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Here’s One Ticket Price Frequent Flyers Should Know

By | Published July 27, 2012 10:08 am
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As anyone who has ever tried to get the best deal on airfare knows all too well, the price of airline tickets fluctuates like crazy.

While it won’t help you get the best deal on a flight to Honolulu in December, there are some airfare data points that smooth out those nausea-inducing peaks and valleys: the quarterly average airfares tracked and reported by the U.S. Department of Transportation’s Bureau of Transportation Statistics (BTS).

Aside from wonky academics and financial analysts, who cares about quarterly averages?

I do, for one. And you should too, especially if you engage with one or more airline frequent flyer programs.

Here’s why.

The great majority of frequent flyer miles are redeemed for restricted domestic coach award tickets, priced at 25,000 miles in most programs. So for purposes of a rough-and-ready calculation, the value of the average frequent flyer mile is the average price of a comparable domestic revenue ticket divided by the aforementioned 25,000 miles. Then, to reflect the hassle factor of finding available award seats, shave off a few tenths of a cent.

Sure, you can squeeze better value from your miles by redeeming them for pricier tickets. And you should. But you’re not likely to beat the average if you don’t know what the average is.

By the same token, you can’t make an informed decision on whether to purchase frequent flyer miles from an airline, or pay extra to earn miles from a vendor, unless you have a ballpark idea of what miles are worth.

The BTS average airfares provide a basis for those considerations.

And the Latest Number Is …

As handy as the BTS numbers are, they’re not as up to date as I’d like. The results for the first quarter of 2012, for instance, were only released yesterday. But a slightly laggy look is better than no look at all.

For the January-through-March period of this year, the average domestic airfare was $373, up 4.8 percent from the average fare of $356 in the first quarter of 2011.

Using 25,000 miles to pay for a $373 ticket amounts to getting 1.5 cents per mile redeemed. Because award tickets are more restricted than paid tickets, and therefore less valuable, we knock off 0.3 cents, to arrive at an average per-mile value of 1.2 cents.

Broad averages are just that. If you wanted a more precise valuation, you could drill down into the BTS data and use the average airfare for your home airport as the basis of the calculation. For example, if you fly from Cincinnati, the average airfare is $526, resulting in an average per-mile value of 1.8 cents.

Whatever the figure, and however you calculate it, you should have a sense of airfare prices and frequent flyer mile values.

That way, you’re less likely to overpay to earn miles.  And you’re in a better position to maximize their value when you cash them in.

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