Valuing AMEX points?

The_Urbanite

AK47UK said:

Hi all,

This is something that has confused me for so long and has resulted in me just accumulating points as I have not dared spend them in case I mess up the value. I have read all of the blogs and they tend to aim for 1.5p per point on redemptions and sometimes get better but this seems to be based on the full cash cost of the flight rather than what I would pay for a flight. I am happy to fly economy, I wouldn't pay hundreds more on the same flight for a better seat so when I have looked into spending airmiles in the past I am essentially spending 100,000 points plus around the cost of what I would pay for an economy seat, so the points just get me an upgrade. 

I had an email today from AMEX where they are doubling the value if I pay with points for purchases, now a point is worth 0.9p so in theory (I wouldn't be buying flights now, just an example) I could buy an economy seat and pay with points.

How do you all value and use your points? I think now might be the time to spend a load on this double up promotion as it covers anywhere that accepts AMEX or paypal but just wanted to make sure I have not overlooked/misunderstood anything!

Thanks

Valuations are complicated!

For the purpose of accumulating points, most airline schemes I value a mile at roughly 1p. Therefore I'd value an Amex MR point at about the same. I wouldn't pay any more than 0.35p to generate a mile.

For redeeming miles, I'd value them against the fare I'd buy if I was paying with cash, which would be the cheapest economy ticket. This is because redemptions still have a cash element to them - the carrier surcharges. Most of the time it comes out at more than 1p, sometimes less. Others have different methods of valuation - some decide that the most expensive cash fare is a good benchmark, even though they'd never actually pay that amount.

Personally I'd only exchange Amex MR points for air miles. Other credit cards exist if you want to generate hotel points. In the current circumstances, statement credits at 0.9p aren't a bad shout. That said, redemption options depend on how many points you can generate in a particular scheme. Look at the redemption rates first and decide if it's worth converting MR points to the scheme.

As for the actual redemptions, for long haul the value is in business and first class redemptions. The cash surcharges can be similar to, or a lot cheaper than the price of a cash economy ticket. You need to be able to generate quite a lot of points though. For short haul flights from the UK, the British Airways Avios scheme offers good value. Long haul economy redemptions are generally a poor use of points unless you really value the flexibility to be able to cancel. Points can come in useful for redeeming on routes in other parts of the world - Singapore to Hong Kong for instance.

If you really get into the points collecting game and end up putting lots through cards and making the most of sign up bonuses and referrals, flying in premium cabins and staying in nice hotels become viable options.

AK47UK

The_Urbanite said:

AK47UK said:

Hi all,

This is something that has confused me for so long and has resulted in me just accumulating points as I have not dared spend them in case I mess up the value. I have read all of the blogs and they tend to aim for 1.5p per point on redemptions and sometimes get better but this seems to be based on the full cash cost of the flight rather than what I would pay for a flight. I am happy to fly economy, I wouldn't pay hundreds more on the same flight for a better seat so when I have looked into spending airmiles in the past I am essentially spending 100,000 points plus around the cost of what I would pay for an economy seat, so the points just get me an upgrade. 

I had an email today from AMEX where they are doubling the value if I pay with points for purchases, now a point is worth 0.9p so in theory (I wouldn't be buying flights now, just an example) I could buy an economy seat and pay with points.

How do you all value and use your points? I think now might be the time to spend a load on this double up promotion as it covers anywhere that accepts AMEX or paypal but just wanted to make sure I have not overlooked/misunderstood anything!

Thanks

Valuations are complicated!

For the purpose of accumulating points, most airline schemes I value a mile at roughly 1p. Therefore I'd value an Amex MR point at about the same. I wouldn't pay any more than 0.35p to generate a mile.

For redeeming miles, I'd value them against the fare I'd buy if I was paying with cash, which would be the cheapest economy ticket. This is because redemptions still have a cash element to them - the carrier surcharges. Most of the time it comes out at more than 1p, sometimes less. Others have different methods of valuation - some decide that the most expensive cash fare is a good benchmark, even though they'd never actually pay that amount.

Personally I'd only exchange Amex MR points for air miles. Other credit cards exist if you want to generate hotel points. In the current circumstances, statement credits at 0.9p aren't a bad shout. That said, redemption options depend on how many points you can generate in a particular scheme. Look at the redemption rates first and decide if it's worth converting MR points to the scheme.

As for the actual redemptions, for long haul the value is in business and first class redemptions. The cash surcharges can be similar to, or a lot cheaper than the price of a cash economy ticket. You need to be able to generate quite a lot of points though. For short haul flights from the UK, the British Airways Avios scheme offers good value. Long haul economy redemptions are generally a poor use of points unless you really value the flexibility to be able to cancel. Points can come in useful for redeeming on routes in other parts of the world - Singapore to Hong Kong for instance.

If you really get into the points collecting game and end up putting lots through cards and making the most of sign up bonuses and referrals, flying in premium cabins and staying in nice hotels become viable options.

Thanks, I have a reasonable amount of Amex MR points, I will run some example flights and compare the value.

michaels

I convert to nectar and cash out when Sains are doing a double up.

Sandtree

michaels said:

I convert to nectar and cash out when Sains are doing a double up.

Wouldn’t you be better off with a nectar credit card if your thing is for a free shopping trolley of food occasionally?

lr1277

Sandtree said:

AK47UK said:

Sandtree said:

I don't value them.

I am similar... any short or mid haul flight I am fine in economy, if its a night time shorter long haul flight or a very long haul flight then I may consider premium economy (especially if I have things to do on the day of landing). I do appreciate going Business or First but would never put my own hand in my pocket to pay the kinds of prices (unless one of those odd times where its $10 difference).

I tend to use all my points on purchasing flights in business or first, especially if they are originating from a low tax point of origin, but don't try to workout the value per point as I would never pay full price so feel wrong to do that and yet clearly it is worth more than an economy seat (on a First flight back from HK that cost $50 in cash we probably drank a pair of economy tickets worth of Krug champagne and thats before you consider the rest of the food, drinks, amenities etc).  

Maybe having a Tesco Clubcard Credit Card would have more real world value but getting £5 off your shopping every so often to me isnt as good as the experience of going off for an anniversary or big birthday and getting the benefits of travelling in a higher class (even if you wouldnt pay for it directly)

I didn't realise you could get better value if you leave a low tax airport, I will look into that.

I flew Virgin economy to HK and was really happy with the comfort and amenities, I also flew economy to a few other countries in Asia with no issues. As sad as it sounds, I like flying so don't usually try to go to sleep, instead rinse the movies and drinks. My points are worth quite a lot of cash with this deal so it sounds like the choice is a luxurious flight or take the money.

Tends more to be "country" than airport, though there are some exceptions. When you either book reward flights or pay for upgrades you still have to pay the taxes, fuel surcharge etc in cash.  So travel more than 2,000 miles in business or first class from the UK other than LHR and you've got  £515 to pay straight away in taxes (LHR is slight more).

Other countries are much cheaper to almost nothing. Unfortunately most of them are further afield but if you look on points based sites may recommend flying to Ireland or Germany first before then taking your long haul flight but there is a but... either you must have two separate bookings (so your at risk if the first flight is delayed) or there must be a 24 hour layover there in which case a hotel etc will devalue the saving. Personally I go with option C and pay cash in a standard cabin on my way out and then use points and tiny cash for a Business/First flight back (return leg of flights are always more painful).

Thanks for your post. What you said intrigued me so I looked up air passenger duty.
My reading of the government’s APD website is that the the £515 (now £528) is only applicable on planes over 20 tonnes and carrying fewer than 19 passengers. That is I am guessing your Gulfstreams and your Lear jets.
The APD for business and first class is now £176.

Have I misunderstood?

Sandtree

lr1277 said:

Sandtree said:

AK47UK said:

Sandtree said:

I don't value them.

I am similar... any short or mid haul flight I am fine in economy, if its a night time shorter long haul flight or a very long haul flight then I may consider premium economy (especially if I have things to do on the day of landing). I do appreciate going Business or First but would never put my own hand in my pocket to pay the kinds of prices (unless one of those odd times where its $10 difference).

I tend to use all my points on purchasing flights in business or first, especially if they are originating from a low tax point of origin, but don't try to workout the value per point as I would never pay full price so feel wrong to do that and yet clearly it is worth more than an economy seat (on a First flight back from HK that cost $50 in cash we probably drank a pair of economy tickets worth of Krug champagne and thats before you consider the rest of the food, drinks, amenities etc).  

Maybe having a Tesco Clubcard Credit Card would have more real world value but getting £5 off your shopping every so often to me isnt as good as the experience of going off for an anniversary or big birthday and getting the benefits of travelling in a higher class (even if you wouldnt pay for it directly)

I didn't realise you could get better value if you leave a low tax airport, I will look into that.

I flew Virgin economy to HK and was really happy with the comfort and amenities, I also flew economy to a few other countries in Asia with no issues. As sad as it sounds, I like flying so don't usually try to go to sleep, instead rinse the movies and drinks. My points are worth quite a lot of cash with this deal so it sounds like the choice is a luxurious flight or take the money.

Tends more to be "country" than airport, though there are some exceptions. When you either book reward flights or pay for upgrades you still have to pay the taxes, fuel surcharge etc in cash.  So travel more than 2,000 miles in business or first class from the UK other than LHR and you've got  £515 to pay straight away in taxes (LHR is slight more).

Other countries are much cheaper to almost nothing. Unfortunately most of them are further afield but if you look on points based sites may recommend flying to Ireland or Germany first before then taking your long haul flight but there is a but... either you must have two separate bookings (so your at risk if the first flight is delayed) or there must be a 24 hour layover there in which case a hotel etc will devalue the saving. Personally I go with option C and pay cash in a standard cabin on my way out and then use points and tiny cash for a Business/First flight back (return leg of flights are always more painful).

Thanks for your post. What you said intrigued me so I looked up air passenger duty.
My reading of the government’s APD website is that the the £515 (now £528) is only applicable on planes over 20 tonnes and carrying fewer than 19 passengers. That is I am guessing your Gulfstreams and your Lear jets.
The APD for business and first class is now £176.

Have I misunderstood?

No, I looked to quickly...   

http://matrix.itasoftware.com is a good website as it gives you the breakdown of the price. Eg for a flight LHR to Hong Kong:

Fare 1: Carrier BA   LON to HKG  Passenger type ADT, ONE-WAY-ONLY fare,  Covers LHR-HKG (Business) £4,169.00 United Kingdom Passenger Service Charge Departures (UB) £48.66 United Kingdom Air Passenger Duty APD (GB) £176.00 Carrier-imposed surcharge (YQ) £164.50 Subtotal per passenger £4,558.16

But the flight back is:

Fare 2: Carrier BA   HKG to LON  Passenger type ADT, ONE-WAY-ONLY fare,  Covers HKG-LHR (Business) £4,198.29 Hong Kong Air Passenger Departure Tax (HK) £11.70 Hong Kong Airport Passenger Security Charge (I5) £4.90 Hong Kong Airport Construction Fee (G3) £17.60 Subtotal per passenger £4,232.20

Points basically cover the fare only not any of the items below so pay with points for the outward leg and you have £389 in cash whereas for the return leg its only £34 cash