There’s no doubt that you can do a lot of cool things with frequent flyer points! Two of the most popular redemptions are Business Class flights and upgrades.
To give just one example, you could fly from Melbourne to Jakarta in Qantas Business Class for just 114,000 Qantas points + $366 round-trip.
The equivalent cash airfare would be $4,666, so you’d be getting around 3.8 cents per point worth of value for this redemption. That’s a good deal!
But does it always make sense to redeem your points? Well, no…
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How much is a frequent flyer point worth?
The value of a frequent flyer point depends on how you redeem it.
When you use your points to book a “Classic” reward seat, you can often get well over 2 cents worth of value from each point. On some redemptions where the equivalent commercial airfare is particularly high, that could be closer to 5-7 cents.
But when redeeming points on the ground for things like gift cards or electronic appliances, you might only get around half a cent of value from each point.
Gift cards and merchandise are typically poor value redemptions
As an example, you’d need to spend 10,874 Velocity points to get a $50 Bunnings gift card from the Velocity Rewards Store. That values your points at around 0.46 cents each.
In general, this means that non-flight rewards are typically among the worst value ways to use your points. But there are a few redemptions out there that get you even less value, including one option with Etihad Guest that has no monetary value at all.
Etihad Guest lets you spend points changing your membership number
Do you consider your frequent flyer membership number to be a status symbol? Well, apparently some Etihad Guest members do, as Etihad has launched a new redemption option for its Platinum and Diamond members.
For 50,000 Etihad Guest miles, Etihad will let its top-tier frequent flyers choose their own membership number. This must be a 12-digit number beginning with “0000” and cannot already be taken.
50,000 Etihad Guest miles is enough to book a return Virgin Australia Business Class flight from Melbourne to Brisbane (plus taxes) – which seems like a much better use of those miles!
Letting your points expire
Of course, you’ll also get nothing of value from your points if you let them expire.
Some frequent flyer programs, such as Singapore Airlines KrisFlyer, Emirates Skywards and Air New Zealand Airpoints, use “time stamping” expiration policies. This means that unused points or miles expire after a fixed period of time (generally around 3-4 years).
Luckily, Qantas Frequent Flyer points don’t expire as long as you maintain activity in your account at least once every 18 months. That’s fairly easy to do. You can also prevent your Velocity points from expiring by earning or redeeming at least one point every two years.
“Reward” flights with negative value
Burning your points on gift cards or products from the airline’s reward store may be poor value, but at least you’re always getting something for your points.
When booking reward flights, the value depends on the number of points you need to spend, the taxes & carrier charges, and the equivalent cash airfare. Most flight redemptions do offer good value, but there are some rare cases where the taxes and charges you’ll pay are higher than the actual airfare!
For example, it would cost 49,000 Qantas points and GBP441 (~AU$847) to book a return Economy Classic Reward from London to New York on British Airways.
Of the taxes & charges payable, GBP280 (~AU$538) or 63% of the amount is carrier charges payable to British Airways. The UK Air Passenger Duty makes up a significant proportion of the remaining amount.
Instead of using frequent flyer points, you could simply buy a return Economy ticket on the same flights directly from British Airways for just GBP396 (~AU$761).
Admittedly, the Economy Basic fare shown above does not include checked baggage. The reward booking does. But let’s look at another example.
If you were to book the same British Airways London-New York flights in Premium Economy, as a Qantas Frequent Flyer redemption, it would cost 97,000 Qantas points + GBP817 (~AU$1,570) return.
But you could book the same flights using money on the British Airways website for just GBP752 (~AU$1,444) return. And in this case, the commercial fare includes two checked bags.
If you used frequent flyer points to book these flights, you’d effectively be spending 97,000 Qantas points to get negative AU$126 in value. That’s a redemption value of -0.13 cents per point!
Check the cash airfare before booking
Of course, there are many other redemptions out there that will get you much better value for your points! The British Airways example above is a particularly extreme one due to the relatively low cash fares, combined with high taxes & charges.
But it just goes to show that it’s worth checking the equivalent cash airfare before redeeming your points. 😉
Have you seen a worse way to use frequent flyer points? Let us know in the comments!
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