|by Jason Steele|
Every loyalty program has some sort of system where you can miles. Usually, they are a terrible option.
Take US Airways for example, for reasons that will become clear shortly. Their web site even has a promotion for “double miles” when you purchase them. Let’s see how this stacks up. Here is the offer:
2.5 cents per mile
$30 processing fee
50,000 miles maximum per transaction
So 50,000 miles multiplied by 2.5 cents a mile is $1250. Add in the “processing fee” and you get $1280. For that, they will give you a 50,000 miles plus another 50,000 mile bonus for a total of 100,000 Dividend miles. That works out to 1.28 cents per mile. That may or may not be worth it, depending on how you read their new, revised (devalued) reward chart, or their Star Alliance reward chart. Don’t forget to include all of their fees in your value calculation.
Now, whatever you do, don’t their miles until you read this:
Their New Promotion
Several bloggers including Gary Leff over at View From The Wing, and Richard Ingersoll over at the Frugal Travel Guy have done the math and found out that this new promotion at US Airways allows you to accumulate miles at .7 cents per mile, almost half of what US Airways is selling them for. Essentially, they are giving a 250% bonus for miles earned through their shopping portal. One of their merchants in particular, TrackItBack, gives a whopping 40 miles per dollar spent on their product, some kind of identification sticker that you put on your stuff in case it gets lost. 40 miles plus the 250% bonus equals 140 miles per dollar, or .7 cents ($0.007) per mile. I will let you read their work on the subject to get all of the details, and the details are important.
Gary deduces that you can get a business class ticket to Europe for $570 on a Star Alliance partner. You could also get a business class ticket to central or southern Asia on most any of the Star Alliance partners for $840. At that rate, you might as well go first class for a mere $1120.
Of course there are a couple risks, albeit minor. First, US Airways could devalue their Star Alliance rewards by requiring more miles and limiting access to available rewards. The real fear is that they might do that some time between now and March 1st, when they are supposed to credit the bonus miles. I doubt they could devalue them so much that it would cost more to book that had you paid cash. As with any airline reward, you must assume there are capacity restrictions on everything. This strategy is for people who can plan travel far in advance and have some flexibility in their travel arrangements. It also helps if you can get to your destination on US Airways, as their award chart for next year has already been disclosed.
There is another way to lower your cost on this promotionthat I don’t think I have seen other bloggers have mentioned yet. When you get your hundreds of TrackItBack stickers, put them on eBay. They may not have a lot of value, but you should get something in cash back from your miles. Of course, you should get a little cash back from your credit card as well.
My friend Shawn and his mother wants to fly to Paris for the Tour de France next year. Currently, round trip tickets in coach are running about $1700 each from Denver to Paris in the middle of July. Let’s say that they follow all of the instructions for the promotion very carefully, and finish with an order of $1800 in TrackItBack stickers, but only after making five or six very small purchases from other partners as required by the rules
By March, they have now earned 250,000 dividend miles. They have consulted the revised US Airways award chart that will be in effect after January 6th and realized that the “High” award tickets to Europe are now a maximum of 125,000 miles in coach on US Airways. This award should be available, so long as they do not have to travel on the blackout dates July 18 and July 25. If they are lucky, I suppose that there is some possibility that they might have a “medium” award available for 90,000 miles, leaving them with 35,000 extra miles each for future travel. If they are both smart and lucky, they will consult the Star Alliance partner award chart, and find out that the current price of award travel on a partner such as Lufthansa in First Class is also 125,000 miles. Even business class is only 80,000 miles and that is a fantastic experience. Sure, they don’t even offer First Class on their daily flight out of Denver, but I would make an extra change of planes just to experience it, if it were available.
So with taxes and fees, they might end up paying only $2000 for both of their seats to Europe, instead of $3400. There is that oh so tempting chance that they might do the trip in business class or even first, but it is hard to say considering they will only be able to book their July trip in March. Only in the world of award travel is planning nearly five months ahead considered to be last minute travel. Who knows, perhaps part of the $1400 saved will be used to purchase a nice replica Yellow Jersey for yours truly.