I seem to have been inundated with emails from frequent-flyer programs, reminding me that I can buy Miles - and some have been offering special deals on the purchase price as well. The most aggressive at selling Miles are the US airlines. For many of them, their frequent-flyer programs are the most profitable part of the operation. They make very large sums by selling Miles to credit-card companies and retailers. European airlines are rather different because most of them try to restrict their programs to people who genuinely are frequent flyers, but that does not stop them doing all they can to sell more Miles.
While people still complain that they cannot book the exact flights they want, the fact is that airlines are very anxious for passengers to use their Miles. These flights are not free and can still be very lucrative for the company.
Now that airlines have to display their fares inclusive of taxes and charges, it is easy to forget the huge chunk that these add on to the fare. The better airlines show you how these sums have been calculated. I looked at a flight in Economy to Germany with Lufthansa and the total extras came to over £90. For the same destination, BA was charging just £77. The split showed that Lufthansa was charging over £50 for fuel and security charges and, even though BA was a little less, its charges were still greater than the genuine taxes and fees. This £50 is really just part of the fare and there is no excuse for levying it separately. It does not matter to most passengers because they are just seeing a total amount - but the frequent flyer who thinks he is getting a free ticket is actually paying £50 towards the airline's costs.
Add in a booking fee, maybe a credit-card fee and, if the airline is lucky and the client has had to top up his Miles account by buying a few thousand more to pay for the deal, you can see that the airline is getting rather a lot of revenue from the 'free' ticket. I remain a great supporter of frequent-flyer programs, but these charges do mean that you have to be more careful about working out the value before cashing them in. Short European trips in Economy are likely to be of no value at all by the time all the charges have been paid.
It goes without saying that you should be even more cautious when buying Miles for cash. You should do a quick calculation: look at the cash price for the flight you want, work out how many Miles it would cost and then calculate the cost of buying all the Miles. By the time you have added on the extra taxes and charges, you will see that the cost of buying Miles is likely to be completely uneconomical.
That should not deter you from buying Miles in some circumstances:
- If your Miles are about to expire or you need a small number to get the flight you need, then it will probably be sensible. However, you should do your calculations carefully to make sure you are not wasting money.
- When airlines have special reduced rates in Miles for some destinations, it can tilt the calculation in favour of buying Miles to get the special deal.
- One-way fares can be very expensive with scheduled airlines - they often cost more than the cheapest return. However, most frequent-flyer programmes charge 50% or 60% of the standard number for that destination. Some programmes will let you make a booking right up until the day before travel, while others, like Lufthansa, will have a two- or four-day cut-off - but Lufthansa actually reduces the number of Miles required for late bookings, in complete contrast to the way it sells seats for cash, where the price goes up closer to departure. If you need a one-way ticket to Barcelona or Frankfurt next Tuesday, using Miles to pay for the ticket, and buying a substantial number of those Miles, can make very good sense.
Finally, if you are stuck with some Miles in an account with an airline that you are unlikely to use much in the future, rather than buying Miles and cashing in the account for a flight, you could consider using some of the other options available, such as a duty-free voucher, a transfer to a hotel scheme (hotels do not add taxes and fees to their free nights!) or, even, a charity donation (often the worst value of all but better than letting the Miles just expire).