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.