Recently, on my way back from Taiwan to Japan, I stopped for a week in Singapore to see friends and co-workers, and no quarantine was required! I used the Air Travel Pass, a travel green lane to enter Singapore that is open to the following countries as long as you have been there for the last 14 days (subject to update, check https://safetravel.ica.gov.sg/atp/requirements-and-process for the latest requirements):
Category: awards
Musings on Premium Economy
Lately, cash prices to fly economy have gotten so cheap for international flights that points bookings are a terrible value proposition. At the same time, airlines are selling more and more business class seats at reduced cash rates relative to a few years ago, meaning award availability is more difficult on the routes that I want to fly. The options for someone loathe to pay cash for flights (and who mostly has fixed dates and locations in mind), therefore, have gotten fairly slim.
One of the ways in which I’ve begun to cope with the changing landscape has been to focus more on earning cash and cash equivalents (I like to call them ‘funny money’) like Flexperks, Chase Ultimate Rewards with a Chase Sapphire Reserve, Wells Fargo GoFar Rewards, Amex Membership Rewards redemptions through Amex Travel. This has largely suited me well, but it has left me without a clear plan as how to weigh their use versus the use of traditional points, or at least a plan with any greater specificity than “earn[ing] cash first, spend[ing] cash last.”
Enter: Premium Economy
One of the interesting threads that I explore as I figured out how to book two of my five trips to Dublin was the value proposition of flying in premium economy, both to make up the comfort gap between coach and business class (perhaps making it easier for me to sleep on a redeye) as well as to take advantage of generally lower cash fares while maximizing the value of my traditional (non-funny money) airline miles.
Premium economy is a concept with which anyone outside the U.S. has been familiar for a long time but that first arrived domestically only recently after American Airlines announced it would be the first US-based carrier to offer Premium Economy as properly differentiated (hard and soft) product from coach (as opposed to the extra legroom seats and free booze you find in economy plus). Typically, you’ll have a small cabin between business and coach with a lower seat density (fewer seats per row), extra legroom, recline, and better meal service.
The extra width, even if it’s only 2″, would make a huge difference for me, and I can sleep in a reclining seat much better than I can a traditional coach seat (sometimes I won’t even lie flat on my business class flights).
However, the typical up charge puts it about halfway between economy and business class on most days, though sometimes it can drift significantly closer to business class fares when airlines have paid fare sales.
So is it worth it? There are a couple of angles I see here:
Fly one leg in premium economy and return in business, or fly one leg in economy and return in premium economy.
As I mentioned in my post about Dublin bookings, I don’t particularly mind flying in economy class in the westbound direction (Europe -> US), because the flight is typically during the daytime and the westbound jet lag doesn’t affect me all that much. It is much more important that, if I were to fly business class at all, it be on my outbound (redeye).
Premium economy could be a good way to reduce costs in the case where I only care about one of my legs being in a true premium cabin while still being cost-sensitive. Most European and Asian carriers make it fairly easy to do mixed cabin cash bookings, and the savings on the legs can be sometimes fairly sizable (this example comes from Iberia’s site):
Of course, this is predicated on your willingness to pay cash or to sit on the phone with Amex Travel, GoFar Rewards, or the like in order to get the exact flight combinations you want (OTAs won’t typically surface mixed-cabin bookings, but most such agencies can book the flights if they compose a valid itinerary). Alternatively, you could also use the same strategy in reverse, substituting economy for business class and flying premium economy on the flight you care about. That way, you could take a fairly cheap base fare ($600 round trip), and pay $300 to ‘upgrade’ your redeye instead of taking an expensive fare and ‘downgrading.’
Fly the Whole Trip in Premium Economy
British Airways and Air France offer two of the original and most well-rounded premium economy products, and frankly, they look pretty damn comfortable. So comfortable, in fact, that I nearly pulled the trigger on booking one.
I’ve always been scared away by Google Flights search results for premium economy, which often price out at $1800-$2200 for a round trip, because even paying for a British Airways award with all of their fuel surcharges can net out to a cheaper but more comfortable business class itinerary.
However, as I discovered a few days ago, different OTAs often surface different prices. Since Google only tends to aggregate from the airlines websites for premium cabins, you miss out on a lot of the special, incentive pricing given by OTAs. For example, when I searched Google Flights, a round-trip on Air France came up for $1,868. However, after running the same search on Orbitz, I found the exact same flight for $500 less:
The $350 per-leg up charge over economy (which prices at ~$600 round trip) is still a lot, but it’s an option that I would certainly consider if there were no business class award availability and I could book using funny money (in this case, I couldn’t — Flexperks used to use Orbitz as a search engine, but they recently switched :/, and Orbitz was the only OTA with the price this low).
One thing that does improve the value proposition of premium economy, however, is its (often significantly) higher mileage-earning than traditional economy. For example, when crediting a BA premium economy (W) fare to Alaska airlines, the (status) mileage earning is as good as a typical business class fare (D, I, R) on American Airlines:
For those who need extra miles for status or redemptions, discount premium economy fares can give you two to four times the mileage earning of discount economy fares (in the case above, the base mileage earning is two times higher, and status can often bump that by another 50% or 100%), so depending on the up charge, you might actually come out ahead relative to having booked an economy ticket.
“Cash and Points”
Conventional wisdom recommends never to book an upgrade award, since a) the upgrade awards cost as many miles as standard awards despite requiring the same fare class available and b) they come with fare restrictions that can cause a(n economy) ticket to double or triple in price.
Premium economy, however, has far fewer fare buckets and less price variation than vanilla economy (I make this claim anecdotally
based on fare charts
There and Back Again (and again, and again, and again, and again)
Last year was something of a turning point for me in terms of my travel habits. Whereas two years ago I let my travel be largely dictated by mistake fares and other sales, this past year I had a very explicit list of places I wanted to go, and I used my miles and ‘hacking’ in order to reduce the cost as much as possible (and/or fly in premium cabins).
$430 for a round-trip SFO-JFK-DUB, with a 9 hour stop in JFK on the outbound.
It’s pretty evident why this would be the case for someone. Once you have built up miles and points balances through credit card signups and manufactured spending, means are less of a bottleneck. Traditional award charts offer fixed miles prices for flights irrespective of the cash price, which means that (assuming you can find availability), a $500 flight to a random U.S. city near a national park costs you the same as a $200 ticket between two major domestic hubs. For premium cabins, the value proposition can be even greater, because the miles prices are typically marked up 50-150% relative to coach, whereas cash prices can differ by up to a factor of ten.
Therefore, last year saw me travel to a bunch of places I had been dying to visit — Australia and New Zealand with Esther and Michael, Milan and the south of France with my sister, and Cambodia and Hong Kong with my friend Jacob.
Of all my “planned” trips last year, however, the ones that were the least expected and also the most difficult to arrange were my visits to Dublin. My partner moved to Ireland for a year, and since my job offers me the flexibility to work from nearly anywhere (incidentally, we have an office in Dublin), we decided that it would be easier for me to trek there than vice-versa. All told, I will have made five trips to visit, and the process of booking those flights allowed me to explore a lot of different facets of travel hacking and flight booking that hopefully will open up other options down the line.
Since writing things down helps me remember them, I decided to do a write-up of my experience booking each of my five trips:
Trip 1: Easy mode
What I spent:
My Experience Booking a Delta Skybonus Award
2017 has only just begun, but I feel like I’ve said the phrase, “Wow, this game has changed” more times in the last two weeks than all of last year. This, despite all of the ‘deaths’ and devaluations that made 2016 a pretty bad year to be a travel hacker.
One thing that remained relatively unchanged last year was Delta’s Skybonus program. Skybonus is a rewards program for businesses as an incentive for them booking flights for their employees. Like AA’s equivalent, Business Extra (United’s is explicitly limited to corporations/large companies), rewards are earned as multipliers on ticket price, with higher multiples for higher fare classes.
At the end of 2015, Delta changed the program to have an annual spending requirement and to require a minimum number of distinct employees to take a flight, in order to make it a less viable double-dip option for sole proprietors. However, through some fare sales, targeted promotions, and help from family members, I was able to not only meet the requirements, but earn enough points (85,000) to redeem for a domestic round-trip. No one I know had ever earned enough points or redeemed a Skybonus certificate, so I was eager to try it out.
Within a few minutes, I received an email with my certificate number and a prompt to call Delta to redeem for a flight.
However, having redeemed gift cards for Delta flights, I knew there was a way to redeem online, so I clicked through to the redemption instructions and followed the links to Delta’s website.
After entering the certificate details, the full certificate details appeared:
Thankfully, and unlike the upgrade certificates for which you can redeem (for which it’s often difficult to determine if there’s availability), my certificate’s terms were simple: as long as there was availability in T class (which is not the lowest fare class), I could book a flight.
On I went to search for a redemption (I had pre-confirmed T class availability before redeeming for the flight):
There were plenty of options. I picked the most direct, which led me to the fare details page and eventually the checkout page.
Interestingly, the price breakdown and receipt showed not an award redemption, but a purchase of a flight with a base fare of $0 and the $11.20 ($5.60 TSA fee each way) in taxes and fees. What I suspect, therefore, is that I will earn Medallion Qualifying Miles on the flight, although obviously I won’t earn any redeemable miles. Ideally, I would have attempted to credit it to Alaska, but since their partnership with Delta is ending before I take my flight, I won’t get to see if I can earn redeemable miles based on fare class (for the sake of science, I might put in my Air France Flying Blue number, but the miles wouldn’t be too useful for me).
Another interesting note is that, despite the flight being after the end of the Delta/Alaska partnership, the website did allow me to enter my Alaska Mileageplan number and select “Preferred” seats as per the current reciprocal status benefits. Who knows if they’ll stick, but worth a shot.
All in all, this was a successful double dip. I think it’s unlikely I requalify for Skybonus this year, so it will probably be my last, but I’ll take it!
Happy hacking!
Airline Miles are Stock Options in Disguise
I’ve been spending the last few weeks reading about financial independence and early retirement (colloquially known as FIRE; there’s a good subreddit for it) because of their natural intersection with travel hacking. Roughly, if the goal of financial independence is to save more, then travel hacking is an incredibly useful tool for those who travel a lot or have large families because of the way it can minimize expenses and free up money to save or invest.
I could have stopped there, but of course, being me, I got interested in reading up on investing, at which point I had an interesting realization:
Airline Miles are Stock Options in Disguise
For those of you who are unfamiliar with stock options, as a consumer (i.e. not a creditor), you have two varieties:
- Call option
- Put option
Each come with some sort of fee (‘the premium’) for the privilege of having the option to buy or sell stock at some particular price. So a call option gives you the privilege of buying a stock at some fixed price and a put option gives you the privilege of selling a stock at a specified price, irrespective of the stock price at the time of exercise. In the case of a call option, you make money when the market price for the stock is higher than the price you are allowed to buy at, because you can turn around and sell immediately at a higher price. The reverse is true for a put option.
The ‘option’ part of the names comes from the fact that you can choose not to exercise if the resulting action would cause you to lose money. If you opt not to exercise, all you lose is the premium you paid to buy the option, which limits downside. You can read more about options in this tutorial from Investopedia.
How do these relate to airline miles? Regardless of how you calculate, airline miles (and hotel points) have some cost. That cost comes in the form of opportunity cost of using an airline card instead of a 2% cash back card or real cost from buying miles from an airline directly. With the help of some manufactured spending, my cost is about 0.6 cents per airline mile.
Think of the miles then in batches of points required for a particular flight. For simplicity, let’s assume all flights cost 12,500 points (the typical price of a one-way domestic ticket). I’ll generalize this in a bit. That means, then, for every 12,500 airline miles that I acquire, I have acquired the option (more precisely, a call option) to buy a one-way domestic ticket at some point in the future at a cost of $75 (0.6 cpp). The cost of my miles ($75) is the premium, and the flight itself is the stock involved in the option.
Just like with options, if I never use my miles and they expire (typically some time between 18 months and 3 years depending on the program), I lose my premium and make no recuperation of my cost. However, if I do use my miles on a flight that costs more than the $75, I’ve . Obviously, this assumes I would have taken the flight anyway, but over time this is a reasonable assumption.
For airline miles, then, the batch of miles can be thought of as a call option, and the retail cost of a flight (which fluctuates drastically) can be thought as the stock.
Let’s relax the restriction that all flights cost the same amount of miles. After all, your miles can buy you a flight to Berlin or a first class ticket to Singapore. How does the call option analogy apply in the more general case? Because the miles costs are no longer fixed, we can’t think of miles in specific size batches, so we’re back to having a large number of options that each cost 0.6 cents.
What are they options for? In the original case, a single mile-option can be ‘called’ for 1/12500th of a domestic flight. However, in the general case, it can also be redeemed for 1/30000th of a one-way flight to Europe, or 1/110000th of a first class flight to Singapore. In fact, our mile-options gives us the flexibility to buy different “stocks” depending on what we find most valuable! This is like buying a call option that can be redeemed for different stocks depending on what will make you the most money.
Although this is an improvement of airline miles over stock options, one shortcoming is that the miles are typically only redeemable in large, discrete amounts. This is where we get the problem of “orphan miles” — miles that are not enough to redeem for a full award and therefore, in stock option parlance, are unexercisable.
But now we’re starting to get into the weeds, and I was mostly interested in introducing a general way of thinking rather than coming up with a perfect metaphor. At this point, I should probably reiterate the wisdom (from The Points Guy, of all people) that you should not treat airline miles as an investment (i.e. income) strategy. Miles make a poor investment over the long term because of how quickly they lose to inflation (due to award chart devaluations), and they have no intrinsic value since they can’t be traded as real options can.
That said, thinking of airline miles as a type of investment instrument gives me a much more concrete way of working it into my budgeting and planning. In the face of the allure of flying first class everywhere I go or the prospect of free travel for the next decade of my life, it’s otherwise hard to decide when to stop earning miles. Would I buy $1,000 of a stock option for a single company? Maybe. $10,000? Probably not.
So what do you think? Does the stock option analogy make sense? Does it change how you think about your miles?
awards.flights adds SkyTeam (Air France/KLM’s Flying Blue) search option
I’ve been using award.flights for quite some time to help easily run multiple award searches on different alliances for some time. However, there was always lacking a SkyTeam search option. Perhaps the author of the plugin didn’t really redeem for SkyTeam awards. However, that is no longer! As of yesterday, Air France/KLM’s frequent flyer program, Flying Blue has been added as a option for awards.flights.
The option is still in beta, so there were some hiccups along the way and there may be potential errors while searching.
- First, add your FlyingBlue number/email and PIN to the Settings page. You can get there by clicking the Set Up link by the KL/AF option
- On your first search, you’ll have to answer a CAPTCHA before proceeding. On future searches there shouldn’t be an issue
- Use award.flights as usual!
I don’t typically redeem for SkyTeam awards either, though there is some good value in FlyingBlue and Alitalia redemptions. This change at least adds coverage to all major airline alliances to awards.flights. Happy searching!
Demystifying Fixed Value Points
I’ve been having a (private) love affair with fixed-value airline miles over the past few months, and I even went so far as to sign up for the JetBlue credit card in wake of the ridiculous promotion they were offering (from which I netted 75,000 JetBlue miles for a round trip flight that cost me $75). Doctor of Credit explains it well, but the appeal for getting the card was the combination of an (unlimited) 10% points rebate as well as the opportunity to earn Mosaic status after spending $50,000 on the card in a single year. Mosaic status offers unlimited free cancellations of both cash (refund to voucher) and award flights, which is amazing for planning domestic travel since I can speculatively book flights without fear of either not being able to take the flight or finding cheaper flights later on.
A natural question to ask is “how much are JetBlue points worth?” And more generally, how valuable are other fixed-value currencies (where the miles cost of an award flight is based on the dollar cost of the flight rather than some fixed amount)?
Value is “Cents per Point”
The most common way we think about the value of airlines miles is in terms of how much cash value we get for each point. The higher this value is, the better. This valuation is what gives traditional airline miles their appeal — for premium cabins in particular, it’s possible to get values north of 10 cents for every point redeemed. Typically we take some blended average of these real redemption values, the purchase values of the miles (typically they can be purchased for 2-3 cents each), and the value of economy class redemptions. Regardless of the benchmark, though, the high upside is what gives traditional airline miles their appeal, because the number of points needed for a flight, rather than the value of those points, is the thing that’s fixed.
Value is “Points Needed per Dollar”
The other way to think about value is to specify how many points you need for each dollar of airfare cost. This is a harder quantity to reason about because it doesn’t immediately correspond to a useful benchmark — it’s hard to instinctively compare the worth of two currencies where one needs 50 points per dollar and the other needs 60 points per dollar. It’s counter-intuitive precisely because the smaller number is better, but even with that information, it’s not a practically useful term.
The one domain in which it is useful is for understanding fixed-value airline miles. Take Southwest as an example.
When Southwest devalued its points last year, the new redemption values ranged from 70 points/$ to 80 points/$ ON THE BASE FARE depending on the flight. That means for, say, a flight costing $140 plus taxes, you would need either 9800 (at 70 points/$) or 11200 (at 80 points/$) points to redeem for an award. After factoring in the money you save on taxes, you end up with a ‘traditional’ value of 1.4-5 cents per point.
Although Southwest’s points scheme is fairly well understood, Virgin America’s and JetBlue’s have for whatever reason remained black boxes. So naturally, we ask: is there a fixed conversion value for Virgin America points? For JetBlue?
Take a DAL-LAS flight on Virgin America on a random date:
The total for the flight is $128.10, from which, based on the number of points needed (below), we would get a “value” of 2.2 cents per point (subtracting the $5.60 cash fee).
If we just look at the base fare, we get a value of about 1.8 cents per point. However, even this number varies because we pay a fixed $5.60 in taxes. So more expensive flights will have a value closer to 1.9 cents per point based on the base fare, and values closer to 2.3 cents per point based on the all-in fare (this number is higher because we’re replacing a larger percentage of taxes with a flat $5.60 fee).
What if we value points the Southwest way? Is there a function that determines exactly how many points a flight should cost? That magic function is…..
# Points = Base Fare * 52.5
Here’s my work:
| All-in Fare | Base Fare Only | ||||||
| Points | Cost | Point/$ | CPP | Cost | Point/$ | CPP | |
| DAL-LAS 11/11 | 5568 | $128.10 | 43.42 | 2.20 | $106.05 | 52.50 | 1.80 |
| DAL-LAS 11/11 | 6545 | $148.10 | 44.16 | 2.18 | $124.65 | 52.51 | 1.82 |
| DAL-LAS 11/11 | 13870 | $298.10 | 46.51 | 2.11 | $264.19 | 52.50 | 1.86 |
| SFO-JFK 10/18 | 8010 | $178.10 | 44.94 | 2.15 | $152.56 | 52.50 | 1.83 |
| SFO-JFK 10/18 | 18754 | $398.10 | 47.09 | 2.09 | $357.21 | 52.50 | 1.87 |
| SFO-JFK 10/18 | 62708 | $1,298.10 | 48.30 | 2.06 | $1,194.42 | 52.50 | 1.90 |
Obviously, this isn’t immediately useful, since it makes it harder to compare Virgin America points against typical airline miles (i.e. it’s easier to reason about how many cents of value you get per $ with something like Alaska miles). However, it does illuminate the program a bit and will hopefully allow us to pattern match with other programs (Delta, I’m coming for you) better in the future.
Running the same analysis for JetBlue, we find that you need 80 JetBlue points/$ of base fare for economy class and 83.5/$ for Mint. JetBlue rounds down to the nearest 100 after computing the number of points, which explains the slight deviations:
| Total | Base Fare Only | ||||||
| Points | Cost | Point/$ | CPP | Cost | Point/$ | CPP | |
| JFK-SFO 8/18 | 22300 | $314.10 | 70.98 | 1.38 | 279.07 | 79.91 | 1.23 |
| JFK-SFO 8/18 | 23400 | $329.10 | 71.09 | 1.38 | 293.02 | 79.86 | 1.23 |
| JFK-SFO 8/18 | 29700 | $414.10 | 71.71 | 1.38 | 372.09 | 79.82 | 1.23 |
| JFK-SFO 8/18 | 60800 | $798.10 | 76.17 | 1.30 | 729.3 | 83.37 | 1.19 |
| JFK-SFO 8/18 | 49200 | 648.1 | 75.91 | 1.31 | 589.77 | 83.42 | 1.19 |
What do you think of the points/$ valuation? Does it make more or less sense than $/point?
Happy hacking!
Asking for an upgrade to business class… and getting it!
Okay it wasn’t as brazen as the post title suggests. But yes, it’s a real life datapoint of asking for an upgrade (that was probably deserved) and getting it!
Back at the end of January, when AA opened up premium award space to Europe pretty widely, I jumped on it to book a business class class ticket to Ibiza, SFO-JFK-LHR, LCY-IBZ as part of a summer Europe trip. My friends were going on the same trip, so I encouraged them to do so as well. Except for the first statement on their Citi AA cards hadn’t closed yet so they didn’t quite have the miles!
Space started to dry up over the next few weeks, so by the time that their statements closed and the miles posted, availability was a bit more limited. The boyfriend managed to grab the same itinerary as me fully in business, but the girlfriend could only get SFO-JFK in First, JFK-LHR in Economy, and LCY-IBZ in Business. I felt super bad that she was spending more miles (62.5k vs 50k), not sitting with her boyfriend for the two longhauls, and was stuck in Economy for JFK-LHR. The AA agent told her she would have top upgrade priority as a voluntary downgrade, but I doubted that as I don’t think there is a similar system as United, where you actually DO have top upgrade priority if you’ve paid the miles for the premium cabin but are in a lower cabin.
I recommended that they wait and check availability everyday, especially as the date got closer. I also set up a bunch of ExpertFlyer alerts so we could be alerted if space ever opened up.
Nothing had opened until a week before the flight. That leg was Saturday, and loads looked pretty low, and Thursday and Friday had both opened up seats on the exact same flight. But got to Friday and they still hadn’t opened up a seat for that Saturday flight!
I checked ExpertFlyer again Friday noon about 14 hours before the flight and ExpertFlyer was showing there was only 1 Business class seat left and none available for awards. Perhaps AA had already run through all their upgrades and now there was only one business class seat left. Now I was feeling pretty bad about my advice. I told them to ask at check in to see if there was an upgrade as she had already paid for a First Class award ticket and try her luck, but was feeling somewhat doubtful.
I show up at the airport to check in, where I found my friends. They said that as they checked in, she asked if she could be upgraded next to her boyfriend on that segment as she already had paid the First Class price but was stuck in Economy. The agent looked at his/her screen and was happy to do it! And when the boyfriend went to check the seat map, there were at least 4-5 seats left in business.
So lessons learned: obviously it’s better to book the cabin you want in the first place, but it’s possible to get that upgrade if it is a reasonable request and you ask nicely, such as getting the cabin you paid for in the overall award. AA may not necessarily reason award seats last minute, and their ExpertFlyer bucket information may also not be correct last minute.