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You've Earned the Miles. Here's How to Use Them

Figuring out which are truly the smart ways to earn frequent-flier miles is only half the battle. You've also got to decide where to spend them.

The goal: Use reward tickets to replace your most expensive trips. In other words, don't spend 25,000 miles to get from Boston to Florida when a round-trip ticket on that route can cost less than $200. Use it instead to fly from Boston to Seattle or San Francisco or Albuquerque. In the same vein, if you're planning more than one trip to Europe, don't use your miles to fly to London. Spend them on a $600 trip to Rome or an $800 ticket to Istanbul or a $1,000 jaunt to Moscow.

Of course, you should never use miles to take a trip you don't want or need to take. Instead, sit down with a list of vacations you've got planned for the next couple years.

Then follow these easy steps (if you want, print out this story first to use as a guide, or use the links provided and return here after each step):

1. Figure out the cost: Head to Business Week Online's Travel Center (www.thetrip.com/businessweek), a joint partnership with the TheTrip.com, to see how much each trip is likely to cost. Once there, click on the airplane icon labeled "Check flights and prices." (Note that you don't have to register to use this feature; just scroll down to the "guest" area.) Then enter the dates and times, and jot down the price.


2. Figure out the miles:
If you don't already know how many miles you would need to make the trip on a free ticket, head to the appropriate airline site for the answer. Here are the sites of the major U.S. airlines:

American (www.aa.com/)
Once there, go to the "AAdvantage Program" pull-down menu and click on "Using miles"

Continental (www.onepass.com/asp/rewards.asp)

Delta (www.delta-air.com/skymile/guide/index.html)

Once there, click on "Delta Air Lines Awards"

Northwest (www.nwa.com/freqfly/travel/guide/free2.html)

TWA (www.twa.com/frq_trav_info/ft_ap_program_awards_chart.html)

US Airways (www.usairways.com/dividend/redeem.htm)

United (www.ual.com)
Once there, click on "MileagePlus" and then "Program Information"

3. What's the value of your miles? Get out your calculator. (Or, if you're comfortable with numbers, a pencil and the back of an envelope will do.) Most computers come with at least basic calculator software installed, if you don't have one laying around. (On Windows 95, click the Start button, then select Programs, then Accessories, then Calculator.)

Now divide the the cost of your trip in dollars by the number of miles you'd need to claim a frequent-flier ticket. For example, let's say you want to fly from Miami to Denver, and you've found out the trip would cost $350. And say that you would need to use 25,000 miles to get a free ticket on that route. Then divide 350 by 25,000.

Whether your trip is domestic or international and whether your seat is coach or first-class, you're likely to get a number between 0.005 and 0.1. This is the value, in dollars, of each mile you would be using to claim a free ticket. Here's an easier way to think about it: Multiply the number you get above by 100. That's the value of each mile in cents.

4. Make a decision: Now comes the easy -- but crucial -- part. What should you do: Buy the ticket with cash, or with your miles?

The following breakdown will help you out.

If each mile is worth...

Less than 1 cent:
Buy the ticket with money, and don't think twice about it. You should never redeem miles for less than a cent. The one exception: your miles are about to expire, and you're forced to use them.

Between 1 and 1.5 cents: In most cases, buy the ticket and save your miles. When you consider that airlines sell miles to companies for two cents apiece -- plus taxes -- you realize that this just isn't a great deal.

Between 1.5 and 2 cents: The freebie is starting to look better, and you probably should go for it. A good example: a domestic coach round-trip that would cost either $400 or 25,000 miles.

More than 2 cents: Pick up the phone, and reserve that frequent-flier ticket this instant. You're a winner! Remember: With most airlines, a frequent-flier award reservation is nonbinding, so you can change your mind and cancel the ticket without penalty.

Now enjoy your trip...
By David Leonhardt


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Updated Jan. 7, 1999 by bwwebmaster
Copyright 1999, Bloomberg L.P.
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