Understanding Alaska Airlines Mileage Plan earning activity

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I like to think there's a difference between loyalty programs that are confusing and those that are merely complicated. It's confusing how many Delta SkyMiles an award ticket will cost because Delta continually obfuscates and changes the number of SkyMiles required, while it's merely complicated to figure out whether a British Airways Avios redemption is cheaper when broken up with an intermediate stopover.

Since I'm relatively new to crediting paid fares to Alaska Airlines Mileage Plan, I wasn't familiar with their system of elite-qualifying-mile bookkeeping. I know that many of my readers are in the same position I am, aiming to keep or reach elite status with Alaska, so I thought it would be useful to share what I've found so far.

Crediting American Airlines flights to Alaska Airlines Mileage Plan

From the Alaska Airlines website, here are the rules for crediting American Airlines-operated flights to Mileage Plan:

"Elite Qualifying Flight Miles: Earned flight miles and premium cabin bonuses on American count towards Elite Status.

Economy Class Cabin: Earn actual flight miles* flown in B, G, H, I, K, L, M, N, O, Q, R, S, V, W, X or Y classes of service.

Business Class Cabin: Earn actual flight miles* flown in C, D, I, or J classes of service, plus 25% Bonus Miles.

First Class Cabin: Earn actual flight miles* flown in A, F, or P classes of service, plus 50% Bonus Miles.

*Earn 500 minimum miles on flights less than 500 miles. Actual miles flown = 1 mile per flight mile flown. O class of service accrues for flights taken on or after February 1, 2015. Miles may not be earned for tickets flown in E, T, U or Z classes of service. Some deeply discounted, and industry fares are ineligible to earn miles."

Since my American Airlines flights last week have finally posted to my Mileage Plan account, I can report that while these rules are followed, their application is unnecessarily opaque.

"Earn 500 minimum miles on flights less than 500 miles"

Here's the flight I was rebooked on from Reno to Los Angeles:

Since the actual miles flown was under 500 miles, I should have earned 500 miles, plus 625 bonus miles as an MVP Gold 75K elite. Instead, I was credited with the 390 miles actually flown and the "Bonus" column was "topped up" with the missing 110 miles, leaving me with the correct total number of miles.

"Earn actual flight miles* flown in A, F, or P classes of service, plus 50% Bonus Miles"

As I mentioned in a previous post, for my flight from Los Angeles to Dallas I was booked into the first class "F" fare bucket, which earns 50% bonus miles when credited to Alaska. Here's how that flight posted to my Mileage Plan account:

Here the third column reflects the number of miles actually flown, and the fourth column includes both the 50% class of service bonus and the 125% MVP Gold 75K elite status bonus. Importantly, the class of service bonus does not increase the base mileage to which the elite status bonus is applied: both bonuses are applied only to the base number of miles actually flown.

"Earned flight miles and premium cabin bonuses on American count towards Elite Status"

Here's where things get tricky: your total number of elite-qualifying miles is the number of actual miles flown (the entire third column), and the portion of the "bonus" column that represents 500-mile minimums and class of service bonuses.

The best way to illustrate this is another example. Here are all five paid flights I've credited to Mileage Plan this year:

And here's what my tier status counter looks like:

The elite-qualifying miles shown represent the sum of my actual miles flown (4226), the part of the "Bonus" column representing my 500-mile-minimum "top up" (501), and the 50% class-of-service bonus I earned on my flight from LAX to DFW (618).

Conclusion: Alaska Airlines elite-qualifying-mile earning is unnecessarily complicated, but fair

While I was credited with all the redeemable and elite-qualifying miles I was due for the 5 American Airlines flights I credited to Mileage Plan, Alaska doesn't make it trivial to verify those numbers. With just 5 flights I could check their math manually, but when that number gets up to 20 or 30 I'll be left taking their word that my miles are being allocated correctly (or keep my own running tally).

Yet another loyalty program trap: airline companion tickets

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In the last few weeks I've done a bit of a deep dive into the annual free night certificates offered by various co-branded hotel credit cards (IHG (and here), Marriott, Hyatt), with the general theme that a single annual free night certificate has to be looked at in the framework of your overall miles, points, and travel strategy.

For example, a $75 Hyatt free night certificate can either save you 8,000 Ultimate Rewards points if redeemed as part of a short Category 2 stay (good deal!), or cost you tens of thousands of Ultimate Rewards points if you let its presence in your account convince you to spend your vacation at a Category 4 Hyatt property rather than, for example, a Club Carlson property where your last night (or every other night, depending on your credit card portfolio) is free.

In other words, it's not enough to say the Hyatt Visa Signature credit card gives a free night when you pay the $75 annual fee. That "free" night might be very cheap or very expensive, depending on your travel plans and overall miles and points strategy.

Are airline companion tickets too good to be true?

Many airline co-branded credit cards offer an annual companion ticket, which are (with a few important exceptions) valid for economy travel in the continental United States and Canada, on flights operated by the issuing airline (excluding their partners and, in US Airways' case, their own sister airline American).

Here's a quick glance at some of those companion tickets:

  • Barclaycard US Airways MasterCard (for new and current cardholders in 2015 only): $99 plus taxes and fees for each of up to two companions traveling with the cardholder, when the cardholder purchases an economy ticket fare of $250 or more. Valid in the continental United States and Canada. $89 annual fee. You must pay with your US Airways MasterCard.
  • Barclaycard American Airlines Aviator Silver MasterCard (beginning in the second quarter of 2015): $99 plus taxes and fees for each of up to two companions traveling with the cardholder, when the cardholder purchases a ticket for $250 or more. The cardholder must spend $30,000 each cardmember year to receive the companion tickets. $195 annual fee.
  • Bank of America Alaska Airlines Visa Signature: $121 for one companion to travel with the cardholder, when the cardholder purchases any economy ticket. Valid systemwide on flights operated by Alaska Airlines. $75 annual fee. The primary cardholder must be traveling or the ticket must be booked with a card in the primary cardholder's name.
  • American Express Delta Platinum (economy) and Reserve (economy or first): pay only the taxes and fees for your companion when purchasing a ticket in eligible fare classes. Valid in the continental United States and Canada, except for residents of Hawaii, who can originate there. $195 (Platinum) or $450 (Reserve) annual fee. The terms and conditions state that the ticket must be paid for with your American Express Delta Platinum or Reserve card, although a reader reported that he was able to use a different American Express card.
  • Chase British Airways Visa: you pay only the taxes, fees, and fuel surcharges for a second award ticket in any class of service booked entirely on British Airways-operated flights, originating in the United States. $95 annual fee. The primary cardholder must be traveling.

Who are companion tickets right for?

I often write that there are only two reasons to even consider using travel-rewards-earning credit cards, rather than earning a straight 2% cash back using a card like the Fidelity Investment Rewards American Express:

  • You travel for work and have reimbursable business expenses;
  • Or you manufacture spend furiously.

That's because even if you (not unreasonably) value Membership Rewards, Ultimate Rewards, or Citi ThankYou points at more than 1 cent each, you have to earn a huge number of them to "make up" the $95, $175, or $450 annual fees incurred by premium rewards-earning credit cards.

The same logic applies to companion tickets. If you're reimbursed by your business or employer for your travel expenses, then the annual fees of these credit cards really might be cheap methods for bringing a travel companion on a domestic trip with you.

That's because when the cost of the revenue ticket is taken out of the equation, the credit card annual fees may be a relatively small fraction of the cost of paying for a second revenue ticket: $217 (Delta Platinum) is 25% of a $868 ticket, $210 (US Airways) is 25% of a $840 ticket, $196 (Alaska) is 25% of a $784 ticket. While those hypothetical prices are currently high for leisure fares (I haven't paid $784 for a domestic ticket in years), if your travel companion wants to come with you on a route heavy with business travelers, they're not inconceivable.

The problem with companion tickets

With that out of the way we can come to the crux of the problem: companion tickets are a bad deal because they require you to purchase a revenue ticket directly from the airline.

And if you're a travel hacker, that's vanishingly unlikely to be the cheapest method of buying tickets — even revenue tickets. Leaving award tickets completely aside, here are a handful of straightforward methods for buying revenue tickets on the cheap:

  • Redeem US Bank Flexpoints at up to 2 cents each, earned at up to 3 Flexpoints per dollar spent on charity. Maximum discount: 83.3%.
  • Redeem Citi ThankYou points at up to 1.6 cents each on American Airlines or US Airways flights, earned at up to 3 ThankYou points per dollar spent at gas stations. Maximum discount: 83.7%.
  • Redeem Chase Ultimate Rewards points at up to 1.25 cents each, earned at up to 5 Ultimate Rewards points per dollar spent at office supply stores. Maximum discount: 46.3%.

Compare that to a revenue ticket purchased directly from the airline, and a companion ticket paid for with your annual fee plus any required taxes, fees, or co-pays. Even the unusually high prices I cited above (with savings of 75% on the companion ticket compared to revenue fares) produce savings of just 37.5% when you're forced to buy the first ticket at retail price.

Exceptions worth considering

While the Bank of America Alaska Airlines companion ticket and the British Airways Travel Together ticket do have to be booked directly with their respective airlines (over the phone, in both cases), the terms and conditions of the tickets do not require them to be booked with the corresponding credit card. That means you can use a Barclaycard Arrival+ card to pay for both tickets, potentially securing a discount comparable to what you'd get booking using a more lucrative points currency.

Personally I prefer to use my Arrival+ miles for non-chain hotels and taxi and Uber rides, but if you're earning them cheaply enough, an Alaska Airlines or British Airways companion ticket might make sense — again, depending on your own miles and points strategy.

Is the Marriott Rewards Premier Visa free night certificate worthless?

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It's perfectly natural, when you're deeply involved in a hobby like travel hacking, to develop some intuitions that guide your decision making, shortcuts that let you quickly decide whether a given award redemption actually saves you money compared to other obvious alternatives.

One thing I love to do here on the blog is to dig into those intuitions and make sure the numbers behind them really do make sense.

Since this week I've been hammering on the Chase IHG Rewards Club and Hyatt Gold Passport co-branded credit cards, and the value of their annual free night certificates, I thought I'd finish out the week discussing a card I actually have (against my better judgment): the Chase Marriott Rewards Premier Visa card.

The card has an $85 annual fee, and each year cardholders receive one free night certificate, valid at Marriott properties in Category 5 and below. The certificate can be redeemed for any room that has standard award availability.

What I want to know isn't whether the free night certificate is worth $85, but rather whether it's worth anything at all. That is to say, based on the actual distribution of hotels within Marriott's reward categories, can I consistently expect to redeem my free night certificate at properties I actually want to stay at?

The release of Marriott's 2015 hotel category adjustments provides a good occasion to apply some data to this question.

Methodology

I travel primarily for leisure, primarily to cities, and want to stay as close to those cities' downtowns as possible. Marriott has a huge footprint of downtown hotels in cities around the world, so the question is how many of those hotels will be in Category 5 or below for reservations made after March 19, 2015.

Marriott Rewards divides the globe into 11 regions. For each region, I picked the 5 largest cities by population, and simply noted whether there was a single downtown hotel in Category 5 or below.

Results

This is the answer to a very specific question: how many of the top five cities by population in each Marriott region have a downtown Category 5 or lower property? In two cases, the definition of "downtown" is clearly disputable, which earned Seoul and Paris 0.5 points each.

  • United States: 1/5 (Houston)
  • Africa: 2/5 (Cairo and Alexandria)
  • Asia: 3.5/5 (Shanghai, Karachi, and Beijing. Seoul is a megalopolis which earns the Courtyard Seoul Times Square half a point)
  • Australia and Pacific Islands: 0/5
  • Canada: 3/5 (Toronto, Montreal, Ottawa)
  • Caribbean: 1/5 (Santo Domingo)
  • Central America: 1/5 (Tegucigalpa)
  • Europe: 1.5/5 (Madrid. Paris is a megalopolis which earns the easily accessible Category 4 and 5 properties half a point)
  • Mexico: 2/5 (Mexico City and Puebla)
  • Middle East: 2/5 (Riyadh and Ankara)
  • South America: 1/5 (Bogota)

Of 11 regions, and 5 cities per region, only 18 have Category 1-5 Marriott Rewards properties, or roughly 33%.

On the one hand, that's preposterously low to speculatively pay $85 on the off chance that a free night certificate in such a city will prove valuable.

On the other hand, if one of those cities is one you regularly need to stay at, you're in luck: the Chase Marriott Rewards Premier card will give you a free night there.

Round two of Chase IHG Rewards Club vs. Hyatt Gold Passport credit cards

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My post on Tuesday comparing the annual free night certificates of the Chase IHG and Hyatt credit cards elicited a lot of well-thought-out responses in the comments section.

The responses fell along 3 lines:

  • Commenter JEM: "I generally travel solo, and don't usually stay more than one night in any one location."
  • Commenter Shawn Coomer: "Hyatt's chart is more reasonable and those points are an easy transfer. In my mind, this cements the IHG card as the better of the two since high-end stays in their properties are harder to come by."
  • Commenter Kenny: "Hyatt has a laughably small footprint, and may be an option (although usually not the best one) for 1 or 2 out of ten of our stays. I often can't get a room for four at the top properties of either chain, but IHG has many more possibilities."

The wonderful thing about this hobby is that all three commenters are absolutely right — and I still "disagree" with all three for my own miles and points strategy! But I want to carefully consider each of these points, so readers can decide which view corresponds most closely to their own travel hacking strategy.

Hotel Hopper

If you enjoy hotel hopping, or if for other reasons you tend to stick to one- or two-night stays, then the cost-per-night analysis I use doesn't make any sense for you. There are a ton of hotel co-branded cards that offer the equivalent of one or two free nights per year:

  • US Bank Club Carlson Premier and Business Rewards: 40,000 bonus Gold Points each year and last night free on award reservations (up to 50 free nights per year).
  • Chase Marriott Rewards Premier: free night certificate good at Category 1-5 properties.
  • Chase Hyatt Gold Passport: free night certificate good at Category 1-4 properties.
  • Chase IHG Rewards Club: free night certificate at any IHG Rewards Club property worldwide.

This strategy doesn't have anything to do with manufactured spend, or even travel hacking per se. Get all four cards and enjoy their 4-5 annual free nights in good health!

Aspirational Redemptions

IHG does have some aspirational properties, and if you have your heart set on one of them, it makes sense to build such a redemption into your credit card application timeline. That means convincing your partner/roommate/child to apply for a card at the same time as you, gaming expiration dates, and basically making sure you're able to make the top-tier IHG Rewards Club redemption of your dreams.

Save money on family vacations

IHG Rewards Club has a vast worldwide footprint, their properties are often reasonably priced and, overseas, can have a more generous approach to packing parents and kids into a single room. So when you're planning a trip that you're certain will involve an IHG Rewards Club property, you can save hundreds of dollars by using free night certificates — something that's vanishingly unlikely with a Hyatt Category 1-4 free night certificate.

My strategy: filling out vacations

As regular readers know, I travel a lot. For example, I have five and a half vacations planned in the next 9 weeks (what's half a vacation? I'm flying directly from San Diego at the end of one vacation to Milwaukee to start another). But I'm not a hotel hopper: my preference is for longer stays. Here's my agenda:

  • Two nights in Reno, NV
  • Four nights in Boston, MA
  • Seven nights in New Orleans, LA
  • Two nights in San Diego, CA
  • One night in Milwaukee, WI
  • Five nights in Lexington, KY

I take a lot of vacations, and IHG free night certificates don't make a lick of sense for any of them! Reno doesn't have any rooms that cost more than $40, I'm staying with a friend in Boston, in New Orleans I'm staying too long and IHG properties are too expensive, in San Diego I actually am staying at an IHG Rewards Club property (but burning some spare points from previous promotions), in Milwaukee I could redeem 8,000 Hyatt Gold Passport points (although I actually redeemed 25,000 random Marriott Rewards points I had lying around), and in Lexington I redeemed 40,000 Hyatt Gold Passport points transferred from a flexible Ultimate Rewards account.

For my strategy, substituting out 8,000 Hyatt Gold Passport points (transferred from a flexible Ultimate Rewards accounts) for a $75 annual fee makes perfect sense. For the strategies of my three commenters, free IHG Rewards Club nights make more sense.

But not one of us is wrong: we just have different goals and different travel styles, and understanding them is key to making the right decisions when it comes to both credit card applications and annual renewals.

One more reason to love Alaska's MVP Gold status

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Until January 1, 2015, the key benefit of Delta Platinum Medallion status was free award changes and redeposits (up to 72 hours before departure). That was for two reasons: Delta would only price and issue award tickets as round-trips, and Delta released agonizingly few low-level award seats. Free award changes meant you could book each leg at the low level as it became available.

For the two years I had Platinum Medallion status, I used this benefit constantly, saving hundreds of thousands of SkyMiles in the process.

In 2015, the benefit lost most of its value, for two reasons. The first reason is that Delta award tickets can now be booked as one-ways, meaning there's no need to "lock in" low-level seats as part of a round-trip award. But additionally, Delta appears to have begun systematically increasing the cost of award tickets booked fewer than 21 days in advance:

That means it's become less likely, rather than more likely, that additional low-level award seats will open up as your travel dates approach.

Free award changes are also a benefit of Alaska MVP Gold status

In the fall I requested and received a status match to Alaska Airlines MVP Gold 75K status. The key benefits for me are:

  • Crediting paid flights on Delta and American Airlines to Alaska, earning a 125% bonus;
  • Free checked bags on American Airlines;
  • Earning valuable Alaska Airlines Mileage Plan miles, which can be redeemed for travel on American, Delta, or their other airline partners.

What hadn't occurred to me until last week is that Alaska Airlines also offers free award changes and redeposits for their MVP Gold and Gold 75K elites.

Restrictions on Alaska Airlines partner awards

While you can use Alaska Airlines Mileage Plan miles to make award reservations on Alaska, American, or Delta flights, there are a few nuances to be aware of when doing so:

  • Naturally, to book partner award flights there must be low-level availability in the partner's own loyalty program. For American, that means SAAver award availability, and for Delta it means "Tier 1" availability.
  • You can combine Alaska Airlines flights with flights operated by their partners, but each direction (outbound and return) can only include one partner (and optionally Alaska Airlines).
  • Finally, Delta award flights are priced as one-ways only when booking round-trip awards. Put differently, if you book a Delta one-way with Alaska Airlines miles, you'll pay the round-trip price, whereas if you book a round-trip award (whether the other leg includes Delta or not) you'll also pay the round-trip price.

It's that last issue that makes free award changes and redeposits so important.

Book seats opportunistically, change and cancel as necessary

The fact that Delta award seats only price properly if booked as part of round-trip awards means that, just as with the pre-2015 SkyMiles program, it's necessary to "lock in" low-level seats as they become available, or pay double the one-way award price.

Unlike when redeeming Delta's own SkyMiles, Alaska Airlines still imposes relatively strict routing rules, so you can't tack a Delta flight onto an unrelated award in order to secure one-way pricing — you actually need to book a more-or-less round-trip award.

Free award changes and redeposits mean that once you've found one available award seat, you can book it immediately along with whatever flights happen to available for your other leg. Then you can periodically check award availability and, if seats become available, change your itinerary for free. If they don't, you can cancel the entire award, also for free.

Conclusion

There's no way to guarantee you'll find low-level award availability for the cities, dates, and times you want to fly. But free award changes and redeposits make it risk-free to lock in Delta award seats as they become available.

More weird Hilton HHonors pricing

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I've written before about "odd" pricing of Hilton premium room awards. Based on my research, I concluded that irregular pricing occurred when a hotel has a high enough fixed value assigned to HHonors points redeemed for premium rooms and, for whatever reason, the best available rate for premium rooms is low enough to drop the price in cash, after conversion to HHonors points, below the HHonors point cost for a standard room award.

As I wrote last July, it's not predictable when this will occur, although I tentatively suggested that large currency fluctuations might make it more likely.

That being said, I recently discovered another example, and thought I'd pass it along.

Here's the standard, 50,000 HHonors point price for a "2 DOUBLE BEDS" room at the Hilton New Orleans/St. Charles Avenue:

A "premium" corner room costs $10 more, but the premium room HHonors award cost is actually lower, at 44,519 HHonors points per night:

 

This is because the property uses a fixed premium room rewards conversion rate of 0.357 cents per HHonors point. Indeed, if you could book a standard room at the premium room award conversion rate, it would cost just 41,719 HHonors points per night!

Unfortunately, that's not possible, but booking cheap premium night awards is a good next-best alternative (unless you're booking 5 consecutive nights, in which case the nightly rate drops to 40,000 HHonors points)!

Evaluating point transfers to airlines by alliance

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Last month I wrote that the addition of gas stations to the Citi ThankYou Premier "travel" bonus category, and raising that bonus to 3 ThankYou points per dollar, had leveled the playing field between that card, the Chase Ink Plus, and American Express Amex Everyday Preferred, all three of which will have $95 annual fees starting April 19, 2015, when the ThankYou Premier card's annual fee is lowered from $125.

Of course, the definition of a card that earns flexible points is the ability to transfer those points to airline and hotel partners. So which airline transfer partners are best for each of the three rewards currencies?

SkyTeam

Chase Ultimate Rewards. Here you have just one transfer partner, Korean Air. The good news is, they have a pretty decent, zone-based award chart for SkyTeam partner awards:

The bad news is, they pass along fuel surcharges on their own flights and SkyTeam partner flights. For flights to South Korea from the United States, one interesting option is paying 35,000 Delta SkyMiles and $24 for your outbound ticket, since Delta doesn't pass along fuel surcharges on Korean Air flights, and using SKYPASS miles for the return on Korean Air, where you'll pay just 83,100 Korean Won (about $75) in taxes and fuel surcharges. That's about $266 less than you'd pay booking the entire trip with SKYPASS miles, and only $14 more than you'd pay booking the entire trip with SkyMiles.

American Express Membership Rewards. Membership Rewards points transfer to Delta and a number of other SkyTeam carriers: AeroMexico, Air France KLM, and Alitalia. For most redemptions from the United States, you'll be best off redeeming Delta SkyMiles, unless you want to book First Class tickets, since Delta doesn't have access to those seats (they don't operate a First Class cabin themselves).

For redemptions originating outside the United States, you'll need to consider another carrier (or more realistically, another alliance), since Delta passes along fuel surcharges on those flights. Air France KLM and Alitalia charge punishing fuel surcharges even on their own flights.

Aeromexico is an interesting case. I was unable to price out any SkyTeam partner awards using their online booking engine, so I don't know if they pass along fuel surcharges, although that's my impression from the little information I was able to gather. If any readers have experience booking SkyTeam awards through Aeromexico, I'd love to hear it!

Citi ThankYou. In addition to Air France KLM, here you have the unique transfer partner of Garuda Indonesia. To quote from the GarudaMiles website: "Award Tickets redemption for any of Garuda Indonesia partner airlines, including Air France & KLM, can only be conducted at Garuda Indonesia Sales Offices." Unfortunately, that's not going to be very useful for most people, so your best best will likely still be Air France KLM.

oneworld

Chase Ultimate Rewards. British Airways is your only option here, and you know what that means: domestic economy flights on American Airlines or US Airways, transatlantic flights on Aer Lingus and air berlin, and transfers to Iberia Avios for redemptions on their own flights.

American Express Membership Rewards. Here you can choose between Cathay Pacific and British Airways (or Iberia) Avios. While both programs are distance-based, and both pass along fuel surcharges from partners, Cathay Pacific's award chart is based on the total distance traveled on an award itinerary, rather than the length of each segment, which should make awards that require connections cheaper. Additionally, on April 28, 2015, Avios redemptions for most long-haul segments in premium cabins will increase by 50% (Business) and 33% (First). That'll increase the value of Cathay Pacific miles compared to Avios. For example, a First Class redemption on American Airlines between JFK and LAX will cost 50,000 Avios (currently 37,500), but just 40,000 Asia Miles, as a "single carrier award." There's additional value in Cathay's multi-partner awards, though you'll see excessive fuel surcharges on many of those awards.

Citi ThankYou. Here you can choose between Cathay Pacific, Malaysia Airlines, and Qatar. Qatar Qmiles appear to be completely worthless. Malaysia Airlines has a distance-based award chart with fairly steep single-partner award redemptions (JFK-LAX on American Airlines would cost 132,000 Enrich Miles in First!), but much more reasonable multi-partner awards. Drew at Travel is Free has looked at a number of routes where Malaysia Airlines miles are competitive, particularly on their own flights, so I'll call this a tie between Malaysia Airlines and Cathay Pacific.

Star Alliance

Chase Ultimate Rewards. Between United and Singapore Airlines, you'll typically want to transfer your Ultimate Rewards points to United, since they don't pass along fuel surcharges on partner awards. The most popular exception is if you're committed to redeeming Ultimate Rewards points for Singapore Airlines Suites Class redemptions, since you may find KrisFlyer miles more useful because of their increased access to those seats.

American Express Membership Rewards. With the same caveat as above, Air Canada Aeroplan miles will usually be more valuable than Singapore Airlines miles, since they don't pass along fuel surcharges on many of their partners, although ANA can make sense on Star Alliance routes with fuel surcharges where their distance-based award chart requires fewer miles than Aeroplan, or on United, where ANA passes along low or no fuel surcharges.

Citi ThankYou. Citi has two unique transfer partners in Star Alliance, Thai Airways and EVA Air, in addition to Singapore. Thai Airways recently gutted their award chart, and EVA Air passes along fuel surcharges, so if you have to redeem ThankYou points for Star Alliance travel, Singapore is likely to be your best bet.

Conclusion

The point of this post is to emphasize that bonused earning rates, like those at gas stations, change the value calculus of various loyalty programs.

Much hay is made of the fact that Starwood Preferred Guest Starpoints have a 20% transfer bonus when transferred in increments of 20,000, or that Membership Rewards points can sometimes be transferred to British Airways with a 40% bonus.

But if you're earning 2 Ultimate Rewards points, or 3 Membership Rewards or ThankYou points, per dollar spent at gas stations, you should be putting equal weight on the 100% or 200% "transfer bonus" that category spend gives you; after all, the Starwood Preferred Guest American Express earns just 1 Starpoint per dollar spent everywhere.

Finally, this is not encouragement to sign up for all three cards that earn bonus, flexible points at gas stations. On the contrary, it's an invitation to take a look at your upcoming trips, the award reservations you intend to make, and the loyalty currencies that can make that possible. Then find the credit cards that offer bonus points in the categories that are going to get you those points as easily and cheaply as possible. If you have access to cheap gas station manufactured spend, it might be one of these cards. If you don't, then you'll need to keep looking!

American sure makes buying tickets confusing

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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.

Marriott rollover nights and the hunt for Gold elite status

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Last October I wrote a couple of posts about an idea I had to use Marriott rollover nights in order to earn elite status once every two years. The technique takes advantage of the principle that elite status is valid for the remainder of the year in which it's earned, plus the entire following elite membership year (which may even reach into the year after that, depending on the loyalty program).

In other words, if you were somehow able to earn elite status on January 1st, you would have that status for two full calendar years.

Marriott Rewards isn't a program I find particularly lucrative for my own travel, which is 100% leisure, but I know many business travelers love their essentially universal footprint and elite recognition.

I love digging into the nitty-gritty of loyalty programs, so I decided I'd give this technique a try to see how it works in practice. 

Elite-qualifying night breakdown

When you log into your Marriott Rewards account, you can click on your "Account Overview" and see the breakdown of all your elite-qualifying nights so far this year. It looks like this:

My Chase Marriott Rewards Premier card has an anniversary date in April, when 15 additional "Rewards Credit Card" nights will post to my account, bringing my "2015 Total" to 34. At that point, I'll need 16 additional elite-qualifying nights, or $48,000 in spend on my Premier card, in order to reach Gold elite status with Marriott Rewards. At that point I'll have exactly 50 elite-qualifying nights, and in January 2016 my total will reset to 0, since I won't have any 2015 rollover nights.

Rollover nights don't roll over!

What I didn't appreciate, Marriott Rewards not being one of my primary or even secondary loyalty programs, is that elite-qualifying nights only roll over one time.

At the end of 2014, I had 42 elite-qualifying nights: 8 paid nights, the 15 bonus nights I receive from my credit card every April, and 4 nights I'd earned through spend on the Premier card, plus 15 nights I rolled over from 2013. I assumed that I would roll over all 32 nights in excess of the 10 elite-qualifying nights required for Silver elite status.

But instead, only 17 nights rolled over: my 2013 rollover nights simply vanished.

Does it matter?

When I originally hatched this elite-qualification scheme, it was in the form of a question: if the Marriott Rewards Premier credit card earns 15 bonus nights per year, and only 10 are required for Silver status, doesn't that mean the 5 rollover nights will accumulate so that every 8 years cardholders will suddenly receive Gold elite status?

The answer to that question is "no:" each year, 5 rollover nights will "expire" and 5 rollover nights will be added, leaving the cardholder running in place towards Gold status.

On the other hand, this has no effect on the strategy of earning Gold elite status every two years using rollover nights.

  • In year 1, receive 15 annual bonus nights and manufacture $45,000 in spend to end the year with 30 elite-qualifying nights;
  • In year 2, receive 15 annual bonus nights and roll over 20 nights;
  • Also in year 2, manufacture $45,000 in spend to reach Gold elite status;
  • In year 3, receive 15 annual bonus nights and manufacture $45,000 in spend to end the year with 30 elite-qualifying nights;
  • In year 4, receive 15 bonus nights and roll over 20 elite-qualifying nights;
  • Also in year 4, manufacture $45,000 in spend to end the year with 50 elite-qualifying nights.

Using this technique, you'd only be without Gold elite status in "even" years, and only until you met that year's $45,000 spending goal.

Is it worth it?

Absolutely not.

Remember, when you manufacture spend on any credit card that earns just 1 mile or point per dollar, as the Marriott Rewards Premier card does, you're buying those points at 2 cents each, since you could put the same spend on a 2% cash back credit card. That means besides the Marriott Rewards Premier card's $85 annual fee, you'd also be foregoing at least $900 per year in exchange for Gold Elite status.

In fairness, you would also receive 45,000 Marriott Rewards points for your purchases, which are worth perhaps $450, if you're consistently strategic in your redemptions.

Who might seek Gold status in this way?

Everything I've said so far implies you never stay at Marriott properties, which would generally make you a poor candidate for Marriott Rewards Gold status! This strategy is vastly more realistic for members who actually have paid elite-qualifying nights at Marriott properties.

Since Marriott allows elite members to renew Gold elite status each year by simply paying 25,000 Marriott Rewards points, which can be transferred in from Chase Ultimate Rewards, the absolute most money you should be willing to spend pursuing Gold status on an annual basis is $250 (the cash value of the transferred Ultimate Rewards points).

A rough guideline that $3,000 spent on the Marriott Rewards Premier card earns $30 in points and costs $60 in foregone cash back would imply that you should be willing to manufacture no more than $25,000 per year on the Premier card pursuing Gold elite status. That would get you to 23 elite-qualifying nights annually (15 annual nights plus 8 nights earned through spend).

In other words, since Gold elite status requires 50 elite-qualifying nights, this strategy might be worth pursuing if you have 27 or more paid nights per year. In that case, manufacturing just $24,000 per year on the Premier card would earn you the marginal elite-qualifying nights you need to reach Gold status.

How do transfer bonuses and Travel Together Tickets affect the value of Avios for long-haul British Airways flights?

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Everyone knows that Avios, the awards currency used by British Airways Executive Club, can be redeemed for short-haul domestic flights at sometimes astronomical values. 4,500 or 7,500 Avios for expensive, short-haul flights is one of the great bargains in domestic travel, and makes British Airways one of the most valuable transfer partners for Chase Ultimate Rewards points, which you can quickly and easily transfer over in increments of 1,000 Avios.

The flip side of that are the huge taxes and fees levied on long-haul Avios redemptions on British Airways flights through London, which mean those redemptions, particularly in premium cabins, are almost never worth making compared to Delta or United redemptions connecting in Continental Europe.

I recently mentioned on Twitter my intention to cancel my Chase British Airways Visa, which I received last January under the fantastic signup bonus of 100,000 Avios after spending $20,000 on the card, and someone mentioned that Membership Rewards transfer bonuses (currently 40%) and British Airways Visa Travel Together Tickets might make the card worth keeping. I don’t pay extortionate taxes, fees, and fuel surcharges, and I don’t recommend my readers do either. But I was sufficiently intrigued: how do transfer bonuses, and the British Airways Visa Travel Together ticket, affect the value of Avios for flights on British Airways metal?

Membership Rewards transfer bonuses

Membership Rewards, one of the proprietary points currencies of American Express, can ordinarily be transferred to Executive Club Avios at a 1:1 ratio. Periodically, however, the program offers bonuses on such transfers so that, for example, 1,000 Membership Rewards points can currently be transferred to 1,400 Avios.

Note what this does and doesn’t mean: while the Avios cost (in Membership Rewards points) of such tickets is reduced by 28.6%, the taxes, fees, and surcharges remain the same.

The cost of every ticket can be broken down into two components: the miles and points cost and the dollar cost. Even a paid revenue ticket has a (negative) miles component (the miles you earn from flying), while a domestic award ticket will still have a low dollar cost ($11.20, for example, in taxes and fees).

There should always be some point at which you’ll prefer to book a revenue ticket over an award ticket; if a domestic revenue ticket on United costs $250, you can redeem 20,000 flexible Ultimate Rewards points for the paid ticket rather than transfer 25,000 Ultimate Rewards points to United to book an award ticket: the negative mileage cost of the revenue ticket makes it "cheaper" overall (even with gutted earning on paid United flights).

In the same way, a sufficiently high transfer bonus should make even award tickets with high taxes and fees cheaper than an award ticket booked on a more consumer-friendly airline.

British Airways Visa Travel Together Tickets

Each calendar year you spend $30,000 on a Chase British Airways Visa, you’ll earn a "Travel Together Ticket.” Travel Together Tickets expire two years after they’re issued. These companion tickets:

  • Can only be redeemed on British Airways-operated flights;
  • Must originate and terminate in the United States (no originating in Brazil to dodge fuel surcharges);
  • Can be used for any class of service, or mixed-cabin itineraries;
  • Require the cardholder to travel on the entire itinerary (no selling Travel Together Tickets online!).

Importantly, when booking a companion ticket you’re still required to pay the taxes, fees, and surcharges for each passenger; the companion ticket only discounts the Avios component of your reservation, not the dollar component.

Is it worth it?

Combining the two promotions results in a discount of 64% to the miles component of a two-person reservation (1,000 Membership Rewards points for 2,800 Avios in value), with no discount to the dollar component. Are there itineraries that make such reservations competitive with other points currencies? I compiled the following chart using the actual mileage and dollar award costs for several cities served by British Airways, American Airlines, Delta, United, and their partners.

For each award, I calculated an "imputed redemption value," which is the rate at which a British Airways Visa Travel Together Ticket redemption is buying American AAdvantage miles, Delta Skymiles (or Membership Rewards points), or United Mileage Plus miles (or Chase Ultimate Rewards points). For example, on a roundtrip economy award for two passengers between New York City and Heathrow, passengers redeeming a Travel Together Ticket would pay $999 in order to spend 28,571 Avios instead of 120,000 Skymiles. You could think of this as buying Skymiles at 1.09 cents each, or paying $999 in order to convert 28,571 Avios into 120,000 Skymiles. If you typically redeem your Skymiles for more than 1.09 cents each, you might consider redeeming a Travel Together Ticket instead.

The lower the  IRV, the better value a Travel Together Ticket redemption theoretically is. I've highlighted IRV's below 1 cent per mile in green, between 1 and 2 cents per mile in yellow, and above 2 cents per mile in red.

A few notes on this chart:

  • This chart only shows award tickets I could actually search for and find online. I've indicated where an airline offers a theoretically lower redemption cost, but where I was unable to find a single award seat at that level. We're interested in the actual cost of award tickets, not their theoretical cost;
  • This chart shows the mileage and cash cost of 2 award tickets, since Travel Together Tickets naturally only apply to 2-person reservations;
  • The mileage cost of British Airways awards is given in Membership Rewards points, since this chart shows the combined effects of Membership Rewards transfer bonuses and a Travel Together Ticket. Multiply by 2 to find the cost in Membership Rewards points without a companion ticket, or by 1.4 to find the cost in Avios without a Membership Rewards transfer bonus (or by 2.8 without either);
  • British Airways will charge more Avios, but not (much) more cash, for departures from their other US destinations. To find the cost from those destinations, add the Avios shown at the bottom of the table;
  • Finally, this is a non-representative sample of British Airways destinations. It was chosen only to illustrate the principle; calculate your own imputed redemption values using the actual cities you're interested in traveling between.

Conclusion

I find charts like this useful not because I have any burning desire to visit Johannesburg, Bangalore, or Beijing, but because using concrete figures can help evaluate generalized claims. My key takeaway from this chart is that the headline combined discount of 64% may sound impressive, but how much value you actually receive from a Membership Rewards transfer bonus and Travel Together Ticket will depend entirely on the itinerary you ultimately redeem them for.

On itineraries between the United States and London, where you'll be forced to pay the United Kingdom's Air Passenger Duty regardless of your airline, the mileage savings with Avios can substantially outweigh the increased cash outlay.

Additionally, if your alternative to using British Airways Avios is the AAdvantage program, you'll likely be booking your transatlantic travel through London anyways, and using a Travel Together Ticket and Membership Rewards transfer bonus instead was a better value on almost all the transatlantic routes I examined.

On the other hand, itineraries between the United States and China are so astronomically expensive in both Avios and fuel surcharges on British Airways-operated flights that even the Travel Together Ticket doesn't make an Avios redemption competitive with redemptions through the other three mileage programs.

Looking at this chart, I've even more persuaded to cancel my British Airways Visa. What do my readers think?