In the realm of points travel, people often brag about booking “free travel.” Unless you’re booking a ticket through Chase Travel Portal, for example, you’re probably not going to get an outright free ticket.
When you use points to book travel, particularly when you use transferable rewards points via an airline partner such as United MileagePlus, you’ll pay a certain amount in miles and a certain amount in cash.
The reason why this exists is that airplane tickets consist of 2 pieces: the fare and taxes and fees.
The miles or points you pay will cover the fare, while you’ll be responsible for paying the remaining taxes and fees. In many cases, your taxes and fees will be minimal, thanks to the absence of fuel surcharges.
When we compare different frequent flyer programs, we pay the most attention to the cost of the miles for a particular flight. But how do airlines price award tickets?
In this guide, we’ll walk you through all of the different award pricing schemes. As you’ll find out, different airlines follow different pricing structures. Let’s learn about award ticket pricing!
Table of contents
Table of Contents
Why Should I Care About Award Ticket Pricing?
The most basic reason why you should care about award ticket pricing is that you want to get the best points and miles deal out there.
Why pay 500,000 points for a first class flight when you can book the same flight for 80,000?
By having a deep understanding of what pricing strategies frequent flyer programs employ in pricing award tickets, you’ll be able to effectively find the cheapest price for the same flight!
For example, a business class flight on Lufthansa from San Francisco (SFO) to Munich (MUC) can cost:
- 56,000 Lufthansa Miles & More miles
- 55,000 Air Canada Aeroplan miles
- 63,000 Avianca LifeMiles
- 65,000 EVA Air Infinity MileagePlus miles
- 70,000 United MileagePlus miles
- 72,000 Singapore KrisFlyer miles
If you know where to look, you can get the best redemptions and save some miles. With that being said, let’s group pricing structures together and talk about the differences across various loyalty programs.
Major Award Ticket Pricing Structures
Airline frequent flyer programs incorporate tons of different nuances into their business model. Although we’ll strictly be talking about pricing structures in this guide, they can also differ across the board in terms of stopover/open-jaw allowances and much more.
When talking about award pricing structures, there are 5 major categories:
- Region-based pricing
- Distance-based pricing
- Dynamic pricing
- Fixed-value pricing
- A combination of award pricing schemes
Let’s introduce each of these and identify areas where we can truly maximize our points and miles.
Region-Based Frequent Flyer Programs
Region-based frequent flyer programs, also known as zone-based frequent flyer programs, divide up the world into zones, effectively grouping countries together.
This method of consolidating dozens of countries into a single region is then followed by consistent pricing for flights between 2 specific regions. The key point to remember here is that where you fly to/from within a specific region doesn’t usually matter.
For example, if you look at Air Canada Aeroplan’s award chart, you’ll find that Canada and the continental U.S. are grouped together into 1 region. If you were planning on flying to Germany in business class, you’ll pay the same price as long as you originate from either location.
In other words, flights from Vancouver will cost the same as flights from Texas or California. It doesn’t matter where specifically you’re flying from or to — as long as the route falls within a specific pair of regions, you’ll pay the same price.
Examples of Region-Based Frequent Flyer Programs
Anytime you see an award chart that is split up into regions on the left-most column and on the top-most row, you’re probably looking at a region-based award chart.
How to Maximize Region-Based Frequent Flyer Programs
There is no standard way of deciding which countries fall into specific regions — every frequent flyer program chooses which countries fall into its respective regions differently.
Generally speaking, flying further will cost more miles. Therefore, if you can fly further for the same number of miles, you’d be hitting a “sweet spot.”
For example, if you were considering flying to Colombia, you’d find most frequent flyer programs categorize Colombia as part of South America. However, some frequent flyer programs categorize Colombia as part of “Northern South America.” Since U.S.-Northern South America flights command lower mileage prices compared to U.S.-South America flights, you’d be saving a bundle of miles by locating programs that have unique region categorization.
Distance-Based Frequent Flyer Programs
The second-most-common frequent flyer program redemption structure is described as distance-based. Overall, the easiest way to describe this structure is: the further you fly, the more you’ll pay in miles.
Distance-based frequent flyer programs separate flight distances into distance brackets. The way it works is that your flight’s distance falls into a distance bracket. From there, you will pay a fixed price for the award redemption.
You can compare these distance brackets loosely to tax brackets. With tax brackets, you’ll pay a certain percentage of your income depending on which range your income falls into.
Let’s take 2 flight examples: New York City (JFK) – Hong Kong (HKG) versus Beijing (PEK) – Cape Town (CPT). The former measures 8,072 miles while the latter measures 8,051 miles.
If we’re looking at a distance bracket of 8,001-10,000 miles, you’ll find that these 2 redemptions should cost the same in miles, despite being completely different routes geographically.
In all, distance-based frequent flyer programs charge a fixed number of miles for all flights within a specific distance bracket, regardless of where you’re flying to globally.
Examples of Distance-Based Frequent Flyer Programs
The easiest way to tell if you’re looking at a distance-based award chart is if you see a column that delineates a series of distance brackets.
How to Maximize Distance-Based Frequent Flyer Programs
Distance-based frequent flyer programs were designed to level the playing field for award redemptions. In general, succeeding looks like booking a longer award flight for the same mileage price.
Since distance-based frequent flyer programs split up the distance spectrum into distance brackets, a “sweet spot” would be considered booking towards the upper bound of a distance bracket.
For example, if you find a distance bracket of 6,001-8,000 miles and are looking to book a flight from Boston (BOS) to Hong Kong (HKG), you’ll find a total flight distance of 7,970 miles.
This 15-hour 35-minute flight is at the top end of the spectrum, and booking this would cost the same as booking a flight from Vancouver (YVR) to Hong Kong (HKG), which is only 13 hours 55 minutes long. In other words, you’ll enjoy a longer flight for the same price.
Dynamically-Priced Frequent Flyer Programs
Our next frequent flyer program structure is one that gets endless hatred. Dynamically-priced frequent flyer programs are unique in the sense that there could be many different award prices quoted on an identical flight.
Simply put, the award price you’ll pay for a specific ticket will vary by factors including, but not limited to:
- Cabin load factor
- Number of award tickets already redeemed in the same cabin
- Number of tickets desired
The way it works is as follows:
- An airline will create fare buckets for award tickets, just like for revenue tickets. These are commonly referred to as award levels or award buckets.
- An airline will allocate a certain number of seats to each award level.
- As travelers book these award tickets, the number of seats in each award level will decrease, with the cheapest award buckets disappearing first.
- As the number of travelers booking award tickets increase, the lowest available award level will get more and more expensive.
This, in a nutshell, is how dynamic award pricing works. One of the main criticisms of dynamically-priced frequent flyer programs has been the lack of transparency. When airlines don’t publish and standardize their award pricing practices, travelers lose faith in and get spooked by constant devaluations.
Because there isn’t an official document that confines the award prices to a specific number, dynamically-priced frequent flyer programs can get devalued within a blink of an eye.
Let’s take an example route of a nonstop Air France business class flight from Los Angeles (LAX) to Paris (CDG). Because Air France/KLM Flying Blue is a dynamically-priced frequent flyer program, you’ll see several different award prices, ranging from decent to exorbitant:
- 67,500 miles
- 72,000 miles
- 118,500 miles
- 141,500 miles
- 209,000 miles
- 285,000 miles
Depending on when you book, you’ll find award prices that change over time, hence dynamically-based.
Examples of Dynamically-Priced Frequent Flyer Programs
One of the telltale signs of a dynamically-priced frequent flyer program is the appearance of numerous different award prices for the same flight on different days.
If you see this, you’re most likely looking at a dynamic award pricing system. Examples of dynamically-priced frequent flyer programs include Delta SkyMiles (on its own flights), Air France/KLM Flying Blue, and Hawaiian Airlines HawaiianMiles.
How to Maximize Dynamically-Priced Frequent Flyer Programs
It can be difficult to eke out amazing value from dynamically-priced frequent flyer programs. When trying to do so, you’ll be starting at a disadvantage, knowing that these programs are designed to make attaining great redemption value as difficult as possible.
Anecdotally, there have been reports of people making terrible redemptions for Delta business class for 395,000 Delta SkyMiles one-way to Africa!
One of the best ways to maximize dynamically-priced frequent flyer programs is to research what exactly the cheapest level awards cost on specific routes. Then, you’ll know, for example, that a solid redemption value would be to snag low-level award tickets. For example, if you know that a flight’s cheapest price is 50,000 miles, then you’ll know to look for tickets that cost 50,000 miles to get the absolute best deal.
Fixed-Value Frequent Flyer Programs
Fixed-value frequent flyer programs are less common and difficult to maximize. As the name suggests, these frequent flyer programs assign a fixed value to their points. Specifically, they assign a narrow range of values to their points.
The amount of miles you’ll pay for a flight is tied to:
- The revenue ticket’s cost
- The mile’s fixed value range
For example, if you are booking a ticket that is worth $500 and you see a fixed value of 1-1.1 cents per mile, you will pay anywhere from 45,454 miles to 50,000 miles for this ticket.
There’s no special optimization or routing rules to implement here. In a sense, this scheme is the most “boring.”
Examples of Fixed-Value Frequent Flyer Programs
One of the telltale signs of a fixed value frequent flyer program is you research lots of different flights in the same program and you find that the mathematical value is always around the same ballpark.
Another sign is that you see mileage quotes that are not “nice, clean, round numbers” — for example, 18,362 miles compared to 20,000.
Some examples of fixed-value frequent flyer programs are Air New Zealand Airpoints (1 Airpoint Dollar is worth NZ$1), Southwest Rapid Rewards points (1.4-1.6 cents per point), and JetBlue Plus miles (1-1.4 cents per point).
How to Maximize Fixed-Value Frequent Flyer Programs
The only way to get outsized value from these frequent flyer programs is if your redemptions can fall within a spectrum of values.
If you take JetBlue Plus points, for example, you’ll see that the value of your miles is 1-1.4 cents per point. To get closer to the 1.4 cents per point end of the spectrum, you’ll need to take out your calculator and start doing some math to figure out the cents per mile value on several different redemptions you’re considering.
Besides that, it’s (by definition) impossible to extract much-added value from fixed-value frequent flyer programs.
The very last program we’ll be talking about is what’s known as a mixed program. Mixed programs are simply those that incorporate a combination of the above-discussed programs.
When airlines offer award redemptions, they often separate the pricing as follows:
- Award structure for their own flights
- Award structure for alliance flights (if applicable)
- Award structure for all other partner flights
Examples of Mixed-Based Frequent Flyer Programs
A particular frequent flyer program may employ different award structures for each of the 3 sub-programs. This concept isn’t new, but it’s an important distinction nonetheless.
1 example of a mixed program is Delta SkyMiles. For flights on Delta Air Lines, you’ll find a dynamically-based structure, while partner flights command a region-based structure.
Another example of a mixed program is Etihad Guest. Etihad isn’t in any major alliance and Etihad Guest charges for its own award flights in a semi-region-based scheme. For its partners, Etihad Guest will either use a distance-based or region-based structure, depending on which exact partner you’re looking to book.
How to Maximize Mixed Frequent Flyer Programs
The easiest way to maximize mixed frequent flyer programs is to understand sweet spots within each sub-program. What does that mean?
For example, you can redeem 25,610 Etihad Guest miles for Czech Airlines business class flights between Prague (PRG) and Seoul-Incheon (ICN). This outlandishly good redemption is only possible if you know the pricing structures for these loyalty programs.
This isn’t a loyalty program structure. Rather, award sales are released to incentivize specific groups of people in loyalty programs by offering great discounts on mileage redemptions
Some of these programs include Air France/KLM Flying Blue (Promo Rewards), Singapore Airlines KrisFlyer (Spontaneous Escapes), Avianca LifeMiles (Star Alliance Award Sale), American Airlines (Web Specials), Delta SkyMiles (Flash Deals), and Turkish Airlines Miles&Smiles (Award Ticket Promos).
The only real way to maximize this is to wait for an award sale to occur before redeeming miles. That way, you can lock in a fantastic discount for business and even first class award tickets.
In closing, award travel is complex. Pricing out award travel is many times more complex than pricing out revenue travel. When you’re booking cash tickets, you can simply go to Google Flights and you’ll get one of the lowest, if not the lowest, quotes on prices.
The same isn’t true for award travel. You need to study airline award programs extensively and have an idea of which particular redemptions are the best and cheapest.
There’s tons of information out there, but booking fantastic business and first class tickets is only getting harder and harder. Getting a hang of the fundamentals and the underlying logic of award pricing structures will be instrumental to your success in booking coveted first class tickets and not bankrupting yourself in the process.
Now, you have all the knowledge you need on how award travel is priced!