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How Are Award Tickets Actually Priced?

By: Julie Szpira

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Every traveler is trying to maximize the value of the miles and points they have earned. Understanding how award tickets are priced is essential when trying to maximize the value of your hard earned points and miles.

Award ticket pricing is not standard across all airlines, so you need to learn the different award pricing schemes to find the best use of your miles and points.

There are three basic types of award programs: revenue-based, region-based, or distance-based. Which program is best for a particular trip will depend on a few variables including the cash cost of the ticket and particular region definitions.

 

Revenue-Based Award Programs

In revenue-based award programs, the award ticket cost is directly related to the cash price of the ticket. As the cash price of the ticket increases, the number of points or miles needed to book the ticket will increase as well.

The U.S. carriers that use revenue programs are Southwest and JetBlue. It is most advantageous to book flights when prices are low, as low cash prices mean the amount of points needed to book the award will be low as well.

Unfortunately, this type of award system does not allow for spectacular redemption values, as far as cents per point calculations go. Within these revenue based award programs, the maximum value is generally between 1.3 and 1.7 cents per point.

However, these systems are generally free from “blackout dates”. If there is a seat available for purchase, you would be able to use your points or miles to purchase the seat.

For example, when booking a one way flight from Los Angeles (LAX) to Boston (BOS), the cash price on Southwest is between $137 and $359.

Award Tickets

When searching for an award flight, the miles required for booking range from 7,648 to 24,393. You can see that higher priced flights require more points when booking. The flight departing at 6:50 am priced at $137 correlates to the lowest points price of 7,648 and the flight departing at 7:55 am priced at $359 correlates to the highest points price.

Award Tickets

When searching for an award flight, the miles required for booking range from 7,648 to 24,393. You can see that higher priced flights require more points when booking. The flight departing at 6:50 am priced at $137 correlates to the lowest points price of 7,648 and the flight departing at 7:55 am priced at $359 correlates to the highest points price.

Remember how I said that revenue based programs have a variable valuation as to how much a point is worth? We can quickly see how the value of a point is different when booking flights, even when those flights are between the same city pairs, on the same airline.

To calculate the value of each point, you would subtract the $5.60 in taxes and fees from the cash price, and then divide the cash cost by the number of points needed to book for the flight.

For the $137 ticket, if you wanted to use points, you would pay $5.60 and 7,648 points.

This would give you a value of 1.72 cents per point (which is an very high value for a revenue based program).

For the $359 ticket, if you wanted to use points, you would pay $5.60 and 24,393, which would give you a value of 1.45 cents per point.

If you are one of our many readers with Chase Ultimate Rewards points, the Ultimate Rewards points transfer at a 1:1 ratio to Southwest.

In this case, it would make sense to book the $137 ticket by transferring points to Southwest, as the 1.72 cent per point valuation is higher than the Chase Sapphire Reserve portal redemption of 1.5 cents per point, as well as being higher than the Chase Sapphire Preferred and Ink Preferred portal redemption of 1.25 cents per point.

However, for the $359 ticket, you would want to book the ticket directly through the Chase Ultimate Reward portal if you have a Chase Sapphire Reserve, as the redemption value of the Ultimate Rewards points through the portal is 1.5 cents per point, which is higher than the calculated value of 1.45 cents per point.

One last tip, buying miles for revenue based award programs is a pretty horrible idea.  With the number of miles being directly related to the cost of a ticket, there aren’t any fantastic redemptions you can made with revenue based award points or miles.

Award Tickets

To purchase a $137 ticket, you need 7,648 points. You would have to spend $220 to buy enough points for that ticket!!

 

Region-Based Award Programs

Region-based award programs charge a set rate for award tickets based on the origin and destination cities, and what region those cities are categorized in.

Airline programs that use region based award charts split the world into different regions, and flights between those regions have a set amount of points or miles that are necessary to fly between locations in that region.

In region based award programs, a flight from Los Angeles (LAX) to Boston (BOS) would cost the same amount of miles as a flight from Los Angeles (LAX) to Denver (DEN), as both flights are between cities in the mainland U.S. These award flights have a standard amount of miles that are required, even if the cash price of the flights may fluctuate.

U.S. airlines that use region based award charts are United Airlines, American Airlines and Delta Air Lines. Other region-based award programs include Flying Blue (the loyalty program for Air France/KLM), Singapore Airlines KrisFlyer and Korean Air SKYPASS.

Each airline loyalty program does not use the same region definitions. United Airlines has 17 different regions.  Some regions only include a single country or state, such as Japan, Mexico or Hawaii.

American Airlines has only 15 different regions, with Japan being classified in the North Asia region, along with Korea.

Flying Blue has has an extremely broad definition of the Europe region, with Morocco and Israel being part of the Europe region. Many programs would define these countries as North Africa or the Middle East.

For example, American Airlines classifies Morocco in their Africa region, and Israel in their Middle East region.  United has Morocco in their Northern Africa region, and Israel in the Middle East region.

I’m sure you’re thinking, “Okay, why do I care about the countries within a region?”  Region definitions matter because the number of miles necessary to fly between certain regions varies with each program.

If you wanted to fly from the mainland U.S. to Morocco using United MileagePlus miles, a one-way economy class ticket would cost 40,000 miles. However, that same flight using Flying Blue miles, would only cost 25,000 miles in economy class. That is is a difference of 15,000 miles!

United MileagePlus and AirFrance/KLM Flying Blue are transfer partners of Chase Ultimate Rewards, so by using Flying Blue, you could save 15,000 Ultimate Rewards on your trip to Morocco (keep an eye on carrier-imposed surcharges though).

Region-based award charts do not take the cash price of a ticket into account, nor do they take the distance flown into account.  That means that a flight from Los Angeles (LAX) to Paris (CDG) will cost the same amount of miles as a flight from Boston (BOS) to Paris (CDG).

This is because Los Angeles and Boston are both part of the mainland U.S region, and Paris is in the Europe region. The flights price the same when using a region-based award chart, even though the flight from Los Angeles is more than 2,000 miles longer than the flight from Boston.

Award Tickets

 

Distance-Based Award Programs

Distance based award programs charge award prices based on the total distance of the flight. As the distance flown increases, the number of points and miles necessary to book the award flight will increase.

Popular programs that use a distance based award chart are British Airways Avios and Japan Airlines Mileage Bank.

Award Tickets

British Airways Avios award chart.

Note: All flights booked on Oneworld Partners use the “Peak” award miles

British Airways has well known “sweet spots” such as 12,500 Avios for a one way flight from the West Coast of the U.S. to Hawaii. The distance between West Coast airports – Los Angeles (LAX), San Francisco (SFO), Seattle (SEA) and Phoenix (PHX) – and Hawaii is in the Avios Zone 4 definition, for flights between 2,001 and 3,000 miles.

This pricing system can be advantageous when booking short flights, such as flights between Miami and the Caribbean.

Region-based programs, such as United Airlines and American Airlines price the Caribbean as a different region than that of the Mainland US. A one way flight from the Mainland US to the Caribbean is 17,500 miles on United or American.

However, you could use British Airways Avios to book from Miami (MIA) to destinations such as San Jose, Costa Rica (SJU) or Oranjestad, Aruba (AUA)  for only 7,500 Avios. That is because the flight distances are in Avios Zone 2, for flights between 651 and 1,150 miles.

Award Tickets

Each program divides the distance flown into different zones, and flights that travel various distances are separated into the different zones, and the number of miles needed to book an award ticket correlates to the flight distance flown.

Let’s go back to the Los Angeles to Paris and Boston to Paris example from the region-based programs above. The flight distance flown does not matter when booking region-based awards.

However, in the distance based Avios system, these flights would require a different amount of miles for an award flight, due to the Boston to Paris flight being 3,449 miles and Los Angeles to Paris being 5,670 miles.

Boston to Paris would be a Zone 5 flight, between 3,001 and 4,000 miles, and would cost 20,000 for a peak economy award. Los Angeles to Paris would be a Zone 7 flight, between 5,501 and 6,500 miles, and would cost 30,000 miles for a peak economy award.

Japan Airlines Mileage Bank offers one of the most attractive distance based awards for aspirational travel.  Using 155,000 Mileage Bank miles, you can fly round trip in first class on Emirates from the New York City (JFK) to Bangkok (BKK).

You could book Emirates first class would be New York City (JFK) to Milan(MXP) to Dubai (DXB) to Bangkok (BKK) to Dubai (DXB) to New York City (JFK) which totals 19,949 miles, which is JUST under the maximum 20,000 miles allowed.

That much time on an Emirates A380 in first class provides you plenty of time to enjoy a private suite, a shower, and the onboard lounge.

I would be as happy as this guy if I had almost 20,000 miles to fly in Emirates First Class

 

Saver Awards vs. Standard Awards

In revenue-based award programs, all awards are tied to the cash cost of the ticket. This means that the awards are priced strictly based on how much the airline would sell the ticket for.

However, region-based and distance-based award programs have different pricing tiers. These different tiers are based on factors such as time of year and availability.

Standard awards are priced significantly higher than saver awards.

For example, a one-way flight from Chicago (ORD) to Sydney (SYD) on United is 80,000 miles as a business class saver level award operated by partner airlines. The standard award price is 175,000 miles.

It seems obvious that saver awards are the best option when it comes to booking award tickets, however saver award availability is more difficult to find than standard award availability.

From January 1, 2017 through January 20, 2017, there are no saver awards from Chicago (ORD) to Sydney (SYD) on United in the economy cabin or the premium cabins (at the time of writing).

If you are looking to fly to Sydney on those dates, you would have to pay the standard award price, or use a positioning flight to fly to a different airport that has saver award availability.

Finding saver awards is more difficult than finding standard awards, so it is important to start your award search early. This is so you have the best chance of finding your desired cabin class and routing, while spending the least amount of miles.

Sometimes, award space will open up closer to your desired departure date, so tracking regularly is advisable. However, there is no guarantee that award space will be made available on the exact dates you want so flexibility in travel dates is key.

 

Final Thoughts

Airline loyalty programs have different award prices for award flights. When booking travel, you will want to compare various award programs to find the most value for your miles.

It is especially important to examine all your award travel options prior to transferring points from programs such as Chase Ultimate Rewards or American Express Membership Rewards.

With a little bit of research, you can maximize your points and miles for award travel. Using points and miles efficiently means that you will have more points and miles for future travel.

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