Points to fare ratio-when is it better to pay cash for fare rather than redeem points

[perthtraveller]

Hi everyone.

This topic has probably been widely discussed but I am struggling to find it in the forums.

I am wondering how to determine whether a cash fare is cheap in relation to the points required to redeem an award fare. Is there a points-to-dollar ratio which people use to determine this?

My particular example is that I am wanting to book a flight from Sydney to Perth on Tues 9th March which will cost 18000 points plus taxes or $229 for a cash fare. Which should I go for and why?

Thanks everyone.

 

[Dave Noble]

Re: Points to fare ratio-when is it better to pay cash for fare rather than redeem po

If you want to use points and there is availability, then why not use points.

The value of points is what you use it for. Some would say that a business class award SYD-PER is worth $1229 , but it isn't really unless you would have otherwise have purchased that fare.

Dave

 

[medhead]

Re: Points to fare ratio-when is it better to pay cash for fare rather than redeem po

Personally, I'd probably pay the cash in that case.

 

[Sprucegoose]

Re: Points to fare ratio-when is it better to pay cash for fare rather than redeem po

If you want to use points and there is availability, then why not use points.

The value of points is what you use it for. Some would say that a business class award SYD-PER is worth $1229 , but it isn't really unless you would have otherwise have purchased that fare.

Dave

I do find that Int upgrades are best use of points. put the value of the fare/upfgrade and divide by the points is one crude way of analysis.

But as Dave is saying its really a personal value choice. I concur.

Good luck

SPRUCE

 

[MelUser]

Re: Points to fare ratio-when is it better to pay cash for fare rather than redeem po

It is very much a personal choice thing.

Personally, I only use points for upgrades into business class.

 

[dajop]

Re: Points to fare ratio-when is it better to pay cash for fare rather than redeem po

My particular example is that I am wanting to book a flight from Sydney to Perth on Tues 9th March which will cost 18000 points plus taxes or $229 for a cash fare. Which should I go for and why?

The answer is very personal, that's why it is difficult to find an answer. It depends on many factors, what you want to use your points for, your cash flow situation (if you are points rich and cash poor the answer would be very different if you had no cash problems, yet had very few points).

If you want my personal answer, I like saving points for more expensive/international flights or even treating myself business class. I use a rough rule of thumb that if the you're getting <1.25c per point its probably worth paying cash . But I don't have a huge mortgage or anything like that so I can afford the luxury of choosing between paying cash and spending points. Your case is 1.2c per point, so is line ball. I'd probably pay cash given I'd earn status credits and more points, but it is line ball, if I didn't worry about status credits I'd consider redeeming!

Sorry can't be of any more help than this, but there is no definitive answer.

Oh, one last comment as well, there are certain thresholds below which I would advise NEVER to redeem for flights. That being either 0.74c per point (if you shop at Big W) or 0.69c point otherwise (if you shop at Woolworths/buy fuel etc) - these are the value you can redeem QFF points for vouchers. Where you can get vouchers for daily necessities of life at better value than flights you'd be mad to use points for flights!

 

[notzac]

Re: Points to fare ratio-when is it better to pay cash for fare rather than redeem po

My personal take is to use points for that which you would never pay for yourself -- in my case, long haul J seats (whether upgrade or otherwise).

If you are in a position to pay for your ticket without causing yourself financial grief, I probably would.

 

[serfty]

OK, that fare of $229 broken down is $196.95 and $32.05 in

.

Of that $32.05, $19.70 is GST on the actual fare.

A points redemption is 18K QFF points Plus $12.35 in

or 21K Qff points.

For the paid flight a QP NB would earn 2,041 QFF points and 20 SC's wich can be worth 222 QFF points in "Loyalty Bonus" points.

So the real balance is:

• Spend $229 or
• Spend $12.35 and 18,000 QFF points and don't earn 2,263 QFF points.

On that basis if you purchase the fare you are $216.65 worse off but 20,263 QFF points better off or a relative cost of 1.07¢ per point.

Going the 21K points outright way you are $229 better off but 23,263 QFF points worse off at a rate of 0.98¢ per point.

Personally, I generally look to get at least 1¾ cents per point value but that's me.

 

[Dave Noble]

Re: Points to fare ratio-when is it better to pay cash for fare rather than redeem po

My personal take is to use points for that which you would never pay for yourself -- in my case, long haul J seats (whether upgrade or otherwise).

If you are in a position to pay for your ticket without causing yourself financial grief, I probably would.

Some might say then that you actually get a zero value from your points since in cases where you used points, you would not otherwise have paid any cash

Dave

 

[Gold Member]

Re: Points to fare ratio-when is it better to pay cash for fare rather than redeem po

For me its a balance of a number of factors that many have already stated. For example;

1) In the best case scenario I would spend 280,000 points for a maxed out Zone 10 business class RTW award. The cost of the individual one-way business class flights would come to ~$30,000 based on my planned itinerary. That means I get roughly 10.7c per point - that's huge! However, would I ever purchase separate one-way business class fares in this manner totalling $30K? Hell no, I can't afford to do that. So the question is how much would I personally be prepared to have spent to get around the world in business like that? By combining a number of factors that are unique to me, I would be prepared to pay no more than $8-9K. One of the key factors that limits this value so greatly is easy to see - a DONE4 offers far more for ~$13K out of Aus). That means the real value to me for my points in these circumstances is actually 3c per point.

2) To contrast the above, I also have a personal stance WRT to domestic travel over 2 hours. That is, anything over 2 hours I seek to upgrade using points. As Serfty stated, there are a number of ways to look at it depending on:

- if you buy the fare outright
- buy the cheapest upgradeable fare and then use points
- or use all of your points for an award flight with taxes.

For me as a SG (soon to be WP!), upgrades on eligible economy fares have reasonable avaialbility given sufficient notice. This way:

- I get the status credits (usually important to me depending on how my SC year is going - egs further questions of value of status but not going into that now).
- I get points on the underlying fare with status bonus
- Most importantly my 6'3 110kg body is not subject to torturous conditions in economy for 2-4 hours.

I don't believe I achieve anywhere near as much value as 3c per point for domestic upgrades (probably more like 1c pp) however given my personal circumstances and preferences, this is a compromise I am always willing to make where possible.

All said and done, its a very personal assessment of how you travel. For me, I have to average the low value of domestic upgades versus the high value of International travel. Ultimately, I would value my FFPs at ~2c pp on average but this is highly variable for different circumstances.

Hope that helps.

GM

 

[lovetravellingoz]

Re: Points to fare ratio-when is it better to pay cash for fare rather than redeem po

I think the other point that is relevant to the OP (and others) besides earn/burn ratios and preferred travel destinations etc is one's point acquisition rate.

If you are only earning say 10-20,000 points per year then that long haul redemption may be deemed a bridge too far, whereas an appropriate domestic (taking note of taxes etc) redemption may be more achievable.

In my case given my acquisition rate I used to be content with long haul economy redemptions as I always wanted 5 tickets so that my family could go on holidays. This it did ever couple of years or so. Prior to that in earlier pre-extra taxes and with better value redemptions when point cost were lower and airfare costs higher I would redeem for long domestic flights for family holidays in Y or J.

ie Melbourne -Prosperine for a couple of weeks sailing in the Whitsundays with a flight to Alice Springs for a weeks 4WD-ing on the way back to Melbourne for I think about 30K each represented great value.

In recent years having sharpened my Points Running skills (plus a bit of luck with a once in a lifetime promotion combined with strategic use of it) I have now lifted my horizons for regular J long-haul redemptions (and even one ticket in F). Though finding 4 or more J's is challenging task.


Another point worth noting:

Is that it can be worth aquiring points in multiple FF programs if you yearly earn is reasonable.

This allows one to optimise ones earn to burn ratio and indeed supercharge things a bit.


ie

• I am targetting SQ at present as their Saver J's represent great value on some routes. However these are drying up and so I am using them now as their future is uncertain. Also redeeming is leading to a number of flights booked as Saver J's to actually be flown on new metal which normally would cost twice the points.
• I have targeted two RTW tickets in J for later redemption J via QF (this also suits as there are various point earns such as Everyday rewards that can only go to QFF)
• Slowly and steadily have built up an 80K bank of BMI points at no $ cost except one car hire over the last two years. Possible MEL Tahiti return redemption in J for these.

 

[drron]

Re: Points to fare ratio-when is it better to pay cash for fare rather than redeem po

Whether an award is worth it or not is entirely dependent on what you value your points at.As in the previous post it does depend on the rate you are accumulating points.
For me i redeem my points for RTW J awards which means i value my AA points at 6 cents,my QF points at 4 cents-and yes i am not taking into account foregone points earning.So if an award came out to those values i would do it.The trip i would take anyway so indeed i can be certain of my implied value.

 

[dajop]

Re: Points to fare ratio-when is it better to pay cash for fare rather than redeem po

would I ever purchase separate one-way business class fares in this manner totalling $30K? Hell no, I can't afford to do that. So the question is how much would I personally be prepared to have spent to get around the world in business like that?

This is a really good point.

As well what you are prepared to pay, another factor is what you could actually pay on another airline.

An (extreme) example from about 2 years ago:
- QF selling upgradeable Y SYD-JFK return for about $2.4K
- QF business class fare SYD-JFK return for $12k
- Upgrade uses 192,000 pts
- Value of points? 5c per point.

However, is Asiana business class a subsitute for QF for getting to JFK? Maybe? Asian selling the flights for $5K.... so the choice is fork out an extra $2.6K to fly on Asiana or fork out 192,000 pts for QF... value is then reduced to 1.35c per point. Of course even this is simplistic, because there could be "value" in more direct routing. But illustrates that sometimes pure cents per points based on commercial fares is not always a good indicator of worth of points.

 

[SOPOOR]

Re: Points to fare ratio-when is it better to pay cash for fare rather than redeem po

It is very much a personal choice thing.

Personally, I only use points for upgrades into business class.

ive heard many people say that,

however, correct me if Im wrong,

Ill use AUS to Asia (eg thailand as an example)

cost is 72000 QFF points+ tax for an airfare that costs between $500-$1000 depending on season,

so if you paid cash for the flight + the upgrade costs to a 72,000 business class, but normally the flight cost of a business class is double economy.

for me this doesn';t seem like the best deal is because I have to pay for the flight anyway, i try and use my points to get something free, like a free flight......

am i missing something here?

 

[AnonymousCoward]

Re: Points to fare ratio-when is it better to pay cash for fare rather than redeem po

cost is 72000 QFF points+ tax for an airfare that costs between $500-$1000 depending on season,

so if you paid cash for the flight + the upgrade costs to a 72,000 business class, but normally the flight cost of a business class is double economy.

Business class on major routes (e.g. SYD-BKK) usually much more than 2 x economy class.

SYD-BKK or SYD-SIN return would cost around $5k business class (maybe around $3.5-$4k via a corporate TA). For economy you are looking at between $1k and $2k

Edit: additionally one-way upgrade cost SYD-BKK (or SYD-SIN) is 40k points (from discount economy), not 72k

for me this doesn';t seem like the best deal is because I have to pay for the flight anyway, i try and use my points to get something free, like a free flight...

Other people would prefer to pay $1000 + 80k points to get a business class return ticket, rather than spend $5000 on a business class ticket

 

[dajop]

Re: Points to fare ratio-when is it better to pay cash for fare rather than redeem po

Other people would prefer to pay $1000 + 80k points to get a business class return ticket, rather than spend $5000 on a business class ticket

Only watchout is upgradable fares to Asia usually cost more than $1K. (at the moment SYD-BKK it is $1.5K). So then the equation becomes ... do you pay $1.5K + 80 k points, or for extra 40k save $1.3K and get confirmed in J both ways (if avail ) Or Do you save the points and just pay $3k to go on MH!!!

Whatever, it illustrates that the choices are intensely personal, and may depend on the value (as opposed to cost) one places on business class.

 

[SOPOOR]

Re: Points to fare ratio-when is it better to pay cash for fare rather than redeem po

Business class on major routes (e.g. SYD-BKK) usually much more than 2 x economy class.

SYD-BKK or SYD-SIN return would cost around $5k business class (maybe around $3.5-$4k via a corporate TA). For economy you are looking at between $1k and $2k

Edit: additionally one-way upgrade cost SYD-BKK (or SYD-SIN) is 40k points (from discount economy), not 72k



Other people would prefer to pay $1000 + 80k points to get a business class return ticket, rather than spend $5000 on a business class ticket

Fair enough,

so example being Syd - Bangkok/Singapore being about say $1000-$1500 for economy, approx $3500-$4000 or even $5000

so you can either pay 72000 points + taxes return for economy while you can upgrade and hence for 144.000 points + taxes to get business class return while most prefer buying the ticket economy for say $1500 and then spending 72,000 points return to upgrade to business class,

Now i get it,

I might do this next time but I would only dream about doing it on an international flight, not an interstate one!

so what are the main differences between economy and business other then larger seats, ie how much better is the food, do you get any other extras,

someone recently told me on first class international they have a buffet at the back!!!

 

[medhead]

Re: Points to fare ratio-when is it better to pay cash for fare rather than redeem po

so you can either pay 72000 points + taxes return for economy while you can upgrade and hence for 144.000 points + taxes to get business class return while most prefer buying the ticket economy for say $1500 and then spending 72,000 points return to upgrade to business class,

I think you've got some of the points requirements mixed up. I'm not sure where you got this 72000 figure, but the various options are not just multiples of 72000 points.

The relevant numbers for SYD to SIN are:

Award ticket (points calculator)
Economy 30000 points + tax each way
Business 60000 points + each way

Upgrade
Discount Economy to Business 40000 points each way
Economy to business 25000 points each way

Someone else has mentioned the dollar costs.

 

[dajop]

Re: Points to fare ratio-when is it better to pay cash for fare rather than redeem po

I think you've got some of the points requirements mixed up. I'm not sure where you got this 72000 figure, but the various options are not just multiples of 72000 points.

My thinking must be looking at somewhere else in Australia -SYD-BKK (as SYD-BKK makes it into the 60000 points category by 116miles, so going from anywhere else makes it 72,000 miles.

 

[SOPOOR]

Re: Points to fare ratio-when is it better to pay cash for fare rather than redeem po

oops sorry, I did get mixed up,

I was comparing Melbourne to Bangkok/Singapore,

I will look through the link and do a full comparison and then get back on here...

sorry

EDIT: well i'll be damned

from melbourne to Thailand and Singapore is now only 60,000 points via economy, about 2 months ago, I booked a trip for one of my family members with my points for 72,000 points, so they must have dropped the points required, since they seem to be diluting points like crazy

so this is what I have deduced, (pls correct me if Im wrong)

Melbourne to Thailand/Singapore is 60,000 points return economy or 120,000 points return business class

however since a business class trip>2 x economy class trip paid for with cash/credit, being up to 3-4 times the cost, that is why people are paying for an economy fare and then getting upgrades to business class