In defense of mileage running for top-tier elites

I have the rather unfashionable view that mileage runs on Delta, American, and United are more likely to be worthwhile for top-tier elites now that those programs are revenue-based than they were under the previous, distance-based regime.

Mileage running is definitely not for everyone: it takes time, and unless you actually like flying, it's not particularly fun. You may end up paying for transportation, parking, and meals, so it's far from free besides whatever you pay for your actual airfare. But there are still reasons you might consider it.

So here's why I don't think mileage running is dead.

Revenue-based programs give a fixed rebate on airfare dollars

Top-tier elites in all three of the legacy carrier frequent flyer programs earn 11 redeemable miles per dollar spent on airfare on their own flights.

That fixed rebate in miles produces a rebate in value that's likewise fixed, although not by the carrier, but rather by your own planned pattern of future redemptions. If you redeem miles for domestic economy flights, you might get 1.5 cents per mile in value. For international business class flights, you might get 2.5 cents per mile. And on partner first class flights, you might get 4 or more cents per mile in value.

In an extreme case, you could imagine a top-tier elite consistently getting 9.09 cents or more per mile in value, in which case their entire airfare expenditure would be rebated back to them in the form of a future high-cost flight: buy one get one free.

Most travelers, however, don't consistently get 9.09 cents per mile in value, and so even top-tier elites don't earn enough miles to completely rebate their out-of-pocket expenses, if they're paying cash.

Using fixed-value points to fund mileage runs

The above is a strong argument against paying for mileage runs with cash: the difference between the amount paid and the rebate earned in miles is too large to justify wasting a day or more in flight, unless you're very close to top-tier elite status and have no opportunity to qualify otherwise (and plan to fly enough the following year to take advantage of your top-tier benefits).

But what if you're able to fund mileage runs with cheaply-acquired fixed-value points? How would that change the calculus?

Rather than look at the out-of-pocket cost of manufactured spend, as I did last Thursday, let's look at four fixed-value currencies and compare a straightforward cash redemption value of 1 cent each to the redemption value when spent on a mileage run.

• Chase Ultimate Rewards are worth 1.25 cents in paid airfare, earning 13.75 redeemable miles for a top tier elite. To break even compared to a one-cent cash redemption, you'd need to get 7.27 cents in value per redeemable mile.
• Citi ThankYou points in a Citi Prestige account are worth 1.33 cents when redeemed on Delta or United, or 1.6 cents when redeemed on American. Compared to a one-cent cash redemption (for example, for a student loan or mortgage rebate check), you'd need to get 6.8 cents per SkyMile or MileagePlus mile, or 5.7 cents per AAdvantage mile to break even.
• American Express Membership Rewards points in a Business Platinum accounts are worth 1.43 cents each when redeemed for flights on your selected airline, requiring a value of 6.4 cents per redeemable mile to break even compared to a cash redemption.
• US Bank Flexpoints are worth 2 cents each when redeemed for paid airfare, requiring 4.55 cents per redeemable mile in value compared to redeeming the same Flexpoints for cash at one cent each.

Obviously your out-of-pocket cost for those fixed-value points currencies will be lower than one cent each. However, once you've earned them, the question is how you'll redeem them, and at that point they're worth roughly one cent each in cash (slightly less in the case of Membership Rewards points, which have to be liquidated with American Express gift cards).

Why swap fixed-value points and time for redeemable miles and elite status?

My beloved readers sometimes accuse me of making arguments just to be difficult. My defense is that I don't give advice — my only advice is that people should do whatever they want to do!

But top-tier elites who have access to cheap fixed-value points and who redeem their Delta, United, and American miles for long-haul premium cabin awards may do well to consider mileage running to requalify for top-tier status for a few reasons:

• Upgrade priority. Smaller domestic first class cabins and more pressure to sell first class seats for cash means top-tier elite status is the only reliable way to secure free first class upgrades on routes with a lot of elite volume. If you fly on paid economy fares regularly, that may matter to you.
• Award flexibility. I haven't had high-tier elite status for a few years now, but when I was a Delta Platinum Medallion I used free award changes and redeposits constantly to make slight alterations to my itineraries or to recoup miles when cheaper awards became available. On my last trip to Europe business class award availability opened up at the last minute, which would have made our trip much more comfortable, but I couldn't bring myself to pay United's extortionate award change fees — top-tier elite status would have made the free change a no-brainer.
• Top-tier elite status benefits. United Global Premier Upgrades, American systemwide upgrades, and Delta's Platinum and Diamond Choice Benefits have concrete value if you're able to take advantage of them. Not everyone will, so like everything in the world of travel hacking, they're not worth pursuing if you don't have a plan or intention to use them. But for many people, being able to upgrade paid economy tickets may provide even greater value and flexibility than booking award tickets in premium cabins.

If redeemable miles are based on revenue, only distance matters

One important thing to note is that unlike the previous era of mileage running, the number of cents paid per mile flown is totally irrelevant to this calculation: if you've accurately calculated that you'll receive the total price of your airfare back in redeemable miles, your only goal should be to maximize the distance flown on any given mileage run, in order to secure top-tier elite status while spending as little out-of-pocket time as possible.

Long, multi-leg, inconvenient flight routings are ideal regardless of whether they're more or less expensive than direct flights.

Conclusion

Most people rightly think that mileage running, if it ever made sense, only did so in the distant past. However, for top-tier elites with access to cheap fixed-value points, mileage running in revenue-based legacy mileage programs may still make sense, if they plan to redeem their miles for long-haul premium cabin awards, if they have a realistic expectation that they will take full advantage of top-tier elite benefits, and if they have the time to do so.

That may be a smaller subset of the travel hacking population than it was when the legacy carriers offered miles based on distance, but it's not nobody.

Finding myself 1,582 MQM short (and making it up)

I mentioned all the way back in June that I was planning on making Delta Platinum Medallion this year thanks to the 200% MQM I'll earn on a First Class ticket operated by Alaska Airlines this Christmas. Oddly, while only "full fare" First and Business class tickets earn 200% MQM on Delta-operated flights, Alaska Airlines only has one First Class fare class, and that fare class earns 200% MQM on Delta, even when it's only trivially more expensive than Coach (as it was on this itinerary).

Then, the unthinkable happened: I decided to spend New Year's Eve in Portland, Oregon, instead of flying back to New England on December 30. Crucially, that meant my final first-class leg, PDX-BOS, would be credited to the 2014 program year, instead of the 2013 program year. That would leave me 1,582 Medallion Qualification Miles short of Delta Platinum Medallion, which is the best Delta Medallion status, since it gives you unlimited free award changes and redeposits, allowing you to grab low-level award seats as they become available.

I'm never one to shy away from a spontaneous vacation, but unfortunately I needed to fly on paid tickets in order to earn MQM, which meant I needed to think strategically. I thought I'd walk through my decision-making for my readers, in case they find themselves in a similar situation.

The Options

When trying to piece together a last minute mileage jaunt like this, you need to evaluate all the options. There are three important dimensions to look at right away.

• Are one-way tickets more expensive than round-trip tickets? If not, you can use different methods to buy each ticket, as I ended up doing in this case.
• Are first-class tickets (much) more expensive than economy tickets? I only needed 1,582 MQM, which thanks to the 500-mile minimum on Delta works out to 4 segments. If, however, I'd needed 2,582 MQM, then I could book my tickets in First Class and with the 50% class-of-service bonus those same 4 segments would earn 3,000 MQM.
• What kinds of points do you have available? This is obviously key if we're trying to earn these miles as cheaply as possible.

The Solution

It turned out that for the flights I had in mind, one-way tickets were half the price of round-trip, with each direction costing about $180 in economy.

On the flights I was looking at, first-class tickets were only about $100 more in each direction.

Finally, I had about 16,000 ThankYou points left over after my last student loan rebate redemption, and those points can be used at full value (1 cent each) for travel reservations made through the ThankYou booking tool. I also had a $50 Delta transportation voucher from a broken reading lamp a few trips ago.

With all that in mind, here's what I ended up doing:

• Ticket #1: Since I didn't have enough ThankYou points to cover the entire $180 ticket, I spent just 15,500 TY points, leaving me with $25 to pay with my Barclaycard Arrival World MasterCard, which will allow me to redeem my Arrival miles against the purchase.
• Ticket #2: I used my $50 transportation voucher against the $180 ticket and paid for the remaining $130 with my Arrival MasterCard.

After redeeming my Arrival miles against the purchases, my total cost for this roundtrip will be about $81.38: $23.75 for the ThankYou points and $57.63 for the Arrival miles (assuming I'm paying 0.75 cents per dollar in manufactured spend). That's a no-brainer for Platinum Medallion status, which also comes with a Medallion Choice Benefit (I picked the 20,000 bonus miles last year).

An Alternative

Interestingly, since First Class tickets were only slightly more expensive than Coach, there was another solution: I could redeem my Skymiles for 1 cent each against a First Class "pay with miles" ticket, which unlike economy redemptions do earn MQM and redeemable Skymiles. I have enough Skymiles that I could have redeemed them for the entire cost of one or both tickets. I considered doing this, but there are a few reasons why I decided not to go that route:

• Delta transportation vouchers can't be used in conjunction with a "pay with miles" redemption, and just like miles and points, the least valuable travel voucher is the one you don't use;
• ThankYou points are worth a maximum of 1 cent each, while Skymiles are worth a minimum of 1 cent each. I can use my Skymiles for premium-cabin international trips, while the best alternative use of my ThankYou points is for student loan rebate checks, where I'm also getting 1 cent in value per point.

And that's how I'm going to earn Platinum Medallion for (probably) the last time, before switching to Alaska Gold MVP+ at the end of next year and earning hyper-valuable Alaska Airlines Mileage Plan miles instead.

A supposedly fun thing I'll never do again

This weekend I went on my mileage run to Lima, Peru, thereby ensuring I'll be Platinum Medallion next year for (probably) the last time. If you follow that link you'll see my airtight logic that by using my (non-mileage-earning) Skybonus award ticket to fly to Chicago this coming weekend, I could use the money I saved to fly to Peru, earning 3 times as many Medallion Qualifying Miles and securing Platinum Medallion status with Delta.

Platinum or Diamond Medallion status is almost essential for securing low-level award tickets, both domestically and internationally. I regularly use the free award rebooking benefit to rebook legs from "medium" to "low" level (now called "standard" and "saver").

While that's all well and good, thanks to the recent Skymiles devaluation, Alaska Mileage Plan miles are so much more valuable than Delta miles (even for award tickets on Delta flights) that that's where I'll be focusing in the future.

All that being said, this mileage run was pretty horrible. While I was seated in Economy Plus on both my international flights and the one domestic flight on which I wasn't upgraded to First, the Atlanta-Lima route was being operated by an extremely old 767-300ER. One of the lavatory doors would not latch so when it was unoccupied the door was literally swinging open and closed with the motion of the plane (right at my seat, 19B). As I walked through BusinessFirst (no OpUp for me, unfortunately) I saw a personal video device Scotch-taped in place.

On the other hand, the service was attentive and the food was perfectly edible in Economy.

The most stressful part of the run was the unwillingness of the staff in the Atlanta airport to print out my return boarding passes. It ended up not being a problem since I had them printed at the gate in Lima. There is absolutely no conceivable reason for this restriction, but I couldn't find anyone in any Sky Club or at the customer service counters who was willing to print out my boarding passes – even though I could access them on my own computer, and was already checked in for my return flight. The Delta Sky Clubs in Atlanta also happen to be in a "transitional period" so their business centers do not have the ability to print documents. All in all it was an absurd set of circumstances for what is otherwise my favorite domestic airline.

In any case, if I ever feel the need to go on a mileage run again, I'll make sure it's short, domestic hops.

Finding a use for Skybonus tickets...to fly to Peru?

Before I get to today's post, I want to mention that my responses to e-mails and comments have been a little bit uneven the last week or so since I'm having some computer trouble. I plan on buying a new Macbook in October, when "online shopping" is a 5% bonus category with my Discover More (now "Discover it") card, and I'll get another 5% back by clicking through the Discover shopping portal. Apple products for 10% off? Yes, please!  Meanwhile if I somehow missed your question feel free to leave another comment or e-mail me at freequentflyer@freequentflyerbook.com.

Earlier this month, I posed the question, "What do you do with SkyBonus points?" My problem was simple: on the one hand, you can redeem Delta's small-business rewards points, called SkyBonus, for roundtrip domestic airline tickets. On the other hand, you can only redeem them for tickets in the cheapest fare buckets, so it's difficult to find situations where you'll get more value than you would redeeming for Skyclub lounge passes or amenity vouchers, for those unfortunate moments when you aren't upgraded to First Class.

Last week I took a look at my elite status re-qualification pace, and figured out that I had only a few remaining trips coming up this year that I hadn't already booked, including a flight from Boston to Chicago in late November. But I ALSO was cutting it pretty close with my Medallion Qualification Miles to re-qualify for Platinum Medallion with Delta next year. Thanks to their award chart devaluation I'm going to be crediting my Delta flights to Alaska Airlines next calendar year (hopefully after a status match gets me to MVP Gold or MVP Gold 75K), but in the meantime Platinum Medallion is absolutely priceless for the ability to rebook awards – for free – from the "medium" and "high" levels to the "low" level as award availability appears. I do this probably 10-15 times a year and it saves me tens of thousands of miles each year.

Then I saw this FlyerTalk thread about $480 round-trip flights to Lima, Peru from Boston, one of my nearby airports. That helped me do a bit of mental accounting: a paid flight to Chicago (on a T fare – eligible for Skybonus ticket redemption) would cost $295, but net me just 2,264 MQM and 4,528 Skymiles. Instead, I could pay $480 and earn 8,526 MQM and 17,052 Skymiles. The difference in fares, just $185, was made up for by the difference in earned Skymiles ($188, valued at 1.5 cents each), but I'd also earn 6,262 MQM, more than enough to put me over the line for Platinum Medallion status next year, in case some of my later trips come in under expectations.

A paid ticket to Peru and a Skybonus ticket to Chicago...do I need any vaccines to spend 90 minutes in the Lima airport?