Monday, October 27, 2008

When Buying Air Miles Is A Bad Purchase

By Mike Grasso

Purchasing airline miles directly from the airline is often a poor method of accruing miles, both economically and practically. But purchasing miles for a near-immediate redemption opportunity can be quite beneficial.

First, the airlines usually price these miles at a premium, valued far higher than earning miles by most other means (flying, car rentals, credit cards, etc.)For example, let's say you are 10,000 miles short of a free flight to New York. United Airlines will gladly sell you 10,000 miles - but for $357 dollars. Instead, purchase a ticket to New York City for about the same price, and you'd earn 5,000 miles in the process. In that scenario, there is no direct value added when buying miles from the airline. Always weigh purchase price options with award redemption opportunities.

Also, redeeming miles into a capacity controlled frequent flier program means the airline will limit your redemption opportunities on days, flights or routes it chooses. If it's a popular route, high-season, or holiday, you will have a tough time finding availability. They would rather sell expensive tickets than fill the plane up with people redeeming miles. And guess what? You are not the only person trying to redeem miles on a flight. Many people are competing for what is often limited overall availability. Thus, buying premium-priced miles for use on low-value flights with the added uncertainly seats will even be offered by the airline, isn't very practical.

And simply buying miles to fill up your frequent flyer account, with no specific purpose for using them, would be like depositing money into a bank savings account that earns 0% interest. Worse off, if the airline goes under, your miles will probably vanish. Whatever you do, don't buy miles and let them sit.

But, buying airline miles can be situationally helpful. If you are 1000 miles short of 50,000 - enough for a free economy ticket to Europe on some airlines, you may want to fork up the $50-$60 cost. In this case, call the airline first - check for award redemption availability before buying miles. Another example is maybe you are 5,000 miles short of 90,000 - enough to fly Business Class on Singapore Airlines to Asia. The true value of that business class ticket is probably $6,000 or more. Paying $150 to cover your miles shortfall does seem tempting. Again, check for availability of award seats before buying the miles.

Lastly, as if they airline doesn't already have a strong-hold on these frequent flier programs already; buying miles is not a real-time exchange. United Airlines says it can take up to 48 hours to post to your account, American Airlines up to 72 hours. So while you are waiting for those purchased miles to post to your account, award availability may vanish from under your eyes. If you are in a situation like this, call the airline first, explain your scenario. They may do a courtesy hold if you provide them with your confirmation number of your miles purchase.

Cost of purchasing 10,000 frequent flyer miles (includes taxes, fees)*
  • United $357.50

  • American $298.75

  • Delta $295.63

  • Northwest $305.00

*price check performed on 7/28/08