Miles are on Sale With a Mystery Bonus up to 50%! It Must be a Good Deal - Or is it?
Expiration Date – September 29, 2016
Alaska Airlines is offering up to a 50% bonus to buy or gift miles until September 29, 2016. But even with a bonus, buying miles doesn’t usually make sense.
Alaska Airlines bonuses are typically offered on tiered purchase levels and this sale is no different. The more you buy, the larger the bonus - up to 50%. Miles are available in increments of 1,000, all the way up to 60,000 miles before the bonus.
It’s a mystery to me why Alaska would advertise a mystery bonus of 35%, 40% or 50%, thereby making anyone who is offered less than 50% feel less special.
Although some will be offered up to a 35% bonus and others 50%, most Mileage Plan members will enjoy up to a 40% bonus broken down this way:
20% bonus on 10,000-19,000 miles (2.46 cents per mile)
30% bonus on 20,000-39,000 miles (2.23 cents per mile)
40% bonus on 40,000-60,000 miles (2.11 cents per mile)
The bonus prices above include a 7.5% excise tax but not the GST/HST for Canadian residents. Without a sale Mileage Plan miles cost 2.96 cents per mile to buy. And if you are lucky enough to receive a maximum bonus of 50%, you will buy miles for 1.97 cents per mile when you purchase 40,000-60,000 miles.
As you know from prior trvlvip Perks and Tips, we believe the value of an Alaska Mileage Plan mile is 2 cents per mile, which is the value we would be willing to pay for Mileage Plan miles if we could buy them for cash. It is also the minimum value we feel you should expect before redeeming your miles.
To determine your cost per mile, take the full purchase price (including the excise tax of 7.5%) and divide it by the total number miles including the bonus miles.
Even if you buy miles with a 40% bonus, equating to 2.11 cents per mile, you will pay above what we believe Mileage Plans miles are worth at 2 cents per mile. Only those purchasing 40,000+ miles with a 50% bonus will be able to buy miles for slightly less than we believe they are worth.
The Choice:
Does it ever make good financial sense to buy or gift Mileage Plan miles? Maybe – but typically only in these scenarios:
You plan to purchase miles in order to secure a specific award flight during a discounted award promotion
You plan to secure a Business or First Class award ticket
Here is a quick calculation you can use to determine deal value:
Find an award ticket.
Determine the full price of that ticket if you were to pay cash, including all taxes and fees.
Add to that amount any taxes and fees you will be required to pay on the award ticket.
Divide that amount by the number of miles required.
If the value per mile exceeds the amount you have to pay to buy the miles then you’ve found a good deal and if not, we don’t suggest you buy the miles.
Remember, purchased miles will not count toward Mileage Plan Elite qualification.
The Wrap-Up:
It rarely makes sense to buy or gift miles speculatively as it is an expensive way to acquire miles even with a discount or this mystery bonus of up to 50%. Once, you’ve picked a location and your dates and have taken the steps to ensure award availability, make the small effort to crunch the numbers to make sure the mile purchase makes good economic sense - you will be very happy you did!
Click here for more information on booking awards with Alaska Airlines.
And a great alternative to purchasing miles to gift to another person is to book them an award ticket using your miles. That is a much more economical choice.
Want to look a bit deeper into the option to purchase, gift or share miles with or without a bonus offer when using the Fly & Buy option or the option to buy and share miles anytime? See our great tip: Alaska Airlines - Pros & Cons of Buying and Gifting Miles.
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