How to Get the Most From Your Airline Miles

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Racking up thousands of airline reward points is like a video game: it can seem like fun while you're doing it, but then you find out there's no reward at the end of the rainbow.

According to the June issue of Consumer Reports, roughly 100 million consumers belong to airline frequent flyer programs. However, as many of us have found out, it's increasingly difficult to cash in those points for a seat on flight you want to take.

The magazine has analyzed ticket data on 70-million passenger trips over the past two years and come up with recommendations to make the system work in your favor. It has calculated the value of a reward seat for each of the major airlines so that consumers can figure out if they're really getting a "free trip."

Limited Seats Available

"If you're going last-minute, it will cost you a lot more points for the same flight than if you planned ahead," said Jeff Blyskal, senior editor at Consumer Reports. He says the sweet spot is to book a flight three to seven months in advance. That gives you a much greater chance of finding the limited number of seats available to reward point customers.

Consumer Reports notes that most major airlines base the number of seats available to rewards customers on each flight on the destination, time of day day of the week and other factors. United Airlines (UAL) has the most restrictions, while Southwest Airlines (LUV) does not put any of its seats off limits. Blyskal says it's a game of "Russian roulette" for customers trying to work their way around these limits.

"If you can't find a round-trip seat, you might consider trying an award ticket for one way of your trip, because the other leg of your journey may not be available to awards," said Blyskal, "and then pay for the return trip to get the most out of your miles."

The report also says it's important for consumers to get the best bang for their buck when they use reward points. It calculates the value of many routes you might want to fly, based on the price offered by the lowest fare airline on that route -- usually Southwest or JetBlue (JBLU) for domestic travel. The idea is to compare the cash price you would have to pay for that flight against the value of reward points you would need to use. To do that calculation, divide the cash price by the number of miles you would use. For example, if the flight cost $500, divide that by the miles/points you would need to use -- say 30,000. "If that comes out to less than 1 cent per mile, you're wasting your miles," said Blyskal. "You're not getting the full value."

Best Value from Southwest, JetBlue

The magazine found that Southwest and JetBlue often offer the best value in cashing in your miles, but that JetBlue booked the lowest percentage of award seats of the five biggest carriers. For many of the most in-demand routes, United flew 12 percent of its passengers on award tickets, Delta (DAL) 14.5 percent, American (AAL) 21 percent and Southwest 23 percent.

In effect, you're paying about 1 cent to earn each reward point, whether you use them or not. And the airlines make millions of dollars in profit each year because so many customers pay for but never use miles.

While many airlines allow you to cash in those reward points for things other than flights -- everything from hotel rooms to magazine subscriptions -- Blyskal says flying is probably the best use of your points. Other tips from Consumer Reports:
  • If you can't find the right freebie flight online, pick up the phone. Agents are more skilled at working the airline reservation system. There may be a fee to use an agent, but it might be worth the cost if it allows you to take the trip you want to go on.
  • Never buy points to reach your goal. The airlines generally charge about 3 cents a mile, and you'll never get that much back.
  • It may be better to use a general rewards credit card that lets you earn miles than to use a card from a specific airline. It recommends Capital One (COF) Venture, BankAmericard (BAC) Travel Rewards and Discover (DFS) It Miles. They allow you to cash in your reward on any carrier and there are no blackout dates.
  • Even though booking months in advance offers you the best chance of using your points effectively, it's worth checking out last-minute opportunities. Because of cancellations, some award seats become available in the week before a flight.
Finally, Consumer Reports advises that you should not let the lure of using "freebie" tickets dictate your travel plans. Your priorities have to be getting where you want to go when you want to get there, and flying an airline that offers the best service.
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