Are Pricier US Airways Miles Still a Buy?

With its recurring 100 percent bonus on purchased miles, US Airways has made a name for itself as the industry’s premier discounter of frequent flyer miles.

Two years ago, when that discounting began, the base price to buy US Airways miles was 2.5 cents each. That allowed Dividend Miles members to purchase 80,000 miles—enough for a business-class award ticket to Europe—for $1,030 plus tax.

And the price to purchase a business-class ticket to Europe? At the time, a ticket on US Airways’ Star Alliance partner Lufthansa, between Los Angeles and Paris, would have cost between $3,257 and $8,665.

The economic case was crystal clear: Load up on discounted miles; redeem them for premium-class international tickets; save a bundle.

A Great Deal, Downgrade #1

The value proposition has taken a couple of hits since then.

First, US Airways bumped the number of miles required for European business-class award tickets from 80,000 to 100,000.

And second, the airline increased the cost to buy miles, from 2.5 cents to 2.75 cents apiece.

Factoring in the price changes, the cost to purchase enough miles for an award ticket to Europe increased around 33 percent, to $1,375, not including taxes.

Still, test bookings at the time showed business-class tickets from the West Coast to Frankfurt going for $6,405. Buying discounted miles instead of paying market price for that ticket would have amounted to an eye-popping 78.5 percent discount.

A Great Deal, Downgrade #2

The latest development in this promotional saga is yet another spike in the cost of US Airways miles.

Effective immediately, the price of miles is 3.5 cents each, plus a "tax recovery charge" of 7.5 percent. That’s a 27 percent increase from the previous price.

With the new pricing, and assuming US Airways reprises its 100 percent bonus for purchased miles, buying 100,000 miles will cost $1,909, all in.

That’s almost double the cost to buy enough miles for an international business-class ticket from just two years ago.

Deal or No Deal

While the cost of miles has soared, the price of tickets has risen as well.

Today, purchasing a business-class Los Angeles – Frankfurt ticket on Lufthansa for travel later this month would cost $7,633.

Even with the less favorable terms, US Airways’ mileage discounts can yield significant savings if the purchased miles are used for pricey international tickets.

Yes, you’ll still have to wrestle with the capacity controls that make award travel a hit-or-miss proposition.

And yes, there’s always the "real" value question: Is a business-class ticket truly worth 10 times as much as a coach ticket?

But even adjusting for the hassle factor, and assuming that business class is somewhat overpriced, the deal can be compelling.

Reader Reality Check

Have you taken advantage of US Airways’ mileage discounts? Where did you fly?

With the new pricing, will future discounts still be compelling deals?

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