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Even On Sale, Frequent Flyer Miles Are Too Expensive

Need frequent flyer miles? The airlines would be happy to sell you some. In fact, they’d be happy to sell you lots of miles. That tells you that selling miles is good for the airlines, but raises the question whether buying them is good for consumers.

The verdict of those who have whipped out their calculators and done the math is that the miles are overpriced, and therefore generally to be avoided. When taxes and processing fees are included, frequent flyer miles cost around 3 cents each. But the average value of a frequent flyer mile is closer to 1.2 cents.

The exception to that rule is the purchase of small quantities of miles to increase one’s account balance to reach an award threshold. In that case, buying a few thousand miles may be the prudent thing to do.

The calculation changes, of course, when the airlines offer special incentives to buy miles.

Alaska Airlines, for example, is currently offering a bonus of 20 percent more miles when a Mileage Plan member purchases miles for his or her own account or as a gift for someone else.

And American has a similar offer in place, except the bonus is 30 percent.

On a somewhat different but related note, Delta is doubling the number of miles SkyMiles members can transfer to other members for 1 cent per mile, plus a $30 processing fee. That effectively reduces the cost to transfer miles to a half-cent each.

While the Alaska and American bonuses make the miles more affordable, the cost still exceeds their value.

With a lower base price and a bigger effective discount, the Delta offer is more compelling. But it should be remembered that the affected miles were already credited to the member’s account, so any transfer fees are in addition to the cost of earning the miles in the first place.

When it comes to buying, giving, or transferring frequent flyer miles, even so-called special deals are rarely good deals.

Have you purchased miles from the airlines? Was it worth it? Use the reader comments section below to share your experience.

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