How to make the most of your frequent flyer miles
Traveling during major holidays like Thanksgiving can be expensive because so many people want to see friends and family wherever they are.
It’s especially tough this year with inflation soaring at the fastest rate since the early 1980s. Airline fares rose 43% in October from a year earlier – just a few categories increased further.
One way to lessen the blow to your wallet or purse is to use frequent flyer miles. Although there is quite a bit of research on the best time to use cash to buy flights, we have wondered as travel lovers if there is an optimal time to use cash. miles.
So, with the help of our research assistant, we investigated this question, focusing on flights during the Thanksgiving holiday.
Americans return to the skies
Thanksgiving Eve is one of the busiest days to travel in the United States.
Before the COVID-19 pandemic disrupted travel, the Transportation Security Administration screened 2.6 million people the day before Thanksgiving in 2019, just shy of the record high of 2.9 million.
While the number plunged in 2020 as demand fell, it rose to 2.3 million last year and is expected to return to pre-COVID-19 levels this year.
Rising demand, along with dramatically higher jet fuel costs, are key factors driving higher airfares.
To offset these higher costs, many consumers may turn to frequent flyer miles — whether accrued from other trips or from credit cards — to avoid shelling out so much money.
Frequent Theft 101
Frequent flyer mile programs began in the late 1970s after the federal government stopped regulating airfares. Prior to the change, fares, routes and schedules for all domestic flights were set by the Federal Council for Civil Aeronautics.
In addition to reducing fares, airlines have responded by creating frequent flyer programs. Texas International Airlines, which eventually merged with United, and Western Airlines, which later joined Delta, were among the first to institute frequent flyer programs.
In a particular airline’s frequent flyer program, you earn miles when you fly with that airline. Many people also earn miles using their credit card. These accumulated miles can then be redeemed for free air travel.
Loyalty programs have been designed to retain customers, as they offer a discount to regular passengers. They are also meant to lock travelers into a particular airline, as they have a strong incentive to only fly with that carrier.
A downside is that many business travelers go out of their way to use their preferred airline, which increases their company’s travel costs.
And although airlines use loyalty programs to grow customers, they frequently change rules and rewards, often frustrating customers.
Researchers have looked at the optimal time to buy plane tickets with cash. In general, they found that prices tended to drop two months to three weeks before travel dates.
Prices are highest for those who want to book their flight very early, to lock it in, and last-minute travelers booking just before their departure dates.
How frequent flyer miles compare
To find out when is the best time to book with miles, we looked at one of the busiest routes in the US – New York (JFK) to Los Angeles (LAX). Each month, airlines have more than a quarter of a million seats flying directly on this route. There are around 30 non-stop flights a day, operated by three different airlines.
Starting about three months before Thanksgiving, we collected weekly data from the online booking sites of these three airlines. We tracked the frequent flyer miles needed as well as the price of each coach flight scheduled in the week after Thanksgiving.
As miles are not interchangeable between airlines in general, we needed an alternative measure for a more direct comparison between different airlines. So we calculated the value of one frequent flyer mile by dividing the number of frequent flyer miles needed by the ticket price.
We then compared the dollar value of 1,000 miles, depending on the airline, time of booking and date of flight.
Economic theory tells us that when there is a lot of competition and the product is nearly identical, the competition should cause all firms to charge roughly the same price.
That’s not what we found.
By mid-October, Delta was asking for 69,000 miles to fly the Tuesday before Thanksgiving. American Airlines was only asking 33,000 miles for roughly the same flight.
This means that if you have a general travel rewards credit card that allows you to use miles on different airlines, it pays to shop around.
Just because an airline has a high mileage price doesn’t mean the price won’t go down. In early November, Delta wanted to fly 69,000 miles per dinner hour on the Tuesday before Thanksgiving.
A week later, the airline reduced the price to 53,000 miles. A week later it was down to 36,500 miles, a price drop of almost 50% in two weeks.
Although in general the earlier you book the better, booking too early can cost you dearly. We’ve found the best time to spend your frequent flyer miles for Thanksgiving travel is to book during the first week of October, which is about eight weeks.
In early October, 1,000 frequent flyer miles were worth more than $14 in airfare. In the last week of October, about four weeks before Thanksgiving, those same miles were only worth less than $12.
The best day to fly
As for what is the best day to travel to get the most out of your miles, there are two answers. The Monday before Thanksgiving, your miles are typically worth the most, averaging $15 per 1,000 miles.
That’s in stark contrast to $11 for Thanksgiving Eve. However, flying on Thanksgiving Day itself required the lowest average number of miles, around 27,000 miles.
If you haven’t booked any flights yet, it may be too late to find the best value in frequent flyer miles. However, as we continue to collect and analyze data, these tips seem to hold for future holidays.
This article is republished from The Conversation under a Creative Commons license. Read the original article.
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