Compensation: Should You Accept Cash or Miles From an Airline?

It’s happened to us all, hasn’t it? You’ve booked your flight, packed your bags, showed up to the airport — and something goes wrong. Whether it’s an overbooked flight, a mechanical failure, or an involuntary downgrade, these instances are more than a little frustrating. After all, we did our part. Shouldn’t the airline?

What airlines owe you in these cases will depend on a variety of factors, especially when the failure isn’t something they were able to control. Still, oftentimes, airlines will attempt to make things right. This can be done in a variety of ways, but common offerings include a cash refund, a voucher valid for future travel, or a lump sum of bonus miles. While these won’t make the pain disappear, they can go a long way towards easing an otherwise upsetting situation.

But when presented with these options, which one should you pick? After all, these choices are not inherently equal — and some may be much more valuable than others. Let’s take a look.

What Will Airlines Give You?

The type of compensation you’ll receive will really depend on the type of inconvenience you experience, but generally, you can expect 1 of 3 different options:

• Cash Refund: As it sounds, the airline will give you a refund, in cash, of the amount you paid for your flight (or some portion of it).
• Voucher: Far more limited than a refund, these are generally valid for future travel. They may have an expiration date and may be non-transferable.
• Miles: Usually awarded to frequent flyers, these can be redeemed for award flights on airlines. They’re more restrictive than cash but can provide greater value.

If the type of trouble you’re receiving also extends overnight, you’ll commonly see things such as hotel stay vouchers and meal credits, which are separate from the options above.

Questions To Consider

The compensation that’s right for you will be fairly dependent on your travel situation. Here are a few things you’ll want to consider when deciding on an option:

• How often do you travel?
• Do you have upcoming travel plans?
• Are you familiar with frequent flyer miles?
• How flexible are you when you travel?
• Do you need the cash cost of the flight on hand?
• Do you fly with this airline often, or is this a one-off?

As you can see, there are quite a few questions to ponder when choosing your compensation. Don’t skimp on these — they’re important. After all, if you only fly once per year and you have no future travel plans, how useful will a travel voucher be? To a lesser extent, this also includes frequent flyer miles. If you’re not familiar with how to maximize them (or you’re not willing to become familiar) it can be easy to mistakenly use them for far less than they’re worth — and far less than you’d have received in cash.

Hot Tip: Fighting with an airline? Check out our handy guide for how to get compensation when your flight is delayed or canceled.

Maximizing Your Value

There are plenty of people who will tell you cash is king, and that’s certainly true, to an extent. But there is a reason that the world of points and miles exists and so many people prefer credit cards that earn travel rewards rather than flat cash-back cards.

This is because it’s possible to get greater value for travel rewards than from cash-back. Think of it like this: every time you get 1 cent in cash, it’s worth 1 cent. However, certain points and miles are worth more than 1 cent apiece. Take, for example, American Airlines’ AAdvantage miles. We value AAdvantage miles at 1.4 cents per point, thanks to their ease of use and the value with which they can be redeemed.

This means that if you were given the choice between $400 in cash and 40,000 AAdvantage miles, you’ll want to consider it carefully. $400 in cash is worth $400, but we value 40,000 AAdvantage miles worth $560 towards travel — and they can be worth a lot more, given the right circumstances.

Here’s a look at a round-trip flight from Dallas (DFW) to Paris (CDG) over Thanksgiving:

As you can see, the flight is 45,000 miles — so a few thousand miles more than our hypothetical offering. You’ll also need to pay $81.07 in taxes and fees. However, take a look at the cash cost of this flight:

In this case, you’d be redeeming your American Airlines miles for a flight that would cost you $1,225, thereby giving them a value of 2.7 cents each. This is well above our own valuation. However, more importantly, you’re redeeming those miles for far more than the $400 in cash (or voucher) you’d otherwise receive.

Be Wary of Bad Redemptions

We mentioned above that it’s possible to make mistakes with frequent flyer miles, especially if you’re not a super savvy traveler. And while it’s all well and good to redeem miles for outsized value, you need to be equally wary about bad redemptions.

Here’s a look at a round-trip flight from Los Angeles (LAX) to Miami (MIA) over Thanksgiving:

Right away, we can see that this flight costs more miles than a trip to France. But it gets even worse when we look at the cash rate of this flight:

In this case, you’re redeeming 47,500 miles for a flight that’s otherwise worth just $402! This means you’ll be redeeming those AAdvantage miles at a rate of just 0.8 cents each — or less than what you’d get if you’d just opted for cash.

Which Option Is Best for You?

We’ve laid out a pretty compelling case for choosing reward miles, but the answer to this question will really be based on your personal needs. Are you the type of person who will be willing to wait for an award seat to open up? Do you care about “maxing” out value? Or are you someone who prefers the simplicity of money in your pocket?

Note that we’ve described 3 different options in this piece, but haven’t really discussed travel vouchers. That’s because — given the choice between a voucher, money, or miles, the voucher will always be last place. This is due to their inherent limitations, which frequently include an expiration date and may not be transferable to other passengers.

Instead, the breakdown really comes down to your tolerance for inconvenience. Cash will always be more convenient, but you can extract some pretty extraordinary value out of miles given the chance. In the end, it’s really up to you.

Final Thoughts

There’s always room for error when traveling, and often there’s nothing more frustrating than trying to deal with an airline when you’re angry. However, airlines will hand out varying types of compensation for your troubles — just be sure to pick the right one for you.

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