The formula
cents per mile = (cash price − taxes) × 100 ÷ miles required
Where it comes from
Loyalty programmes do not publish a value for their points because there is not one: every redemption is worth something different. The only useful metric is how much money each mile saves you on the specific redemption you are looking at, and for that you have to take off the taxes, which you pay in cash whether you use points or not. A 400 ticket with 50 of taxes for 25,000 miles gives 1.4 cents a mile; the same ticket found on sale at 200 gives barely 0.6.
How to work it out by hand
- Subtract the taxes from the cash price: that is what you actually save
- Divide by the miles the redemption costs
- Multiply by a hundred for cents per mile
- Compare with what buying those miles would cost you
What is worth knowing
The benchmark the industry uses is one cent a mile: below that you are usually better off paying for the ticket and saving the miles for a better redemption. The good redemptions are almost always premium cabins on long haul, where the cash price runs away and the mileage price does not; the bad ones are short cheap flights and above all the points shop, where a toaster works out at three tenths of a cent. Be careful with buy-miles promotions: they only pay off if the redemption you have in mind is worth more per mile than you pay.