How to “upgrade” the value of your frequent flier miles

I fly a great deal for business and pleasure, and like many of you, have accumulated gobs of frequent flier miles. I also have one of those airline credit cards and acquire miles that way as well. Unfortunately, the airlines have been systematically devaluing those miles in recent times.

Many frequent or casual fliers have reacted to that devaluation by no longer sticking to one particular airline for the bulk of their air travel. The percentage of U.S. online leisure travelers who consider themselves brand-loyal, including those enrolled in airline loyalty programs, has plunged by 19 percent, from 31 percent in 2006 to 25 percent this year, according to a recent survey by Forrester Research Inc.

We read all the time about airlines raising the cost of award travel and reducing the availability of their cheapest award seats. This has forced travelers to expend many more miles than previously anticipated to score those “free” seats in exchange for frequent flier miles, thereby dramatically reducing their value.

Think about it this way. If you spend 25,000 miles for a $500 economy ticket, you’re only getting 2¢/mile for those miles being sucked out of your account.

What’s more, some airlines have added fees and surcharges to your “free” ticket when you use miles to purchase it, further eroding the value of your miles. US Airways charges $25 to process a domestic award ticket.

In previous years, many airlines would grant a minimum of 500 miles for any flight, no matter how short. Earlier this year, airlines such as United and US Airways eliminated that minimum. If you took a short trip, you only got the miles flown. I guess that was one of those proverbial straws that broke the camel’s back, as both those airlines reinstated the minimum again, at least for their elite level frequent fliers.

So, what can you do to get some real value out of your miles? In a word — upgrade!

One of my best friends and neighbor, Mel, travels to Thailand regularly. For years, he’s first flown to Detroit, then from there to Bangkok. That Bangkok flight’s a very long one, about 23 hours. Years ago, he told me if I wanted to get the most out of my frequent flier miles, I should use them to upgrade. By flying business class, he flies far more comfortably and arrives much more rested, and ready to go, than those shoe-horned into economy for those 23 hours, and he’s laid out the same cash as those in the “back of the bus.”

I think he’s right. Upgrades are the way to use miles.

I have family on the west coast who I visit as often as possible. If today I purchased a seat on a US Airways flight from Philadelphia to Los Angeles in March, an economy ticket would cost about $450 round trip. A first class ticket would cost about $2,250 round trip, a difference of $1,800. The non-stop direct flights take about 6 hours to LA, and 5 hours back to Philly. I don’t know about you, but for me, that’s a long time to be cooped up in a smallish seat in economy, with little legroom and little opportunity to walk around, and only food and drink for purchase, plus $15 for a checked-in bag.

For long flights, four hours or over, my rule of thumb is upgrade, if the economy fare, plus any upgrade fees, fit within your budget. Purchase the economy ticket and use 30,000 of your miles to upgrade your seat to first class domestically. I also believe in upgrading for international flights, if they’re over four hours duration. (The actual miles needed on any specific airline may be different than my example, and may vary according to the route, fees and award seat availability.)

Let’s do some math. If you used miles to purchase the economy seat on US Airways it would take 25,000 miles. At a price of $450, the value of those miles would be 1.8¢/mile. If you used your miles to upgrade, the value of those 30,000 miles would be 7.5¢/mile, more than 4 times the value of miles used to purchase the economy seat. By the way, if you purchased a first class seat outright with miles, that would be 50,000 miles or 4.5¢/mile.

Be warned: Some airlines, such as American and Continental have upgrade copay fees, which can be substantial. American charges a copay minimum of $350 (non-refundable). United has announced plans to add these “copays” too. Nevertheless, it would appear that the value of the upgrade on a cost per mile basis will still remain higher than purchasing an economy award seat. Plus that upgrade will make your flight far more comfortable and enjoyable.

You know as well as I do, that the romance of flying is gone and air travel isn’t easy these days, so consider pampering yourself by upgrading. Maybe we’ll meet in first class on our next transcontinental flight.