There are very few cases where I am tempted to buy miles. They are often expensive, so you have to wait for a sale. They are also at risk of devaluation. A 100% bonus on purchased miles is no good if the cost of awards doubles before you get to use them.
But LifeMiles, the loyalty program of AviancaTaca, has such a generous award chart and such good sales on its miles that I often reconsider my skepticism. LifeMiles usually requires you to be an existing member of their loyalty program before the sales are announced (this one is no exception) so I suggest signing up now to prepare for the next one. The current sale is in place from now through April 30.
A Primer on Buying Miles
When deciding if you should buy miles or points, it’s important to have some kind of valuation — an idea of how much they are worth to you when you finally redeem them for an award. This isn’t necessarily the cost of the ticket if you had paid cash, but that’s a good start. (Why isn’t it this simple? Because you can buy any ticket for cash, but award tickets have limits on availability. You probably also wouldn’t pay the normal cost of some awards.)
A good rule of thumb for most U.S. airlines is 2 cents per mile. This is how I value my United Airlines miles, and LifeMiles has a similar award chart and partners with Star Alliance. (Update: This award chart is not accurate, and the best alternative is to do a test search for your desired itinerary. I have updated the examples below with correct values to the best of my knowledge.)
I caluclated that 2 cent valuation because I can usually find $500-600 awards to visit my future in-laws for only 25,000 miles. I can also redeem 110,000 miles for a business class award to Europe, which is only worth about $2,200 to me, not the published fare of $5,000+.
My frustration is that I’m not willing to buy miles just any time the price drops below 2 cents. I earn most of my miles by flying, often to places I actually want to go even if just for a short visit.
I pay about 4-5 cents per flown mile for most my flights, and with my 100% elite bonus that means I am getting redeemable miles at a cost of 2 to 2.5 cents. But I’m also getting a trip and credit toward status. If I buy miles outright for 2 cents I get only the miles — no trip and no status.
Why LifeMiles Are More Appealing
LifeMiles runs occasional sales with 100% bonuses on purchased miles. The normal price is 3 to 3.5 cents per mile, but during the current sale, you can get them at only 1.5 cents per mile (There are reports that even though the price was recently increased before the sale, people are still being charged 1.5 cents for the discounted rate). That puts us well under 2 cents, and at this point I might be willing to forgo the trip and status I would get if I earn through travel.
You also have the option of redeeming miles for 40% of your award and buying the remaining 60%, similar to a cash + points reservation at a hotel. These additional miles are purchased at an even lower rate of 1.275 cents each with or without a sale. This means your risk of devaluation is less. Sure, they can change the rules at any time, but it means you are paying — on average — 1.365 cents per mile and have less upfront cost.
Finally, you can buy these miles without paying taxes. Purchased miles in the United States have a federal tax just like purchased flights because, most likely, the miles will be used for air travel at some point.
$341 + Tax in North America and Other Good Deals
LifeMiles look very appealing to me for domestic flights that are frequently expensive. I try to pay 4 to 5 cents per mile on most flights, but those $500+ tickets to visit family do not give me much choice.
With LifeMiles, a domestic round-trip award in the U.S. is 25,000 miles. I can buy 10,000 miles during the current sale for $150 and then buy the remaining 15,000 miles for $191.25. That means my $500+ ticket costs only $341.25 plus the usual taxes and fees on award tickets.
I think this is a better deal than redeeming my United miles, which I would rather hold in reserve for international awards. Thanks to my elite status, I can make changes with no fee, and I am much more likely to require changes to international than to domestic awards.
Here are other sample prices for round-trip award tickets starting in North America (remember that taxes and any booking fees still apply):
Northern South America: 70,000 miles in business class
28,000 @ $0.015 + 42,000 @ $0.01275 = $955.50
Southern South America: 110,000 miles in business class
44,000 @ $0.015 + 66,000 @ $0.01275 = $1,501.50
Europe: 105,000 miles in business class
42,000 @ $0.015 + 63,000 @ $0.01275 = $1,433.25
Asia: 125,000 miles in business class
50,000 @ $0.015 + 75,000 @ $0.01275 = $1,706.25
I have seen economy class fares to some of these destinations for similar prices, and the option to buy miles for a business class award is worth it, in my opinion, to give up the earned miles and status that comes with buying a revenue ticket. Not everyone is in a similar situation as I am with a few mandatory expensive economy fares, but those may also be a good opportunity.
Jump on this deal now if you have plans to book a Star Alliance award. If you’re not already a LifeMiles member, sign up to be able to take advantage of similar sales in the future.