Non-London American Airlines routes to Europe

A few weekends ago I held one of my notorious subscribers-only meetups in Philadelphia, and a long-time reader mentioned that American Airlines was launching non-stop service from Philadelphia to Budapest. I more or less gave up on American years ago since their miles are so difficult to earn and their award availability is so terrible.

But I was at least willing to entertain the possibility that a oneworld route to Europe that avoided London might be a good use of Avios, since it might mean avoiding Heathrow's high surcharges on premium cabin award redemptions. So, I decided to check it out.

British Airways is not showing American award availability

The British Airways search engine is having one of its periodic fits, making it extraordinarily annoying to find American SAAver award space. One trick that worked for me on some searches (but not others) was to click back and forth between dates in your search results, which after 2-20 clicks sometimes makes American award space magically appear.

Iberia is showing American award availability

Fortunately, Iberia Plus is showing American award availability normally, and you can transfer British Airways Avios to Iberia Avios, and now you can even transfer Chase Ultimate Rewards points directly to Iberia Plus without using British Airways Avios as an intermediary.

Nonstop Iberia Plus awards cost the same number of Avios as nonstop British Airways awards (adding connections creates complications, and opportunities), but the cash component of award tickets can differ for reasons I don't yet fully understand.

On the flip side, Iberia requires you to book roundtrip itineraries, which neither American nor British Airways does.

Tax and surcharge roundup

With that out of the way, we can compare the value of American miles and Iberia Avios for roundtrip flights between Philadelphia and Europe that avoid London. All these flights cost 60,000 American miles roundtrip in economy and 115,000 American miles in business, so what I want to get at is what additional cost you pay booking using Iberia Avios, a currency that for most folks is much easier to earn than AAdvantage miles.

I searched for business class award availability between Philadelphia and every city in Europe served nonstop from there, avoiding American's close-in booking fee wherever possible, and plugged them into this spreadsheet. Where you see a mileage cost of 87,500 I was unable to find a single business class award seat in one direction and selected a mixed economy/business award instead. I was unable to make Iberia show Shannon itineraries at all.

I've helpfully color-coded the chart, but you can make a copy and sort it differently if you're so inclined. A few things immediately pop out of these numbers:

  • There are still several sweet spots when redeeming Avios for business class to Europe, even after accounting for carrier surcharges. If you have a healthy balance of Avios or Ultimate Rewards points, you should prefer to redeem those for business class flights to Spain and Portugal, since the amount you'll save in transferred Ultimate Rewards more than makes up for the increased carrier surcharges, even if you just redeem your Ultimate Rewards for the cash to pay the associated fees.
  • Paris is a good deal in business, and an even better deal in economy, costing just 42,000 Avios and $390 roundtrip, although if you're flying in economy you'll usually just want to book a paid fare, which can be as low as $579 on this route.
  • The flip side is that some routes cost so much more in both Avios and cash that you should save your AAdvantage miles to redeem for those flights. Basically everything East of the Rhine is better booked with AAdvantage miles or another zone-based currency instead of distance-based Avios. Of course, a $2,000 roundtrip business class ticket to Europe isn't exactly "expensive," but the point here is to use the right currency for the job, and when booking award tickets to Rome Avios are definitely the wrong currency for the job!

Conclusion

I don't think you should hoard your American AAdvantage miles. Heaven knows I don't hoard them, which is why I only have about 15,000 in the bank. But you shouldn't hoard your Ultimate Rewards points either!

So if you do manage to find low-level American award space that works for you, it's probably worth at least popping over to the British Airways (if it ever starts working) or Iberia (if you're booking a roundtrip) websites to see if your itinerary happens to fall into one of their distance-and-surcharge sweet spots.

Paid flights are not a strategy for earning redeemable miles

This week as the blogosphere erupted like a school of piranhas around the bloody calf of the American AAdvantage devaluation, I quipped on Twitter that "'Where to credit your paid flights' should be of tertiary interest to travel hackers. Interesting question, but not very lucrative."

Let's break that down.

Primary interest: how much are you paying?

Due to the phenomenon I call price compression, how much you pay for your flights has only a glancing connection to the retail price.

  • If you manufacture spend on a US Bank Flexperks Travel Rewards card, you'll enjoy a discount of 62-75% off of retail, depending on where in a redemption band your flight falls.
  • A Citi Prestige credit card gives a 37.5% discount off ThankYou point redemptions on paid American flights, which increases to 79% if you're able to manufacture spend with a Citi ThankYou Premier card at gas stations.

Paying less for your travel may not be your only interest, but it should be a primary interest for the simple reason that the less you pay for your travel, the more of it you can afford!

Secondary interest: what are you getting?

Of course there's a difference between being frugal and being cheap: what you get for your money matters too, or we'd all be flying in the back of Spirit Airlines planes with our knees pressed against our chests (once — never again!).

In my experience, Delta Airlines is the domestic carrier most likely to get me where I'm going on time and in comfort. That doesn't mean I'll go out of my way to book Delta flights, but once price compression levels the differences in fares, Delta is far and away my preferred carrier.

Tertiary interest: where should you credit?

The reason I call the decision of where to credit paid flights of tertiary interest is that it's difficult to imagine a situation in which it would outweigh the factors of cost and convenience. In other words, there's no reason a travel hacker should pay more for less convenient flights that happen to earn a particular rewards currency.

There are two reasons for this. First, redeemable miles are cheap. When you can manufacture spend to earn exactly the number of redeemable miles you need, whenever you need them, miles earned through paid flights should be a rounding error in your overall rewards portfolio. Admittedly, it's a rounding error in your favor, and I'm not suggesting flying without a frequent flyer number attached at all. But if you have an award redemption in mind, it would be strange to count on your revenue flights to earn the needed miles.

Second, I'm happy to admit that elite status is valuable. But under most circumstances, it's unpredictably valuable. Here's a real-life example: I'm currently booked in economy on a United award reservation to Europe. I've been occasionally checking for business class award availability, and yesterday it suddenly appeared. For 40,000 more United miles, I can move to a premium cabin on a flight over 10 hours. Good deal! But as a MileagePlus general member, United also wants to charge a $100 change fee for each ticket. As a Premier Silver, I'd pay $50 per ticket, a Premier Gold would pay $25, and Premier Platinum and 1K members would pay nothing. That's real value: not some kind of squishy mental accounting, but cold hard cash that would be left in my pocket due to elite status.

The same example shows the problem with counting on elite status to generate big savings: to get predictable value from elite status you would need to know in advance which reservations, booked with which miles, are likely to require changes. If you spread your award reservations around between Alaska, Delta, American, and United, let alone the other transfer partners of your flexible rewards currencies, you will be left paying change fees (or keeping suboptimal reservations) on all the ones you don't earn elite status on.

Conclusion

When elite status is the natural byproduct of your travel hacking practice, it's a fine way to stretch the value of your rewards. As a checked-bag enthusiast, I enjoy my Delta SkyMiles Silver Medallion status, which saves me a few hundred dollars a year in checked bag fees.

But the less a person flies, the less value they receive from elite benefits. The problem with chasing elite status is not that there's anything wrong with elite status, but that it's expensive and inconvenient. If you live in a city where two or more airlines battle each other constantly on price and convenience, then it makes sense to pick one with which to run up your elite-qualifying tally.

Otherwise, chasing elite status and redeemable miles is playing the airlines' game, not ours.

Redeeming rump point balances

If having too many points in a single program is one kind of problem, both because of the increased exposure to devaluations and the fact that the least valuable point is the one that is never redeemed, then having just a few points in a program is a slightly different kind of problem.

The remaining points left in an account, whether "orphaned" there when you moved your earning activity to another program or the "rump" points left after a big redemption, can be difficult to redeem for anything: too few points for a big, valuable redemption and too many points to simply redeem for magazines.

Since I redeem my miles and points as aggressively as possible, I'm often faced with this problem of rump points. I thought it might be useful to go through my balances and see what I can get with my current account balances, without earning any additional points.

Club Carlson: 13,248 points

After my windfall back in January, I rebooked a couple of stays and ended up with a rump balance of just over 13,000 Gold Points. This is enough for a single night at a Category 1 property.

Club Carlson's Category 1 offers very slim pickings. The Park Inn by Radisson Puerto Varas, in Chile, looks adorable, and there are a few properties in Eastern Europe that seem fine (although I'm not sure the Park Inn Danube, Bratislava, will still be Category 1 after they finish their renovations on September 1, 2016).

There are 3 Radisson Blu properties on the list, in Egypt, Turkey, and India.

But since none of those options work for me, I'll likely redeem my remaining Club Carlson points for airline miles. As you'd expect, the transfer ratio is terrible, with 2,000 Gold Points transferring to 200 airline miles with their partners. Still, it's clear that I'm much more likely to redeem 1,200 airline miles than 13,000 Gold Points.

IHG Rewards Club: 55,380 points

"FQF," I imagine you asking, "how can you call 55,000 points a rump balance? That sounds like a ton of points!"

Well, it's a rump balance because IHG is a terrible program. 55,000 points isn't enough for a single night at one of their top-tier properties. If I were skipping around the world living in PointBreaks properties it would be enough for 11 nights at one of those, but I already pay rent on a perfectly nice apartment, so I'm not keen on moving to Browning, MT, for 11 days.

Having said all that, IHG's huge footprint makes it easy to find properties to fill in the little gaps in an itinerary. I currently have a one-night stay booked at the Grand Hyatt New York for $202.27 (as part of my tentative plan to requalify for Hyatt Gold Passport Diamond status). Instead, I'll buy 5,000 IHG Rewards Club points for $40 and stay at the InterContinental New York Times Square, getting 0.3 cents per point, which is slightly below the Hotel Hustle median value for IHG Rewards Club points.

American Airlines AAdvantage: 13,917 miles

Despite having had a Citi / AAdvantage World Elite MasterCard for several years (since they keep waiving the annual fee), I only recently booked my first reduced mileage award.

This is how reduced mileage awards work: if you're redeeming miles for a one-way or roundtrip itinerary within the contiguous United States, and your origin or destination is on the list of eligible "destinations," you receive a 2,500- or 3,750-mile discount on the miles required in each direction. The discount is applied immediately over the phone, which is the only way to book these awards, and it can't be combined with the new short haul awards going into effect March 22, 2016, although American promises that "New reduced mileage award levels will be introduced for these shorter flights on April 1st."

All of this is just to say that when applying the 3,750-mile discount I'm eligible for, one-way awards to and from eligible cities cost just 8,750 miles. Moreover, since American's co-branded credit cards also offer a 10% mileage rebate on all redemptions (up to 10,000 rebated miles per year), that rebate immediately brings the total cost of such flights down to 7,875 in each direction in economy (19,125 in first class).

One interesting possibility with these awards is to use them for hidden city ticketing. Since every American Airlines itinerary from my home airport requires a connection in Charlotte, Chicago, or Dallas, I could theoretically use a reduced mileage award to fly there and simply exit the airport or continue on to a different destination on a different carrier.

In any case, I'll likely kill two birds with one stone and transfer 12,000 Club Carlson Gold Points to AAdvantage, leaving me just 633 AAdvantage miles short of a roundtrip reduced mileage award redemption (n.b. actually slightly more than that since the 10% discount is applied only after booking, so I'll actually need 1,508 AAdvantage miles to make the second one-way redemption. The proof of this is left as an exercise for the reader).

Overpay by booking Cathay Pacific premium seats with Avios

There's a tempting intuition that says high balances across a variety of programs are a goal worth pursuing, since they allow you to deploy the right rewards currency for the right job. That's never been my view: I prefer building up balances in programs where I have planned, or at least foreseeable, redemptions in mind. That's why I don't hesitate to accumulate Delta SkyMiles, since even if I don't have planned Delta travel, I fly Delta often enough that I'm certain to be able to redeem them at some point. The same is true with Hilton HHonors points: there's no risk that I won't be able to redeem them, since there are Hilton properties everywhere.

Of course, being focused on a small number of rewards currencies has a downside: by definition, it's more expensive to book flights if you don't have the currency that makes those flights cheapest.

For example, until March 22, 2016, American AAdvantage charges 67,500 miles to fly between the United States and Hong Kong in first class on their oneworld partner Cathay Pacific, with minimal taxes and fees.

That's a great deal, and if you have a slew of AAdvantage miles and a flexible-enough schedule, it's certainly the best way to get to Hong Kong. Since I don't hoard AAdvantage miles, I'm out of luck, right?

Not so fast.

British Airways charges a lot for long premium cabin flights

The conventional wisdom says to redeem distance-based British Airways Avios for short-haul domestic flights or a few select "sweet spot awards" that fall in the top of their distance bands, and redeem region-based awards for longer and premium cabin flights.

And indeed, if you had huge quantities of every rewards currency, for any given award you would want to redeem the fewest miles or points possible, using a tool like AwardAce.

But if you don't want to accumulate huge rewards balances speculatively, you have another option: simply overpay.

British Airways doesn't charge that much for long premium cabin flights

A Cathay Pacific first class flight from Los Angeles or San Francisco to Hong Kong costs 140,000 Avios each way, plus about $50 in taxes and fees:

After American Airlines' March 22, 2016, devaluation, they'll charge 110,000 AAdvantage miles plus the same taxes and fees. Of course, the American award, in addition to being cheaper, allows you to depart from anywhere in the United States, not just the west coast, and connect onward from Hong Kong.

140,000 Avios cost $1,400 in cash if you transfer them in from an Ultimate Rewards account, giving you about 6.66 cents per Ultimate Rewards point in value for that $9,367 flight.

If you earn your miles and points primarily through manufactured spend, 140,000 Avios are likely easier to earn than 110,000 AAdvantage miles, thanks to the Ink Plus bonus categories of office supply stores and gas stations and the quarterly Chase Freedom bonus categories allowing you to earn 5 Ultimate Rewards points per dollar spent in rotating groups of merchants.

But even more importantly, using an Ultimate Rewards point transfer to British Airways to book this flight keeps your overall miles and points strategy simple. Instead of signing up for one or more American Airlines co-branded credit cards, requiring multiple credit pulls and bearing the risk of your application being denied, you can keep doing what you're doing: aggressively earning Ultimate Rewards points in bonus categories.

If you end up finding award space for dates that work for you, transfer the points and make the reservation. If you don't, transfer them instead to Hyatt, United, Southwest, or even redeem them for cash. You haven't lost anything by earning "extra" Ultimate Rewards points. You just have to slightly overpay for your award when you decide to book it.

Speaking of award availability...

There's a reason that I've used Cathay Pacific as my example throughout this post: it's because award availability on Cathay Pacific is quite scarce, and can't be searched on American's website. Instead, you're likely going to be using British Airways to search for award availability anyway, since they display it online.

Not only that, but British Airways allows reservations to be made further in advance than American does! Take another look at the search result above: it's for a first class flight departing December 10, 2016. That's 354 days from now, while American only allows reservations to be made through November 17, 2016 — 331 days from now.

As you'd expect, award availability tightens up quickly once American's award booking window opens. Given that Cathay Pacific frequently makes just a single first class award seat available, those 23 days may spell the difference between getting your first class award or having to sit in business class.

In that sense, you aren't overpaying for Cathay Pacific first class by using British Airways Avios; you're simply paying the only price at which the first class seats you need are, in fact, available!

How much would you pay to be able to book any flight on any day?

Another day, another devaluation.

Yesterday American Airlines announced the changes they'll be making to the AAdvantage program next year. You've likely already read all about them, but in summary, they are:

  • Revenue-based mileage earning (beginning in "the second half of 2016");
  • Award chart devaluation (effective March 22, 2016);
  • Elite status devaluation (effective for qualification after January 1, 2016).

Since I credit my paid American flights to Alaska, I don't care much about the first or third points. But the award chart devaluation is real and, for premium cabin redemptions, significant.

Premium cabin awards are not cheap or easy

With yesterday's announcement, American Airlines joined Delta and United in raising mileage prices for premium cabin awards, in some cases astronomically. For example, a first class award seat on a 3-cabin aircraft to Sydney from the continental United States will cost 110,000 AAdvantage miles starting March 22, 2016, up from the 72,500 miles it currently costs, a 52% increase.

Of course, that's purely academic. There are no first class award seats between the continental United States and Sydney.

Yes, if you're flexible, if you're searching far in advance, close-in, and on every single day in between, you might be able to find one or two seats during the Southern winter. But don't hold your breath.

Premium cabin seats are (not that) expensive

For a lot of people, "travel hacking" is synonymous with "loyalty program hacking." And indeed, historically the loyalty programs operated by hotels and airlines have been a great source of outsized value for people willing to dedicate the time and attention to maximizing the value of their miles and points.

But those airline award seats we hunt down so diligently are also available on the open market! Believe it or not, the airlines just sell them. Of course, in exchange for the flexibility buying revenue tickets grants, you're going to pay a little more.

Or a lot more. That 220,000-mile roundtrip first class award ticket American promised you might cost $10,000 or $15,000 if you choose the flexibility of a revenue ticket.

Well, it might cost someone $15,000. But it doesn't have to cost you $15,000, because you're a travel hacker.

The revenue premium may be smaller than you think

A $15,000 first class flight to Sydney will give about 6.8 cents per AAdvantage mile in value after the March 22 devaluation (if you could find first class award space).

Since the Citi Prestige card allows you to redeem ThankYou points for 1.6 cents each on American-marketed flights, you'd need about 938,000 ThankYou points to purchase your first class revenue ticket. That's a lot of points, but the ThankYou Premier card earns 3 ThankYou points per dollar spent at gas stations, so you'd only need to manufacture $312,666 in gas station spend to make your redemption. That's obviously not something you'll be able to do in a weekend, but it might be a reasonable goal if spread out over a year or two.

Since the Citi and Barclaycard AAdvantage co-branded credit cards earn just one mile per dollar spent everywhere, you'd need to manufacture $220,000 on those cards to make your first class award redemption. In other words, the revenue premium — the additional manufactured spend required to book any seat on any flight — in this case is about 42%.

The $15,000 flight has the additional advantage of earning an Executive Platinum 165,000 AAdvantage miles, enough for another roundtrip to Sydney (albeit in business class instead of first).

Conclusion

Most people aren't going to manufacture enough spend to pay what American is asking for a first class ticket to Australia. Those who do probably don't value a first class ticket to Australia at $15,000, and would rather redeem their fixed-value points for the domestic economy flights they'd book anyway. That's a perfectly reasonable point of view.

The point I want to make is that while I sometimes say that cash is a superior earning choice for manufactured spend unless you have a particular, high-value redemption in mind, it may be a superior earning choice even if you do have a particular, high-value redemption in mind!

In other words, it's not enough to say that an award redemption will get you more value per dollar in manufactured spend than earning a currency like Ultimate Rewards (1.25 cents per point), Flexpoints (up to 2 cents per point, redeemed in tiers), Membership Rewards (1.43 cents per point with the American Express Business Platinum), or ThankYou points. You also have to be willing to redeem your loyalty currencies exclusively on the dates, flights, and times that the airlines choose to make award seats available, and put the time into learning the intricacies of each alliance and each airline.

If you don't find that fun or interesting, you may well be better off saving your time and paying the revenue premium instead.

American sure makes buying tickets confusing

Regular readers know that my plan for air travel in 2015 is simple:

  • I requested a status match to Alaska Airlines MVP status, and received MVP Gold 75K status, valid through 2015.
  • Until the end of 2014 I continued to credit my paid Delta travel to Skymiles, and reached Silver elite status for 2015.
  • For award flights on Delta, and paid flights where I know I'll have to check bags, I'll continue to enter my Skymiles number in order to check a bag for free.
  • For paid flights on Delta without checked bags, and all paid flights on American, I'll credit my miles flown to Alaska, in the hopes of earning MVP status again for 2016.
  • I don't fly United.

Since I love flying Delta, and live in the upper Midwest, until this year I only rarely had any reason to stray.

Now that Alaska has gutted mileage earning on paid Delta flights, however, I'm looking at more American flights. After all, a 1,000 mile Delta ticket in an "L" fare class will earn just 500 Mileage Plan miles (1,125 after the MVP Gold 75K 125% mileage bonus), while the same flight on American will earn 2,250 miles. The farther the distance traveled, the more valuable an economy ticket on American is, compared to the same distance flown in a cheap Delta fare bucket.

But American's website is a terrible place to buy American Airlines tickets!

There is way less going on than meets the eye

Here's the first flight option for an upcoming trip I'm planning:

If you're used to any other airline, you might assume these are 4 different fare classes, at 4 different price points. You'd be absolutely wrong. The first three options all book into the "O" fare bucket. Rather than different fare classes, they're different fare basis codes, which indicate to American what services are bundled into your ticket. Here's Choice Essential:

In other words, on the one-way flight I searched for, you can prepay your checked bag fee and pay an extra $4 for Group 1 boarding priority. I get free checked bags through my Alaska status, and priority boarding isn't a big deal for me, but many people seem to love boarding early, so maybe it'll makes sense for them.

And here's Choice Plus:

On the flight I looked at, for $80 you can get all the benefits of Choice Essential, plus a 50% AAdvantage mile bonus and free same-day travel changes. Paying $51 for 1083 AAdvantage miles is not a good deal. But if you anticipated making same day travel changes anyway, the bonus AAdvantage miles would be a nice touch.

The problem is that to earn them, you'd need to travel under your AAdvantage member number, instead of your Alaska Airlines Mileage Plan number, defeating the purpose of flying American to begin with!

Why does it matter?

There are a few reasons why it's good to understand what's going on here. First of all, so you don't unwittingly book one of these Choice Essential or Plus fares!

But secondly, you might actually want to book one of these fares, and you definitely don't want to do it through American's website. Since Choice Essential and Plus fares have unique fare basis codes, travel agents should be able to manually book these fares over the phone.

For example, when searching the Chase Ultimate Rewards travel portal or US Bank Flexperks travel portal, you won't see these fares since they are all in the same "O" fare bucket. 

But by calling in to Chase (866-951-6592) or Flexperks (888-229-8864), you should be able to ask the agent to book your ticket into a specific fare basis code, not just fare bucket. It's safe to assume not all phone agents will know how to do this, since it's a bit of an odd request, but if you try a few times you'll hopefully get one who can help you.

The obvious reason to do this is if you're planning to credit a flight on American to the AAdvantage program, and the flight you want is towards the bottom of a Flexperks Travel redemption band. By booking your ticket on a more expensive Choice Plus fare basis code, you'll earn the bonus 50% AAdvantage miles, without spending any more Flexpoints.

Conclusion

Choice Essential and Plus fares are overpriced, and strike me as a fairly shameless cash grab by American. But that doesn't mean there aren't situations when we can use them to squeeze a few more cheap miles out of the airline. The benefits seem to be primarily for passengers who credit their miles to AAdvantage (and don't have elite status), so I doubt I'll personally be taking advantage of these fare options.

American and US Airways award discounts

As I've mentioned, in January I was approved for both the Citi Platinum Select / AAdvantage World MasterCard and Barclaycard US Airways MasterCard. Having met the minimum spending requirements for both cards, I paid them off and stuck them in a drawer.

Of course, now I've got all those miles on my hands! Since I have an expensive domestic roundtrip coming up in March, I thought I'd check out what kind of award availability the airlines had on the dates I needed (hint: not much!).

That got me to wondering about the award discounts offered by the two airlines to their co-branded credit card holders. I found it intensely confusing, so I thought I'd throw up a quick summary in case any of my readers recently signed up for the same cards.

American Airlines: 10% mileage rebate & reduced mileage awards

There are two kinds of discounts you get as a Citi / AAdvantage cardholder. First, there's a 10% mileage rebate on all the miles you redeem out of your account each calendar month, up to 10,000 total miles (on 100,000 in mileage redemptions). Second, there are "reduced mileage awards" which are offered to a changing list of (domestic) destinations throughout the year. That program is clearly decided to be as difficult to take advantage of as possible: you need to look up the eligible cities for each month, copy down the code, and input it when making your award reservation.

Oddly, the terms and conditions of the 10% rebate program don't even require these redemptions to be for flights, so if you find a good redemption for hotels or car rentals, or if you redeem your miles for an Admiral Club membership, you should receive the rebate on those redemptions as well (I don't know how this works in practice).

Finally, for bookings made through February 27 for flights through April 4, there's another active promotion whereby non-stop MileSAAver economy award flights between Los Angeles and cities in the continental United States, and all MileSAAver economy award trips between Las Vegas and cities in the continental United States cost 10,000 AAdvantage miles each way, instead of 12,500. The 10% mileage rebate should apply to the final (post-discount) cost of each flight.

US Airways: 5,000 mile award discount

When you're a Barclaycard US Airways cardholder in good standing, you are designated "Dividend Miles Select." As far as I can tell the only benefit of that "status" is that you receive a flat, 5,000 Dividend Mile discount on all US Airways-operated flights.

I'm not going to lie, I've been messing around on US Airways' website for the last hour and I cannot for the life of me get the 5,000 mile discount to apply to any award tickets. Presumably if I actually wanted to book an award I could call in and have a phone agent apply the discount.

Analysis

The added wrinkle in all this is that starting a few weeks ago, you've been able to use American miles to make award reservations on US Airways, and vice versa. That means that it's possible to receive a 10% discount on US Airways award reservations by making the reservation through your American AAdvantage account. So when deciding which account to make a reservation through, you need to ask yourself the following questions:

  • Have I already received 10,000 miles through the AAdvantage rebate program this calendar year? If so, you won't receive any additional discount this calendar year.
  • Is this award ticket operated entirely on US Airways aircraft? If not, it's not eligible for the 5,000 mile discount.
  • If it is operated entirely by US Airways, is it more or fewer than 50,000 Dividend Miles? If it's more, you'll be better off using AAdvantage miles. If it's fewer, use your 5,000 Dividend Mile discount and save your rebate headroom for a more expensive redemption.

Finally, consider checked bag fees. The US Airways MasterCard famously does not include free checked bags, while the AAdvantage card does. American's website currently has the following helpful information:

"Q: Do the First Bag Checked Free Waiver and Group 1 Boarding (or Priority Boarding) benefits on select Citi®/AAdvantage® cards apply to US Airways flights?

"A: Not at this time. These benefits will not be available for travel on any US Airways flights, including any codeshare flights."

That means that if you're deciding specifically between American-operated and US-operated flights, booking the American flight with a 10% discount may be more economical than booking the US Airways flight with a 5,000 mile discount; it depends on whether the difference in miles is worth more or less than the $50 you'll pay roundtrip per first checked bag and $70 per second checked bag on US Airways.

Confused yet? Me too. Let me know in the comments if I'm missing anything obvious.

Quick update: my impromptu January application cycle

[update 1/11/14: I never got around to calling Chase about my British Airways application, but today I saw that it had been added to my online accounts with a $2,000 credit line.]

Yesterday I announced that in honor of the 5% cash back "old" Blue Cash card still being available, I was moving my next round of applications up from the beginning of February. That meant scrounging around for the best, currently-available, signup bonuses. Unfortunately, the Alaska Airlines offer I wrote about in my "perfect storm" post is no longer available. Here's what I ended up applying for:

  1. American Express "old" Blue Cash. No signup bonus, no minimum spend requirement, no annual fee. 5% cash back at drug stores after spending $6,500 each year. Result: immediate online approval, $1,000 credit limit.
  2. Citi Platinum Select / AAdvantage World MasterCard. 50,000 miles after spending $3,000 within the first 3 months. Result: approval after calling the "status check" number, (888) 201-4523, $3,000 credit limit.
  3. Barclaycard US Airways MasterCard. 35,000 miles after first purchase. Result: immediate online approval, $1,000 credit limit.
  4. Chase British Airways Visa Signature. 100,000 miles after spending $20,000 within 12 months. Result: application pending. I called into the application status line today, (800)-436-7927, but have still been unable to get a decision or shuffle my credit limits around to secure approval. I'll wait and call back on Monday.

As you can see, because this application cycle was impromptu, I didn't have a chance to massage my credit by making sure all my credit card statements closed with a low or zero balance. My day-to-day high utilization rate negatively impacts my score between application cycles, making me look less credit-worthy (even though I always pay off my balances in full).

However, this doesn't bother me. I intend to only use the US Airways card once, to secure the signup bonus, and spend just $3,000 on the American Airlines card, so those low credit limits aren't a problem.

The $1,000 credit limit on the Blue Cash card, on the other hand, would be an issue except for the fact that American Express makes it easy to shuffle your credit limits between cards, so I'll be able to move all but a small part of my $10,000 Hilton HHonors American Express credit limit over to my new Blue Cash card (this is only possible within personal and business cards, not between them). That'll give me more than enough room to manufacture spend on my new 5% cash back card.

All in all, I'm pleased with the results of this application cycle, and hopefully I'll get approval for my British Airways application in the next day or two, possibly after moving part of my credit limit over from my Chase Sapphire Preferred card.

Comparing co-branded airline credit cards

Hard at work on the second edition of The Free-quent Flyer's Manifesto and re-reading Chapter 4, it occurred to me that it might be useful to give a side-by-side breakdown of the similarities and differences between the co-branded credit cards of the principal US airlines.

In the second edition I'm adding Alaska Airlines to the list of traditional airlines given detailed treatment, along with Delta, US Airways, American Airlines, and United. Why? Alaska's route map makes them far from a regional carrier; their partnerships with American and Delta make their Mileage Plan program more flexible than miles with either AAdvantage or Skymiles alone; and their co-branded Bank of America credit card has a number of lucrative features.

What kinds of co-branded credit cards exist?

For all the traditional carriers except US Airways and Alaska Airlines, there are two kinds of co-branded credit cards: an "entry-level" card that offers some combination of a free checked bag, priority boarding, annual companion tickets, and sometimes a bonus for meeting a high annual spend target; and a "club-level" card that gives lounge access, plus some combination of the above. This basic picture is made a little more complicated by the fact that Delta also splits its "entry-level" cards into a Gold and Platinum American Express: the Gold has a lower annual fee, but substantially fewer benefits. Note: do not confuse the American Express Platinum cards with American Express Delta Platinum cards. The names are similar; the products are completely different.

US Airways and Alaska Airlines both have entry-level cards, but no club cards. Here's a side-by-side comparison of the entry-level cards available from each airline:

Take note of the following differences between these cards:

  • The annual fee on all these cards is waived the first year of card membership, except for the $150 annual fee for the American Express Delta Platinum card (although signup bonuses sometimes include statement credits of up to $100).
  • All the cards offer 1 mile per dollar spent on purchases, and 2 miles per dollar spent on purchases with the airline, except the Alaska Airlines Visa Signature, which offers 3 miles per dollar spent on Alaska.
  • The US Airways and Alaska Airlines companion tickets are available during your first, fee-free year, and every subsequent year. The Delta Platinum companion ticket is only earned the second year of card membership, after paying the $150 annual fee a second time.
  • The MileagePlus Explorer card offers 10,000 redeemable United miles after spending $25,000 on the card; the Delta Platinum card awards both redeemable and Medallion Qualifying Miles for high spend on the card.

Here is a comparison of the Club-level cards from United, American Airlines, and Delta:

Note that unlike the AAdvantage and United cards, the American Express Delta Reserve card does not technically give you a Sky Club membership; rather, it gives you Sky Club access, but only while you're flying on a Delta-issued or Delta-operated ticket.

Who should sign up for a co-branded credit card?

n my view, there are four reasons to sign up for a co-branded airline credit card, rather than a card that offers double or triple flexible points on airline purchases, like the Chase Sapphire Preferred or American Express Premier Rewards Gold cards:

    1. High signup bonuses. These cards periodically feature very high signup bonuses, high enough to justify applying for a card even if you have never set foot on the airline before. For example, the Citi AAdvantage ard offers up to 50,000 AAdvantage miles (my lifetime American Airlines miles flown are about 11,000), American Express Delta Gold occasionally offers 70,000 Skymiles, and I signed up for the United MileagePlus Explorer card when it was offering 65,000 miles. Since the annual fees on these cards are waived the first year, these are incredible offers of $1,000 or more in value for the cost of a hard inquiry on your credit report.
    2. You're a Delta frequent flyer. The American Express Delta Platinum and Reserve cards give you the opportunity to "mileage run from home" and earn 20,000 or 30,000 Medallion Qualification Miles per year through high spend bonuses. This is a no-brainer, especially if this is the difference between Silver Medallion and Gold Medallion status, since that's when the Medallion mileage bonus rises from 25% to 100%.
    3. You only fly occasionally, or fly a secondary airline, and check bags. If you have a preferred airline, where you receive free checked bags because of your elite status, but occasionally have to fly another airline because the fares are substantially cheaper, then you may save money on checked bag fees by carrying a Delta, United, or American co-branded credit card. Here in New England, I fly Delta whenever possible (because I receive unlimited complimentary Medallion upgrades to First Class, and I prefer Delta's in-flight product, even in Economy), but sometimes United flights are so much cheaper that I can't justify paying the premium to fly Delta. In these cases, it's helpful to carry the MileagePlus Explorer card in order to check bags for free.
    4. You pay for a lounge membership. In almost all cases, you're better off receiving your lounge access by paying the annual fee for a Club-level card, and also receiving the benefits of the co-branded card, like the United Club card's high earning rate and the elite-qualifying miles generated by high spend on the AAdvantage Executive and Delta Reserve cards.

    Free one-ways on American award reservations

    We've already discussed the basics of adding a free one-way flight before or after a round-trip award reservation on Delta and on United.  Free one-ways on American Airlines are a little trickier than on either of the other traditional carriers.  As always, in order to book a free one-way flight, you need to use a stopover.  However, American only allows stopovers on award tickets at the "North American gateway city," which is the airport where you depart or arrive North America.  This post has a list of which cities are considered North American gateway cities with different American partners.

    Therefore, the only way to add a free one-way to the beginning or end of your itinerary is if you live in your North American gateway city, or can get there cheaply or easily.  For example, if you live in Boston, then as long as you depart or arrive North America on a flight from or to Boston, you can add an earlier or later one-way flight at the beginning or end of your reservation.  Below is a simple example.  On the outbound international leg, Boston to London, Boston is the North American gateway city.  That means that I was able to add an unrelated, free one-way flight from Dallas to Boston at the beginning of the itinerary for the same miles as just the international round-trip:

    On the return flight I found, Chicago is the North American gateway city, so it would be possible to stopover there if I hadn't used the stopover already at the beginning of the itinerary.  Of course in order to get from Boston to Dallas in the first place you'll need a paid one-way ticket or an award from an airline that allows one-way awards at half the price of a round trip, like United or American.