any more?

Method Five: Renting a car

So, you have flown to your destination which earned you miles. You have booked a hotel which has earned you miles. Now, you can earn miles on the rental car you booked for your time away.

Sure enough, you can earn miles through your rental car too. Any ideas what happens when you use your co-branded credit card for that too? More Miles.

So, now you can see how easy it is to earn miles – how do we spend them?

Step One: Understanding the value of your miles

Knowing whether to use accrued miles, or simply buying a ticket using cash can be a tricky decision. It’s hard to know whether you are getting a good deal spending your hard-earned miles. I will try to outline how to work this out below.

  1. Go to your airline’s search page
  2. Search your desired flight
  3. Note the cost of the ticket in real money
  4. Then, do the search again. But check the box that implies you will use miles to pay for the ticket
  5. Divided the cash value of the ticket by the number of required miles to get the ‘per mile’ value of each mile
  6. Compare with a trusted miles valuation from one of the many websites that are out there. (Links below)

Note the example below with American Airlines – New York to Paris. The ticket would be $329.00 in economy or $2,229 in business.

The same ticket using miles would be 30,000 in economy, or 66,000 in business.

Some calculations …

Economy: 329 / 30,000 = 0.01 or 1 cent/mile

Business: 2,229 / 66,000 = 0.03 or 3 cents/mile

If the ‘per-mile’ value is greater than the industry-agreed level, then you have got yourself a good deal. If it is lower, then it might be better to pay with ‘real’ money. As you may now have noticed, you get much better value per mile for premium cabins such as business class. One of my goals getting into points and miles was to avoid 12+ hour flights cramped in economy on my future trips, so it’s encouraging to see that a big bonus of collecting miles is the prospect of future premium cabin redemptions! Bring on the Champagne!

A note on the value of miles:

There are professionals in the industry who tirelessly plug these kinds of numbers into a calculator from across the entire airline network monthly in order to come up with an ‘average’ value for each mile for each of the major frequent flier programs available. I have provided one of these links below. However, for our above calculations, it is generally agreed that American Airlines miles are worth 1.5 cents each – so for our economy class ticket we are getting bad value, but for our business class ticket, we are getting great value! Click the link below for an example of someone who values points and miles professionally.

Of course, if the whole reason you got into the miles game was for a ‘one-off’ dream trip to Paris, and you have accrued the right amount of miles for an economy class ticket, then you should just go for it regardless of ‘value’.

Step Two: Understanding alliances and partners

Most of the world’s major airlines (although not all) are members of one of the ‘big three’ airline alliances. These are Oneworld, SkyTeam, and Star Alliance.

Alliances are where various airlines ‘team-up’ to offer a global, cohesive flying experience across the globe. If a particular airline does not offer service in one particular area of the planet, chances are that one of their fellow alliance members does.

Also, outside of the alliances, many airlines have privately chosen to ‘team-up’ with other airlines, which offers a similar end experience to the traveller. This is called an ‘airline partnership.

What does all this mean for you?

If you fly a lot, chances are that you have found yourself, or will find yourself, in a situation where a particular flight you want to take is not offered by your chosen airline, or a different flight is cheaper. This is where alliances and partnerships come into play. Customers can earn and redeem miles freely between member/partner airlines, and more often than not, can use their ‘home’ airline’s search tool to find flights between any member/partner airline. This loyalty to one alliance can help you avoid having a low mileage balance scattered across lots of different airlines from all the various flights you take. You can simply keep all your miles in one account.

Let’s say, for example, you wanted to fly from Auckland, New Zealand, to Sydney, Australia:

Your ‘chosen’ airline where you hold all your miles (in this example American Airlines) does not offer this route, but you would still like to earn miles. (Of course!) Have a look at the screenshot below from Qantas’ booking page…

The dropdown box allows the user to select which frequent flier program they are a member of. This allows the Qantas to credit the earned miles to your preferred program. Easy!

Note that all of the Oneworld (the alliance that both American and Qantas are part of) airlines are listed, as well as Qantas’ partner airlines too.

What about other North American Airlines?

Delta Airlines are part of Skyteam along with AeroMexico, whereas United Airlines are part of Star Alliance along with Air Canada.

It’s worth researching further the alliances that are most relevant to you.

But, what about redeeming miles on alliance and partner airlines?

Easy!

I simply used my ‘home’ airline’s website to search the ticket that I wanted, and hey presto – there it is. I can use my American Airlines miles to book tickets with Qantas! See the screenshot below from the American Airlines booking page. Underlined in red it states that the flight is operated by Qantas.

Lastly – what is ‘Status?

Status is simply airlines rewarding the most frequent fliers with additional perks. Status is usually tiered based on how much you fly in a given year. As you earn each subsequent level, you get additional perks. These perks include things like lounge access, free upgrades, more miles earned per flight, and more. I won’t go into too much detail here as it’s another very deep rabbit hole of learning that is best covered in a separate post. But, it boils down to a basic fact:

‘The more you fly with one airline and it’s partners in a given year, you will earn increasing levels of status which grant you additional perks when you travel.’

I have included below a screenshot of American Airline’s status levels which includes a list of associated perks below each one.

Miles can not only be spent on flights, but also hotel stays and rental cars too. Effectively, anything to do with travel can earn you miles, and you can redeem miles on them too!

That’s it! I hope this article has helped to demystify an area that is intimidating for many people! I know certainly I have enjoyed my extensive research into the subject, and I look forward to improved travel experiences in the future. Please check out the links below to learn more about this area of the modern travel industry.

www.thepointsguy.com

www.thepointsguy.co.uk

www.onemileatatime.com

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