Avios and cash followup: booking that Air Berlin flight
/Last month I wrote about an Air Berlin flight from Berlin to New York City, for which I was planning to redeem British Airways Avios. I had 24,000 Avios in my account, but since British Airways allows cash to be substituted for Avios at relatively favorable rates, I had to decide how many Avios to redeem (including transfers in from Chase Ultimate Rewards) and how much cash to pay for the two tickets I wanted to buy.
Here were my Avios and cash options for purchasing the tickets:
As I wrote then,
"ultimately, I fall on the side of redeeming my Ultimate Rewards points for 1.5 cents each. That's because I'm points-rich and cash-poor: if I "saved" my points by redeeming 20,000 or 14,000 of them against the Air Berlin itinerary, instead of transferring in 16,000 Ultimate Rewards points, I would then redeem the corresponding Ultimate Rewards points for cash at just one cent each."
Not so fast!
My decision was based on the best alternate redemption of the Ultimate Rewards points I already had, which was just 1 cent each for cash redemptions. However, I still wasn't sure how I was going to fly outbound from the United States to Budapest.
So before transferring 16,000 Ultimate Rewards points to British Airways, I first checked for award space between Chicago and Budapest, and sure enough the calendar was wide open for economy award travel on Turkish Airlines, United's Star Alliance partner. Suddenly, my alternate Ultimate Rewards redemption wasn't 1 cent each for a cash redemption, but a little over 3 cents each when transferred to United for a transatlantic flight redemption.
British Airways charges variable amounts of cash per substituted Avios
A close look at the Avios and cash chart above reveals something odd: the intervals between the Avios redemption levels are irregular. Here's the same chart, rearranged to illustrate the point:
Now, if I already had enough Avios in my account, I would certainly have redeemed the maximum 40,000 Avios and paid just $178.18 in cash.
But I didn't have enough Avios, which is why I had to ask the question of how many Ultimate Rewards points I was willing to transfer in.
- Since I had 24,000 Avios in my account, the first 2,000 were a no brainer: I would get the full $60 in cash savings value but pay just $20 in Ultimate Rewards points.
- The next 6,000 would give me just 1.17 cents per Ultimate Rewards point, less than the points' value when redeemed for paid travel and barely more than their cash value.
- Finally, an additional 8,000 transferred points would yield 1.38 cents per point, which would be worth considering, except that in my case it would first require the above 6,000-point transfer, averaging out to just 1.29 cents per Ultimate Rewards point.
Since I already have a planned redemption that offers more than twice as much value per Ultimate Rewards point — my Turkish Airlines flight to Budapest — I ended up transferring just 2,000 Ultimate Rewards points and saving the remaining 14,000 points for my transfer to United Mileage Plus.
Conclusion
The lesson here is that the value of points and miles varies, not just between people but for the same person over time, depending on their points balances and plans for redemptions.
In my earlier post, I was fully ready to redeem 16,000 Ultimate Rewards in order to save $240 (1.5 cents each). When my plans developed further and I settled on a 3-cent-per-mile Turkish Airlines award, my calculus likewise changed and I became unwilling to transfer more than a nominal number of Ultimate Rewards points.
I was right both times, but the more information I had about my future plans, the better my decision became.
