I’m winding down my status on any of the airlines because I get pretty much the same benefits on United having their credit card as I do having silver status and its nice to not have to travel as much.
But I still have close to 100,000 miles banked and I do collect the miles and use them wisely. As part of that equation I thought I would try and work out what each UA frequent flyer mile is worth to me. That way, if I see a car rental for $200 with 1500 miles and another for $175 I can work out whether it’s worth paying the extra for the points.
A starting point is the (apparently quite high) cost of purchasing miles for United – 1000 miles costs $37.62 which works out to 3.76 cents a mile – plus a bunch of extra fees. That’s only practical when you are few miles short of an award. Using my United credit card for work expenses has zero marginal cost as long as I don’t carry a balance. But if I pay interest that “freebie” starts to become very expensive.
If I look at it from the other direction, I mostly use miles to travel to Europe. When I travelled a lot I used miles for business class because that’s where you get the best value per mile, but let’s assume I’m taking economy / saver tickets because that’s what I do when I can. A trip to the UK using miles is currently 60,000 miles RT for a flight that averages $1000-1200 which gives a redemption value of ~1.6 to 2 cents per mile. You get better value in Business because it “costs” 115,000 miles RT but would cost $5,500-8,000; yielding a redemption value of almost 7 cents per mile.
Using these metrics I came to the conclusion that one United Mileage Plus mile is worth somewhere between 2 and 4 cents to me when I’m earning. Meaning that I can pay a $20-40 premium to earn 1000 miles and feel OK with that. Of course, my preference is always going to be to earn as many miles as I can without paying anything extra.