Let's make one thing clear right off the bat. I'm not exactly the most frequent of fliers. I have a friend who is a healthcare consultant. He's on the road about 5 days out of 7 and probably makes at least 2 or 3 flights a week. In a typical year, I may fly 7 times (usually at least once internationally); I also get miles from a credit card. What this means is that my miles are actually worth something to me. My friend can cash in miles virtually anytime he wants. He recently took his whole family to Europe on miles.
But with a more modest total in the bank, I think I'm much more in tune with the typical flier, who hordes and then spends miles every year or two on a more expensive flight overseas so I can have a nice vacation I wouldn't otherwise be able to afford. But I'm always faced with the dilemma of when to use miles and when to use cash. Over the years, this is what I've learned.
5 Times to Use Miles If You Have Them
1. Always use miles for upgrades on long flights. Unless you are a high-level frequent flier and get free upgrades, you have to use a hefty number of miles to get one. Still, it's always worth it on a long flight overseas. You get a better meal, more room to stretch out, and more and better entertainment options. New York to Hong Kong? No question. New York to London? Of course. New York to Chicago? Not unless you're a frequent flier and get the miles for free. My rule of thumb: 6 hours or more in the air, and I'll consider spending miles to upgrade. It's a lot of miles, but I know I'm always getting the most return on my investment.
2. Always use miles for really expensive flights. A friend went to Tanzania a couple of years ago. His airfare would have cost over $1,600 if he'd paid for it. With miles, it was less than $30 for fees. No contest there. As a general rule, I start thinking of using miles if I have to spend more than $600 on a flight. I used miles to go to Rome a couple of years ago, and that was an easy decision as well since the flight (even in the shoulder season) would have cost me almost $700.
3. Consider using miles when the flight is really expensive per mile flown. Sometimes, a flight from one fairly isolated secondary airport to another can be very expensive. That's not always the case, but if you can't find a fare below $400 for a flight within the U.S., then it's always worth considering miles.
4. Consider miles when the hotels are expensive. One reason people use miles to travel to the Caribbean or Hawaii is because you can use the savings to stay in a better resort. If you're going to be in the same resort for a week (and pay resort-style prices for food and drinks), then it's worth it to snag the free flight, which frees up more cash for the extras of your vacation. If you're staying in a more modest hotel or can get a good deal on a package that includes both hotel and air, then it might not be such a good idea to use miles.
5. Consider using miles for last-minute trips. Last-minute trips aren't always more expensive anywmore. But if you have to fly suddenly to a funeral or other unexpected event, as I did last year, then consider using miles. I priced my trip and would have had to spend a bit over $500 to fly to DFW from New York (that's a flight that's usually less than $300 if I can plan ahead). For me, it was no contest. This was an unavoidable and unexpected trip, but I didn't exactly have $500 right after Christmas, so I used miles. They weren't available for a vacation later, but I felt it was a good use of my miles.
4 Times to Pay Cash
1. There's a huge sale. If you can get a ticket for a route that's usually expensive for a very good price, it might be worth it to pay cash instead of use miles. I bought a Cathay Pacific All-Asia pass in 2003, right after the SARS epidemic, for less than $1,000 (about $1,400 once you added all the taxes and fees), and got flights to 4 different destinations. Yes, that was a lot of money, but I got many more flights for that price than I could have possibly gotten for my miles, so it was a no-brainer. I might have spent all my miles to get to Hong Kong and still spend $700 or $800 for the rest of the tickets. For me, the return on the investment was phenomenal; sadly, though, you don't get miles for an All-Asia pass. So it was a bittersweet savings, even though I had enough miles to go to Prague the next fall.
2. The flight is cheap to begin with. If you can get a flight for $250 or less, then you'll spend the same miles for a domestic round-trip than if you went across the country, which could cost $500 or more. That's a bad use of your miles. Save them and pay cash. Even at the $300 threshold, it may make more sense to pay cash. (Before committing to spending miles, always price out the flight and see what you're paying, but anytime after $300 the cost vs. miles ratio is more compelling.)
3. You need to transfer or buy miles. Say you are tantalizingly close to having enough miles to get that free trip to Paris; however, you have to buy 5,000 miles to reach that threshold. Is it worth it? Well, it depends on the cost of the flight. The fees to buy or transfer miles from one account to another are crazy these days. Delta, for instance, charges about $180 for this (you actually have to buy 6,000 miles). Considering that you are already using at least 25,000 of your hard-earned miles for this trip already, it might be worthwhile to wait until next year's vacation if you can get an off-season ticket for less than $500; then you'll earn enough miles on your own to get a free ticket next time. Of course, if you don't have the cash, then it's a harder choice.
4. When you can't get the lowest-level award. If you have to double the number of miles you spend to get a free ticket (60,000 rather than 30,000 for an economy ticket to Europe, for example), then it may not be such a good deal. Again, price that flight. But if you can fly for $500 or so, then you can use those same miles to get two domestic round-trips for you and a loved one for as little as $300 and will come out ahead by paying for the trip to Paris but using miles to go to Indianapolis to visit grandma. People often want to use miles only for exotic or vacation travel, but if you need to visit relatives in a destination with plenty of available seats, then it might be better to wait and use them miles then.
Frequent Flier Resources
Flyertalk has forums that are popular among frequent fliers. The site is a good source of news and information, and a good place to get advice.
Airfare Watchdog has an airline frequent flyer fee chart with the fees charged for frequent-flier tickets. Fees are listed for major U.S. airlines only.