I previously valued AA miles at 1.6 cents per mile. I argued that was my perceived value, the amount I value my actual redemption to be. However recently I have changed my valuation of American Airline miles and SPG points.
I increased the value of AA miles to 1.8 cents per piece for three main reasons.
- Only major airline with free date changes for non-elite members. I like the option to change my departure date and return date to anytime within a year of the booking date. United recently changed this fee from $0 to $75 on June 19, 2013.
- Free one-way rule is awesome. It’s awesome adding in a free half trip to Hawaii every time I take a direct flight out of LAX. I’ve recently done HNL-LAX(stop 3 months)-LHR and also NRT-LAX(stop 4 months)-HNL. It’s possible to squeeze in a completely free trip to Hawaii by booking two international trips on the front end and back end. For example, NRT-LAX-HNL then HNL-LAX-LHR.
- Cathay Pacific and Japan Airlines first class are relatively easy to book. I tend to book my trips very far in advance and both these airlines have decent availability from the west coast to Hong Kong and Narita. Japan Airlines is updating their first class on their NRT-LAX route in November and it looks awesome.
It is quite hard to assess the value of points and miles because people have different perspectives. If you would spend $2,000+ for a business or first class flight, you would value points and miles at a higher rate. On the contrary, if you wouldn’t spend over $2,000 for a business or first class flight you would value points and miles at a lower rate. That is because you would have a lower point where you would be indifferent between holding points vs. cash. I value my points and miles on the lower end of the spectrum because I am not willing to pay over $2,000 for a first class flight. I’m not saying my valuation method is the only method, but it is reasonable to me.
For the above example JAL flight, it would cost 125,000 miles to fly first class to Japan and back from LAX. If I value AA miles at 1.8 cents then I would be willing to pay $2,250 for a first class flight. Wait, that is contrary to my rule I talked about above. However I would add a free-oneway first class flight from LAX-HNL and/or HNL-LAX, which I value at about $400-$500 each. Thus, I would subtract that amount from $2,250 and it would be under $2,000 for the flight.
Since I increased my valuation of American Airlines miles from 1.6 cents per mile to 1.8 cents per mile, that would increase SPG’s point value because you can transfer 20K SPG points to 25k AA miles. Therefore, 1.8*1.25 = 2.25 cents per point. I think that SPG points yield a lot more value when redeeming for airline miles than hotels. However if an SPG hotel is the only decent option in the city I am visiting, then I might consider it.
Conclusion: American Airline miles are the most useful miles in my opinion. They are becoming harder to come by because the end of the 2-browser trick to obtain two Citi AA Platinum credit cards in one-day and also the devaluation of BankDirect, an online checking back that earns miles. The airline industry is picking up, and my thoughts are that they are restricting the amount of airline miles available because airline companies are starting to sell more of their seats. Also, with the merger of US Airways and American Airlines coming soon, I don’t think they want people to have thousands or millions of miles. Earn and redeem American Airline miles and SPG points now before a possible devaluation in points and miles.
If you are need of either AA miles or SPG points, there is a current 50K and 40K sign up bonus for the Citibank Platinum AA card and 30K bonus for the SPG personal and business cards in the credit card deals section.