The Ins and Outs of Airline Travel Awards

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Whether you fly around the world or are a weekend warrior, air travel can be expensive. That’s why collecting points and miles to redeem is so attractive. But making sense of award redemptions can be challenging.

From fixed-value points to variable value, airline travel points can be confusing. How do you make sure you’re receiving everything you’ve earned? What are the different points, and how do you redeem them? 

How Airline Miles Work

Think of frequent flyer miles or airline miles as currency. This airline currency can be used to pay for more flights, hotel stays, and other rewards. Airline currency is sometimes referred to as points, but it’s still the same concept. 

Although it depends on the airline, most points can be used to book flights. You can book on that airline or a partner airline. You typically search for cash flights or award flights separately. Points can sometimes be used for flight upgrades.

You can use your points on car rentals, merchandise, hotel stays, etc., but the most value for your airline miles comes from redeeming them with flights.

How to Earn Airline Miles

There are several ways to earn miles. 

Airline credit cards are a major way to earn miles and are used the most. And although it depends on the airline and credit card, you may earn from one to three miles per dollar spent using the card.

Examples of airline credit cards include:

• United Club Infinite Card
• Aeroplan Credit Card
• Southwest Rapid Rewards Priority Credit Card
• Alaska Airlines Visa
• Delta SkyMiles Platinum American Express

When opening a credit card, you‘ll often receive a welcome bonus. You’ll first have to meet a minimum purchase requirement.

Another way to earn airline awards is through traveling with partners. Some airlines, hotels, and rental car companies collaborate to allow you to earn points. 

For example, Enterprise lets you earn miles at JetBlue, Virgin Atlantic, Turkish Airlines, and Lufthansa when you pay for a rental. 

You can also earn miles through airline dining and shopping programs.

Types of Points

There are different types of points. They include:

• fixed-cash value
• variable value
• transferable points

Fixed-cash value has a specific, published dollar value. You can only use this dollar value for redemption. Small banks often use fixed-cash points.

Although your points may be fixed-cash, they vary by redemption type. For example, a point may be worth 1.5 cents when redeemed for travel but only worth $1 if redeemed for cash back.

The advantage of fixed-cash is you can always use your award for what you need to purchase. There aren’t any restrictions like blackout dates.

But there’s no way to receive outsized value from fixed-cash value points. For example, a $100 ticket would require 10,000 points at $1 a point. But a $10,000 reward would require one million points. Big ticket travel is probably out of the question.

Another point value is the variable. The majority of airlines and hotels use this method. There isn’t a strict dollar value attached to the points. 

For example, a room at a hotel may cost 20,000 points per night. This may be true even though the cash price for the same hotel room may fluctuate. The result is the value of your points will vary.

Unlike fixed-cash, variable points offer the opportunity to have outsized value. You’ll have the greatest access to big trips. But they are challenging to redeem on demand.

Finally, transferable points allow you to transfer to partner programs. They’re versatile and the most valuable. They are also the most challenging to use.

How Award Flight Tickets are Priced

Airlines, hotels, and travel companies have many ways they price their awards. There are several ways, including:

• award charts
• dynamic pricing
• peak and off-peak pricing

Airlines usually price their frequency flyer miles using award charts. It’s a matrix containing the different world regions with a fixed price of flights between them.

Dynamic pricing lets award prices change. This is based on demand, promotion and capacity. The price of a flight in miles often correlates with the price of the same flight in dollars. Depending on demand and capacity, you may have to use more of your points.

But it can also go the other way. Sales and other limited-time deals can allow redemptions below the saved point value.

Despite using an award chart or dynamic pricing, some airlines will vary based on travel seasons. This could go for you or against you. You may have to use more points if you travel during a busy travel season, like summer. An off-season allows you to use fewer points. 

Redeeming Airline Points

Going through the loyalty program’s website is the easiest way to redeem points. Booking a travel award will follow the same process as booking a flight or hotel. You can elect to see prices in cash or points when booking a flight or hotel.

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