In this post, Liz at Everyday Goddess notes that she prefers American Airlines to Southwest for a number of reasons, and is willing to pay more for a ticket on the former. One of her reasons is that she’s accumulating miles on AA’s frequent flyer program and plans to use those miles to get a free trip to Florida this August.
I’ve heard people say that sort of thing often, and it is, of course, why the loyalty programs are there: the airlines (and hotel chains, and so on) hope you’ll do business with them, even to the point of paying more, because you want the benefits the loyalty program provides.
But, while that sounds reasonable on the surface, it doesn’t make much sense when you look at it more closely. I said this in a comment on Liz’s blog, but I wanted to bring it here, too, because it’s so common.
In general, you should not pay more for a flight because you want the miles. Here’s why, using Liz’s example:
LAX (Los Angeles) to ORD (Chicago O’Hare) gives you about 3500 miles, round trip. Let’s say that the AA flight cost $100 more. That means those miles cost you around 3 cents per mile extra (2.857 cents, more precisely) — you didn't get them for free. You need at least 25,000 miles for a "free" ticket (or 50,000, depending upon when you want to do and what restrictions you have). At $0.03/mile, it will cost you $750 for 25,000 miles (and $1500 for 50,000).
I just priced an AA ticket from LAX to FLL (Fort Lauderdale, FL) in mid-August, and I got a fare of $265. Spending miles that cost you $750 extra to “earn”, to buy a ticket that would cost under $300 over the counter, is not a good deal.
And this is almost always the case. If you select your airline based on a desire to accumulate miles there, on the whole you will pay far more than the miles are worth. In general, you should select your airline for other reasons (price, flight schedule, on-time record, seat comfort, like or dislike of the way they do business, or whatever matters to you), sign up for every airline’s loyalty program, and let the miles accumulate all around. When one program has enough miles for you to redeem them, then you really will get a free flight out of it.
To be sure, there are times when it’s worth paying a little extra, but it’s important to think about it and do it in an informed way. For example, suppose you’ve amassed 48,000 miles on AA and were careful not to pay extra for them. And you want to redeem miles for a trip soon, but you need 2,000 more. Then it could make sense to pay an extra $100 or $200 to buy your next ticket on AA, so that you have enough for, say, a $500 ticket somewhere. Similarly, you might be willing to pay a little more occasionally to keep your account active, so your existing miles won’t expire.
So if you have other reasons to prefer one airline over another, by all means, let those reasons decide for you. But be wary of doing it because of the frequent-flyer program.