Whether it makes more sense to Redeem for Economy or First/Business Class

There is always going to be a hot debate on whether it makes more sense to redeem for economy or first/business class travel. For the purposes of this post, I will focus more on Aeroplan. But the same concept and calculations apply for any other once you have the formula down.

I’m not going to waste points on business class because the “earn” is better…that would mean I have to churn more for the same distance.

You will notice that companies like TD or CIBC will advertise that the 15,000 Aeroplan will get you a “free short-haul flight” or 25,000 get net you a “free long-haul flight” anywhere in continental North America. That is what the marketing focuses on, which implants this idea into everyone’s mind as the main purpose of those miles.

Nearly everyone I know has some sort of airline- or hotel-affiliated credit card, though very few of my friends know what to do with all the points they accrue. I find myself scratching my head when my friends tell me they have 50,000 miles generated from credit card spend on Airline A, which they hate, because they love flying Airline B so much more.

When to redeem for Economy Fares

Short or long-haul economy reward redemptions actually make the most sense during high season where prices are inflated. Luckily, frequent flyer programs do not overly inflate the amount of miles needed for a reward redemption.

In other words, if you find an airfare that is fairly discounted, you are better off paying in cash, earn the miles that are due, and use your miles on another reward redemption that would give you more value per mile (click here for our Points Index, which is continually updated, on what we think are the ideal valuations).

For example, a low-season (or deep sale) economy flight between Toronto and Vancouver could go as low as $550 round-trip. That would normally cost 25,000 Aeroplan miles + $100 in taxes and fuel surcharges. Let’s break the math down further:

• $550 (fare) – $160 (taxes and fuel surcharges) = $390 (in value)
• $390 / 25,000 miles = 1.56 cents per mile

For example, a high-season (or last minute) economy flight between Toronto and Vancouver could go above $1,000 round-trip. That would still cost the same 25,000 Aeroplan miles + $100 in taxes and fuel surcharges. Let’s break the math down further again:

• $1,000 (fare) – $160 (taxes and fuel surcharges) = $840 (in value)
• $840 / 25,000 miles = 3.36 cents per mile

So let’s say you are considering this routing, you may want to factor in what is your breaking point between whether just to pay for the flight or to redeem miles.

First and Business Class Travel

Let’s do a comparison with first and business class valuations.

For example, let’s say you find a business class flight between Toronto and Vancouver for a low cost of $2,500 round-trip. That would normally cost 50,000 Aeroplan miles + $192 in taxes and fuel surcharges. When we do the calculations, this is what it looks like:

• $2,500 (fare) – $192 (taxes and fuel surcharges) = $2,308 (in value)
• $2,308 / 50,000 miles = 4.6 cents per mile

For example, a high priced business class flight between Toronto and Vancouver could go above $4,000 round-trip. That would still cost the same 50,000 Aeroplan miles + $100 in taxes and fuel surcharges. Let’s break the math down further again:

• $4,000 (fare) – $192 (taxes and fuel surcharges) = $3,808 (in value)
• $3,808 / 50,000 miles = 7.6 cents per mile

Even though you are getting significant more value per mile, you burned 50,000 miles on one trip, in what could have been 2 trips. So the question you just need to ask yourself, is do you prefer using the 50,000 miles for 1 trip or for 2 trips?

The valuations can get even sweeter when you fly across the oceans. It is the same mathematical formula that you would apply.

What I Have Been Doing

Personally, the approach that I have taken is quantity over quality. There are certain situations where I would pay for a flight ticket when I feel that my valuation per mile is too dismal but for the most part, I have been redeeming miles for economy travel.

At this stage of my life, I rather stretch my miles for as many trips as possible. Maybe later on, I will switch business/first class travel when I want to travel less … if that day ever comes!

Conclusion

As you can see, it all comes down to personal preference. My recommendation is to not let anyone influence your decision. Focus more on what you want out and go for it!

All you need to do is learn the tips and tricks to help achieve your goal. If you are just getting started, be sure to read up on Pointshogger 101.

If you already know what you are doing, please feel free to share your personal preference in our comment section below!