How Are Award Flight Tickets Priced and Why Is It Important?

plane in the clouds

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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!

Why Should I Care About Award Ticket Pricing?

Emirates First Class Suite Cabin Shot
If you’re smart about your points and miles, you can book some unforgettable experiences in the sky (like this Emirates Game Changer First Class Suite) without shelling out tens of thousands of dollars. Image Credit: Cherag Dubash

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

Price up down drop rise
Image Credit: FrankHH via Shutterstock

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:

  1. Region-based pricing
  2. Distance-based pricing
  3. Dynamic pricing
  4. Fixed-value pricing
  5. 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

Aerial view of Zhiguli mountains with green trees and Volga river in Samarskaya Luka national park during summer evening, Samara region, Russia
Region-based award charts group countries into regions and standardize award prices to/from regions. Image Credit: VarnakovR via Shutterstock

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.

Some examples include American Airlines AAdvantage, Alaska Airlines Mileage Plan, Virgin Atlantic Flying Club (mostly), and Turkish Airlines Miles&Smiles.

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

Flight distance
Distance-based pricing structures determine a price for your award ticket based on how far you fly. Image Credit: MicroOne via Shutterstock

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.

Some examples of distance-based frequent flyer programs include Japan Airlines Mileage BankQantas Frequent Flyer, or British Airways Executive Club.

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

Dynamic pricing
When looking at dynamic award pricing structures, you can never really pinpoint how much award tickets will cost. Instead, expect a range of values for your ticket. Image Credit: chaphot via Shutterstock

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:

  • Route
  • Seasonality
  • 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

Coins
Fixed-value award programs have miles similar to currencies, in the sense that the value is fixed and stays relatively consistent. Image Credit: Khongtham via Shutterstock

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.

Mixed 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.

Award Sales

krisflyer spontaneous escapes
Some airline loyalty programs consistently and regularly offer award sales! Image Credit: KrisFlyer

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.

Final Thoughts

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!


Frequently asked questions

What are award tickets?

An award ticket is simply a special airline ticket paid with airline miles. These are often referred to as reward tickets.

You spend miles in order to get free (or heavily discounted) flights, and these flights are known as award tickets.

How do you get award tickets?

You get award tickets by redeeming miles with a specific airline for travel on a particular flight.

You can’t redeem miles for award tickets on all airlines. You must strategically pick which miles to earn and which miles to redeem when thinking about booking travel.

How does airline ticket pricing work?

Airline ticket pricing is complicated. There are complex computer software algorithms that determine ticket prices. There are also computer software algorithms that determine whether or not certain tickets are available for redemption.

Refer to the rest of this guide to learn how airline award ticket pricing works.

How many seats are in a flight award?

It depends. The airlines very carefully regulate the inventory of seats available. At any point in time, they can remove or add seats at their discretion.

Do airlines release more award seats?

Sometimes. For example, British Airways is known for releasing lots of extra award seats all at once. Typically, you’ll find out by subscribing to BA press releases.

On the flip side, airlines can also pull award availability at any point in time, especially if they see lots of seats being sold for cash.

How far in advance should I book an award flight?

Generally, you should plan your travel as far out as possible (11-12 months in advance). However, there are some airlines, such as Japan Airlines, that release lots of unoccupied award seats in first and business class a few days before departure.

Stephen Au

About Stephen Au

Born and raised in Los Angeles, Stephen has been privileged to enjoy many premium cabin products and 5-star hotels. A petroleum engineer by trade, Stephen caught the travel bug in college when he traveled to Asia several times. After 2 years of continual promotions, Stephen quit his safe and secure career path in favor of entrepreneurship.

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