Thoughts towards earning domestic airline miles as cheaply as possible

[For reasons I cannot begin to understand, I am camping far from civilization this week. I have a couple posts scheduled, but won't be participating as actively as usual in the comments or on Twitter.]

Last week I received polite notification from Suntrust that my services as a customer would no longer be required, which inspired this post.

My simple heuristic for booking air travel

When booking air travel, I usually follow variations of the following simple decision-making heuristic. First, I ask...:

1. How much are paid airfares? If American- or Delta-operated flights are near the top of a Flexpoint redemption band, I'll redeem Flexpoints for paid, mileage-earning airfares in order to credit them to Alaska Airlines Mileage Plan. If American- or Delta-operated flights are less than $300 or so, I'll redeem Ultimate Rewards points for 1.25 cents each for paid, mileage-earning airfares. If neither of those are true, I ask...
2. Is there Delta low-level availability? Since for a little over a year I've been able to manufacture SkyMiles at such a trivial cost, Delta low-level availability will almost always offer me the cheapest out-of-pocket cost. If there isn't Delta low-level availability, I ask...
3. Is there American low-level availability? Since I can transfer Ultimate Rewards points to British Airways for cheap short-haul flights, and get preferred seating with my Alaska Airlines MVP Gold 75K status, American is often a convenient and even comfortable way to travel. For the longer flights that make Avios redemptions impractical, I can use the Alaska Airlines miles I still have left over from the days of the Bank of America Alaska Airlines debit card.

Those three simple questions cover the vast majority of my air travel needs.

No more cheap Delta and Alaska miles; what next?

With my Alaska Airlines debit card closed along with everyone else's, and my Suntrust card retired a little ahead of schedule, I no longer have access to unlimited, virtually free domestic airline miles.

That got me thinking that it might be worth doing a little math on the cheapest way to earn redeemable domestic airline miles through manufactured spend.

• United Mileage Plus. United is in an interesting position, since it's a transfer partner of Chase Ultimate Rewards. The Chase Ink Plus (and Sapphire Preferred) cards offer an unusual dual value proposition: Ultimate Rewards points are both worth 1 cent each and also entitle the cardholder to buy United miles for 1 cent each. Many readers don't like it when I draw attention to this dual functionality, but that doesn't keep it from being true: the ability to redeem Ultimate Rewards points for cash means you face a tradeoff between cash and Mileage Plus miles. That creates the following dynamic: if you value United miles at between 1 and 1.25 cents each, you are best off redeeming your Ultimate Rewards points for paid airfare at 1.25 cents each; if you value United miles at between 1.25 and roughly 1.5 cents each, you're best off transferring Ultimate Rewards points to United; and if you value United miles at more than 1.5 cents each, it may start to make sense to sign up for a Chase United Club card, which earns 1.5 United miles per dollar spent, depending on how much unbonused spend you're willing to manufacture with the card. Here's a chart which illustrates the principle:

View fullsize

In this chart, every dollar you spend above the "Breakeven spend" point generates profit, having already paid off the card's annual fee with the Club card's "Excess value."

The key is that whether you like it or not, you're buying Mileage Plus miles for 1 cent each when you transfer Chase Ultimate Rewards points to United.

• American AAdvantage. This one's simple: since no credit card earns more than 1 AAdvantage mile per dollar spent, the American Express Starwood Preferred Guest is the cheapest way to earn AAdvantage miles through manufactured spend: it earns 1.25 AAdvantage miles per dollar spent when you transfer Starpoints to American in increments of 20,000 Starpoints.
• Alaska Mileage Plan. As above, so below. No (currently-available) cards earn bonus Mileage Plan miles, so Starwood Preferred Guest transfers offer the best earning rate at 1.25 Mileage Plan miles per dollar.
• Delta SkyMiles. Here we can get some more traction, since SkyMiles is a transfer partner of American Express Membership Rewards at a 1-to-1 ratio. The cheapest option depends on your ability to buy and liquidate prepaid Visa debit cards at gas stations. If you have access to unlimited gas station manufactured spend, the $95 Amex EveryDay Preferred card gives 3 flexible Membership Rewards points per dollar spent at gas stations (when you make more than 30 purchases during your statement cycle). If you don't have access to gas station manufactured spend, the $175 Premier Rewards Gold card offers 2 Membership Rewards points per dollar spent at grocery stores. Both are better values than the $195 American Express Delta Platinum or $450 Delta Reserve cards, unless you don't have access to either gas station or grocery store manufactured spend. In that case, the slight difference between the 1.4 SkyMiles per dollar (at $25,000 and $50,000 in spend) earning rate of the Platinum card and 1.5 SkyMiles per dollar (at $30,000 and $60,000 in spend) rate of the Reserve card usually makes the Platinum card the better bet, unless you're gunning for Delta Medallion elite status.

Conclusion

Now that my fountain of Delta miles has dried up, I'll likely rely more and more on Flexpoints (for more expensive flights) and Ultimate Rewards points (for cheaper ones) when booking domestic travel and international economy travel.

The ability of airline miles to offer out-sized value when booking international premium cabin travel is often exaggerated (ignoring things like availability constraints), but it's not a fabrication: there really are trips where miles, when earned cheaply enough, offer a much greater value than equivalent flights booked using rewards currencies like Flexpoints, Arrival+ miles, or Ultimate Rewards points.

So with those flights in mind, I'll continue building up modest balances in a variety of domestic rewards programs, while always remembering that the least valuable mile is the one I don't redeem.