If you’re like me then you’ve probably been receiving quite a few emails from various airlines with offers to buy points or miles on sale. Some even offering a 100 percent bonus on all miles purchased or half off the normal price.
Seems like a pretty good deal, huh?
Well, maybe…
You see, airline points and miles are a lucrative business for the airlines. In fact, many of them make millions off them every year. And, right now with the cash crunch they’re in, selling miles is a quick and easy way to raise money without killing their balance sheet.
The reason these profits are so high is because all airlines price their miles much higher than they’re worth. So, even when they mark them down or give you a huge bonus, they’re still almost always overpriced. Not to mention, the airline can de-value them at anytime by charging more miles per flight.
This is the main reason that airline loyalty programs are still intact, not to save frequent fliers money, but rather to create an additional revenue stream for the airline.
That said, it’s usually not a good proposition to buy miles or points. However, there are a couple instances when it might make sense to buy points.
Instance #1 – The Point Price Is Lower Than The Valuation
As you can imagine, there aren’t too many deals to buy points that are actually good, but they do happen periodically.
But how do you know if the deal is any good? There’s one easy way to tell – if the purchase price per point is lower than the current valuation of those points.
One example was an offer that I took advantage of in 2018 to buy Iberia Airlines Avios at 1.4 cents/point when they were currently valued at 1.6 cents/point. I had stocked up on 45k Iberia Avios for $630 since they can be used on American Airlines and we fly to Chicago often.
We ended up booking two $815 first class/mixed cabin tickets for 22.5k each and ended up with a killer return of 3.6 cents/point.
Instance #2 – You Have A Use For Them In Mind Already
If you’ve been eyeing a trip already and have been planning to pay cash, a point sale could offer an opportunity. That is, of course, if you can spend less by using the points.
Let’s look at a potential scenario where this could happen.
Perhaps you wanted to fly to Madrid, Spain and the cost of a business ticket was going for $3500 on American Airlines. That seems pricey, but you don’t want to fly in economy, and you remember that you got an email from them 2 days ago that advertised a “buy miles” promotion.
After reviewing the sale, you determine that you can buy miles at 2 cents/each. Since American Airlines charges 57,500 miles each way on business class to Europe, you’re going to need 115k miles total. That means if you buy all the miles needed it will run you $2300.
Even though 2 cents/mile is higher than the typical 1.5 cent/mile valuation for AA miles, it still presents a good opportunity in this scenario since you’d stand to save $1200 for the plane ticket.
Instance #3 – When You Need To Top Off Your Miles For A Booking
Picture this: you’ve been planning to take a summer vacation to the Virgin Islands where you’ll spend seven glorious days on the beach, and you notice that there’s a great deal that only costs 20k miles round-trip. Excitedly, you check your points balance and you only have 16350.
What should you do?
This would be a perfect situation for buying points.
Even though there’s a good possibility you’ll overpay for the points heavily, you only need to buy 4k and that should pale in comparison to the great deal you’ll be getting for your booking.
But how many points should you be willing to buy up to in one of these scenarios? That’s not so easy to answer, but I would say that you probably shouldn’t buy more than 25-30% of the ticket cost in points unless it’s a very low-cost award (10k or less).
Conclusion
Airlines love to sell points and reap the profits of doing so whenever they need a quick injection of cash. In the current state of affairs, you’re likely to see plenty of promotions pop up but be wary because not all of them will be a good deal. Buying points miles/points usually isn’t a great proposition, but if you find yourself in one of the instances above, it makes sense to take advantage.
