How Do Airline Miles Work? A Getting Started Guide
If you know someone who scored a free flight to Hawaii or some other far-off dream destination, chances are, he or she used airline miles to buy the ticket. Airline miles can seem mysterious and possibly too good to be true, but they are a legitimate way to get free or discounted flights.
"It's kind of like airline cash," says Jen Ruiz, author of "The Affordable Flight Guide: How to Find Cheap Airline Tickets and See the World on a Budget." You can use miles to buy plane tickets or even to book cruises or purchase electronics. Here's a look at how to earn and use airline miles.
The Value of Airline Miles
Each airline's loyalty miles have different values, says Adrian Mederos, founder of Aerocred.com, a website that allows you to find credit card sign-up bonus offers that would cover different flight routes. The rules and redemption rates for each airline's miles program determine its value.
[Read: Best Airline Credit Cards.]
You can try to figure out how much each airline's miles are worth, but it's complicated and can depend on where, when and how you redeem them. You can refer to U.S. News' rewards redemption value guide, which calculates the worth of loyalty program miles for leading airlines. For example, Delta Air Lines SkyMiles are currently worth approximately 1.21 cents apiece, and American Airlines AAdvantage miles are worth about 2.58 cents apiece.
However, the miles redemption value is just one factor in each airline loyalty program's overall value. Another important element is how easily you can earn miles. If you can earn three times more Delta Air Lines SkyMiles than you can earn American Airlines AAdvantage miles, the Delta program may be better for you. It's also important that you can book the flights you want with your rewards miles.
Earning Miles by Flying
One way airlines build loyalty is awarding miles for flying with them. You'll need to have a loyalty program account with each airline you fly with to accumulate the miles for each program. It's free to participate in a loyalty program, so you should always sign up before you buy your ticket. When purchasing a ticket, enter your loyalty program member number to get credit for your flight.
Each airline has its own way to determine how many miles it awards for each flight. Alaska Airlines awards miles based on the distance you actually fly. Its program states you'll earn at least 500 miles for any flight and that you can earn bonus miles for certain premium cabin tickets. Delta's program uses a fare-based system to award miles. It awards 5 miles for each dollar spent on your ticket, excluding government-imposed taxes and fees. You can earn more miles per dollar spent on your ticket based on your loyalty status.
Earning Miles Using Cobranded Credit Cards
Even if you fly often, the best way to earn airline miles quickly is by signing up for airline cobranded credit cards and earning sign-up bonuses. "Usually, credit cards are competing for consumers, and they like to offer these enticing sign-up bonuses," says Mederos.
A credit card may offer 40,000 bonus miles for spending $2,000 within three months of opening the card. Ruiz says you could be flying somewhere for free within six months by signing up for a credit card and earning a sign-up bonus.
[Read: Best Sign-up Bonus Credit Cards.]
But that doesn't mean you should go on a spending spree. Mederos says, "You want to make sure that you'll be able to meet that minimum spend in a way that doesn't stretch your normal spending." If you make purchases only to meet the minimum purchases requirement, you'll have bought the miles rather than earned them for free.
In addition to sign-up bonuses, you can use credit cards to earn miles or rewards points through your everyday purchases. Each card has its own earning rates. Some credit cards offer a flat earning rate on all purchases, such as 2 miles per dollar, while others offer bonus miles in particular purchase categories, such as dining or gas station purchases.
Other Ways to Earn Airline Miles
Some credit card rewards programs allow you to redeem your points with flexibility, with multiple options that may include transferring point values to an airline loyalty program. For example, the Chase Sapphire Preferred Card allows you to use your points to book travel through the Chase Ultimate Rewards travel portal or transfer them to travel partners, including leading airline loyalty programs. With this type of rewards program, you can search for the optimal redemption value for each point you earn.
However, you don't have to be a frequent flyer or sign up for a new credit card to earn airline miles. Airlines offer many other ways you can earn miles, including:
-- Booking hotels rooms or rental cars.
-- Using an airline's online shopping portal.
-- Registering a credit or debit card with an airline and using it to dine out.
-- Signing up for products and services through airline sites.
-- Buying vacation packages through an airline.
-- Buying gift cards through an airline.
Check with your preferred airlines to see what unique earning options they offer.
Redeem Your Airline Miles for Flights and More
Redeeming airline miles is the most exciting part of the loyalty program process. After all, a free or discounted flight is a great way to start a vacation. You can use miles to cover the airfare part of the ticket, but you'll have to pay for the taxes and fees associated with the flight, says Ruiz.
In most cases, you don't have to be a loyalty program member to search for the cost, in miles, of an award ticket. Many airlines allow you to search for that information using their booking search engine. Look for an option to switch from dollars to miles or for a check box to search for reward flights. You can research the cost in miles of flights you want to take before you sign up for a loyalty program or credit card, says Ruiz.
Similar to how airlines use different methods for calculating how many miles you can earn for a given flight, they also have different rules surrounding what they charge to redeem them. Fare-based rewards programs calculate the number of miles you'll need for an award ticket based on the cost of the ticket. Southwest Airlines' Rapid Rewards program uses this system. Its award flight prices vary based on the fare, route, demand, date and time of your flight.
Distance-based airline loyalty programs use the distance traveled to determine the number of airline miles required for a free ticket. That said, the number of miles the flight travels won't be the cost of the flight. Airlines using distance-based awards, such as British Airways, assign redemption rates based on where your flight distance falls within the airline's distance range tables. Finally, zone-based programs divide the world into separate regions. Each zone combination is assigned a redemption rate in miles. American Airlines currently uses the zone-based redemption system.
There are technicalities to consider. Some airlines have blackout dates, which means you won't be able to redeem miles for particular flights. Even if an airline doesn't have blackout dates, it may significantly increase the cost of award tickets on popular routes or on high-volume travel dates or times, says Ruiz. Airlines may also limit the number of award tickets they will issue on a particular flight.
Flights aren't the only option you have when redeeming your airline miles. If you have a surplus of miles but don't plan on booking a flight anytime soon, airlines may allow you to redeem your miles to:
-- Book hotels, rental cars or cruises.
-- Buy magazine or newspaper subscriptions.
-- Buy gift cards.
-- Shop for merchandise.
-- Buy sports, concert or theater tickets.
[Read: Best Rewards Credit Cards.]
Picking the Right Airline Rewards Program for You
Earning and redeeming miles can be intimidating. "The first thing you want to identify is what your goal is," says Ruiz. Decide whether you want to earn free flights to take your family to Disney World, visit relatives a few states away or travel the world. But how do you know which program (or programs) you should focus on?
If you're looking for a way to get a free flight or two, you're likely best off joining a single loyalty program. "For a beginner, an airline credit card is a good, easy way to start, especially if you know that you have a preferred airline," says Ruiz. You can choose the program offered by your favorite airline or select an airline that offers the most flight options from your nearby airport.
On the other hand, you may want to get the absolute best value for every point or mile you earn. In this case, flexible rewards credit cards such as The Platinum Card from American Express or the Chase Sapphire Preferred Card may be a better option. These cards allow you to transfer your rewards to many airline loyalty programs. You can earn rewards, shop for the airline that offers the best redemption value for the flight you want, then transfer the points you need to book to that airline's program.
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