Advertisements

Imagine buying a round trip plane ticket from the US to Asia and earning enough frequent flyer miles to score a one-way domestic ticket to use towards a second vacation. That’s the deal from American Airlines right now, but it takes some strategizing to make it all work.

Background

Frequent flyer miles are a funny business. They’re supposed to reward loyalty, but given their ever-changing value, you can also make them work to your advantage to score a plane ticket for next to nothing. The game is called arbitrage and the trick is finding the right balance between ticket price, mileage earning rates, and award redemption costs.

And, as often the case, international flights are often great opportunities to take advantage of fares sales, high mileage earning opportunities, and bonus mileage earning promotions.

In addition to being a money nerd, I’m also an aviation geek that wants to get everyone traveling for as cheaply as possible. Let me explain how this pencils out.

The Deal

Loyalty Lobby posted a Premium Economy promotion for San Francisco (SFO) to Hong Kong (HKG) on American Airlines with a stop in Los Angeles (LAX), for $995. Not a great deal, per se, as Premium Economy seats on other carriers flying the same route (China Airlines, EVA) go for $1,000 round trip during sale periods. But, AA’s has a brand new Premium Economy class that’s worth trying.

The Math

If you were a member of the Alaska Airline Mileage Plan program, which AA is a partner of, you could credit the frequent flyer miles you earn to Alaska Airlines.

In premium economy class on AA, the earnings ratio is 1 Alaska mile earned for every mile flown. Since you’ll only be able to earn miles on the LAX to HKG leg (and return), that amounts to 7,247 miles each way or 14,494 total round trip.

You only need to redeem 12,500 miles to score a free one-way economy class ticket between SFO and JFK (for example), on both Alaska and American Airlines. You could even manage a free round-trip ticket from SFO to Portland (redeem 5,000 miles each way, 10,000 round trip), but that may not be the best use of your miles.

The math gets a little crazier if you figure out the value of Alaska miles and compare it to the price you paid for the ticket.

As of June 11, 2018, The Points Guy values Alaska miles at 1.8¢ per mile. If you earn 14,494 miles on the trip above, that means you earn $260.89 worth of redeemable miles by purchasing a $995 plane ticket. If you redeem your miles for a ticket priced at $260.89 or above, you have effectively paid $734.11 or less for your premium economy SFO-HKG flight on AA.

The Catch

This sort of opportunity presents itself often. In fact, some would argue that you could do the same on China Airlines or EVA and redeem equivalent miles at roughly the same value on their partners (Delta and United). But finding domestic award seat availability on Delta and United at the lowest award price can be a pain. And many mileage experts value Delta and United miles at a much lower value than Alaska’s miles.

Bottom Line

When you play the mileage game, you can travel for next to nothing. But only if you plan your strategy well. In this case, you could score a cheap one-way ticket. But imagine what you could do if there was a mileage bonus promotion available? Possibly, a free round-trip ticket, or even a nice upgrade to first class!

(Fare is valid as of June 11, 2018 at 6pm PST. If you’re reading this story any time after this time, the fare probably has expired.)

(Featured photo credit: “Airplane seating” by Matthew Murst is licensed under CC BY-SA 2.0.)

Advertisements

Become Money Smart!

Sign up to hear the latest news and advice from 2MF about your money.