Use a demand schedule to maximize open jaws on revenue tickets, too

The "demand schedule" is a tool I first read about at Milenomics, which has now become more or less conventional wisdom: by creating a consolidated list of all the trips you plan to take, including flights, hotels, and transportation, you're able to maximize the value (and minimize the cost) of each trip by taking advantage of stopovers, open jaws, and roundtrip pricing.

Equally importantly, when a mistake fare or generous coupon code pops up, you have an itemized list of all the reservations you need to make with it. Avoiding paralysis in that way maximizes the value you get from your travel hacking practice.

I confess I'm not terribly diligent about maintaining my demand schedule; I more or less piece together trips as award space opens up, and most of my hotel stays are paid for with Hilton HHonors or Hyatt Gold Passport points, where I almost never have trouble finding rooms available with points.

But an upcoming trip illustrates why a little planning can go a long way.

Revenue tickets can include very cheap open jaws

I have a number of pre-devaluation award nights booked at Club Carlson properties in Europe for next summer, and paid 26,000 Avios and $358.18 to book two tickets back from Berlin to New York at the end of the trip.

My initial plan was to book our outbound flights to Budapest on Turkish Airlines for 30,000 United Mileage Plus miles each, since award availability is wide open next summer. That would involve transferring 50,000 Ultimate Rewards points (with a cash value of $500) from Chase to United Airlines Mileage Plus (I have 10,000 orphaned Mileage Plus miles in my account already).

Then I realized that I still have the US Bank Flexpoints I had been saving up for this trip before I found Air Berlin award availability. I still plan to book my partner's ticket by transferring 20,000 Ultimate Rewards points to United in order to empty my Mileage Plus account, but for my own flight I decided to look into revenue tickets on the same outbound flight.

While searching for Turkish Airlines revenue tickets, I immediately noticed that a one-way outbound flight prices out at $1,010 through the Flexperks booking portal, while it's only trivially more expensive to add a return flight from most Turkish Airlines destinations in Europe back to Chicago (for example, $1,185 returning from Berlin).

Because of that fluke of pricing, whether I book a one-way outbound or a return itinerary, I'll pay 70,000 Flexpoints — an example of what I've called in the past "price compression."

In other words, I can substitute 70,000 Flexpoints for 30,000 Ultimate Rewards points and get an additional one-way flight from Europe to Chicago — but only if I can decide on the origin and date of that future flight at the time of booking! A demand schedule would help in that calculus, but I don't have any additional trips to Europe planned, aside from our summer holiday.

Is this a good deal?

There are two competing intuitions when it comes to situations like this, and I want to give each one a fair airing:

  1. since 30,000 Ultimate Rewards points are worth $300 in cash, and 70,000 Flexpoints are worth $700 in cash, a 30,000-points Ultimate Rewards redemption is $400 cheaper than a 70,000-Flexpoint redemption;
  2. since 70,000 Flexpoints are worth a maximum of $1,399 in paid airfare, and 30,000 Ultimate Rewards points are worth up to 12.4 cents each, or $3,720, when redeemed for Korean Air First Class flights, it's better to redeem the fixed-value Flexpoints wherever possible, while saving Ultimate Rewards points for those redemptions where their value is maximized.

In other words, you can think of the reservations as minimizing your cash-equivalent outlay or maximizing your option value by retaining your most potentially-valuable points as long as possible.

Finally, the paid Flexpoints redemption booked into the "H" fare class will earn 100% of the actual miles flown, or roughly 6,142 Mileage Plus miles if I credit the outbound flight to United. As long as I ever plan to transfer Ultimate Rewards points to United again, booking the paid fare will save me 6,000 Ultimate Rewards points at that time. If I book a return flight from Europe to Chicago at any time within Turkish Airlines' booking window (and end up flying it), that will add another 6,000 or so miles to my United balance.

Suddenly, we're talking about paying 70,000 Flexpoints or 42,000 Ultimate Rewards points (30,000 spent on the reservation booking and 12,000 foregone by booking non-mileage-earning award flights), and the Flexpoints redemption is looking even more persuasive.

So, what should I do?

My decision will ultimately depend on whether I can find a return flight from Europe that I'm more likely than not to actually take.

Spending $700 in Flexpoints in order to save 36,000 Ultimate Rewards points isn't as compelling as saving 42,000 would be (if I was able to fly both the outbound and return), since it moves the cash-equivalent breakeven point from just above $300 to just below $300, and one-way economy flights between the United States and Europe cost exactly 30,000 Ultimate Rewards points when transferred to United Mileage Plus (subject to award availability).