Frequent flier miles are worth more when used for upgrades...or are they?

In 2008, the airlines told us what they think of us, and they rolled out various extra fees designed to bleed us. Baggage fees. Change fees. Water that costs $2. "We'll haul your body around," the airlines told me, "but you're going to pay extra for every other thing you want from us."

Fine. I'm buying a service. I get that. But the take-me-for-what-I'm-worth game can play both ways. Now, like millions of other Americans, I'm going to devise ways to reverse the relationship and to take the airlines for whatever I can. That means I'm going to wring value out of every last frequent flier mile I have. I want pay as little for airfare as I can. Preferably, that's nothing.

As if on cue, the Wall Street Journal has run the numbers, and it finds that the best value for those miles isn't in using them to buy your seat, but to upgrade a seat you've already purchased. It puts it this way: When you use miles to get a coach seat, you're getting about 1.2¢ per mile if you divide the dollar cost of that ticket by the number of miles you have to use.

But when you use your miles to upgrade from coach to business or first class (the paper uses a New York-San Diego ticket as an example), each mile buys about 5¢. And that was calculated including a $100 redemption fee of the sort that airlines are increasingly tossing onto the bill.

This declaration is a little deceptive. Just because you're getting the best "value" by upgrading doesn't mean a whole lot when you consider the fact that upgrades are painfully overpriced to begin with. If I charge $1,000 for a luxury item such as jewelry and one day I decide to drop the price to $200, that's still $200 more than you have to spend. Sure, the new price represents "value" off the old one, but you never really needed it to begin with.

Coach seats do the same job as first class seats when it comes to getting you where you need to go. And even if miles are only worth 1.2¢ each to get a ticket in coach, if using them keeps you from having to pay out of pocket (setting aside tax) to get somewhere, that's a pretty good value to me. If you have to lay out some money to access that extra value of 5¢ a mile, you're still losing more cash than you had to spend.

Still, the findings are duly noted, even if they are most useful for business travelers who have their tickets purchased for them. As long as your company is footing the bill of the base ticket, you'll be saving cash on that high-value upgrade redemption.

The Journal did point out that the value of your miles skyrockets when fares do. Even for standard coach tickets, you get a lot of bang for your banked miles when they're used for unplanned trips, after the airlines have hiked last-minute fares to ridiculous levels. Expect big returns on funerals and unplanned weekend getaways -- basically, anything outside of holiday and vacation periods when the seats allocated to mile redemption have yet to be filled.

Burn through those miles today, because you never know when your favorite airline is going to fold its wings and roll up the runway. Even if your chosen carrier survives a while longer, expect to revel in the satisfaction of getting something for nothing from an airline again.

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