What's an Air Mile really worth?

Michael Prentice
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Used properly, customer loyalty reward points can add up

Almost all retailers try to buy our loyalty, and you can't blame them, since they have to make a living.

(Stock image)

The problem is that many of us allow ourselves to be bought too cheaply.

Have you ever wondered how much an Air Mile is really worth?

I have frequently. Now I know. It's about 10 cents.

Air Miles is the name of the hugely successful retail loyalty program in which millions of Canadians collect points to eventually earn a reward, such as a free flight, cruise or merchandise.

"Eventually" is the key word here. Typically, a $20 retail purchase earns one Air Mile.

The value of an Air Mile used to be a bit of a guessing game, depending on when and on what the collector spent the reward miles.

Now the program has introduced the option of permitting collectors to redeem their Air Miles for cash towards the purchase of goods at participating retailers.

It works like this: each time a collector accumulates 95 reward miles, he or she can exchange them for $10 off the bill at a participating retailer. The $10 is deducted after the payment of tax on the total bill.

Thus, 95 reward miles equals $10 - or about 10 cents per Air Mile.

Would you go out of your way to shop at a retailer that offered a reward of 10 cents for $20 in purchases?

Put that way, many people would probably say no. But I did frequently to buy gasoline from stations offering Air Miles, until a nearby Costco started selling gas and sharply undercut competitors.

Let's be absolutely clear here. Air Miles is a tremendously successful business that offers canny consumers the opportunity to get something for nothing. In most cases, it costs nothing to collect Air Miles, and most collectors will eventually earn enough for a prize, even if it's no more than a ticket to the movies.

But don't shop anywhere just for the Air Miles you'll earn. Shop where prices are lowest and quality is highest.

And don't just collect Air Miles. Join the loyalty program of any airline you fly. And use credit cards that offer the best value in loyalty rewards, preferably cards with no annual fees.

The Air Miles program does not decide the degree of generosity - or meanness - of participating retailers. That's up to the businesses themselves.

Once you've collected enough Air Miles to earn a reward, does it make sense to take the cash? Not to me, it doesn't.

Why? Because you should be able to get a reward that is more valuable than 10 cents per Air Mile.

I never cash in loyalty rewards for air travel without carefully checking how much it would cost to pay to take the same flight on the same day. I only use the reward points if I feel I'm getting fair value for them.

Here's an example:

A round-trip Ottawa-Vancouver air ticket requires 4,225 Air Miles for travel this July. On the dates I checked, Air Canada offered a return fare of $628, before taxes and surcharges.

You have to pay the taxes and surcharges, whether you use your Air Miles or buy your ticket. So, the value of 4,225 Air Miles is $628 on the dates I looked at flying. That makes the Air Miles worth about 15 cents each. Fifteen cents is not great, but it's a lot better than 10 cents.

Of course, you will almost certainly never earn a free flight to Vancouver just by the free Air Miles you earn from participating retailers.

The big rewards are earned by those who spend thousands of dollars annually on a credit card. Typically, these cards offer rewards of about one per cent of the sum spent on the card. So, $10,000 in annual spending earns about $100 towards a reward. It's not much, but it's worth doing a lot of shopping around to find the credit card that works best for you.

And the best deals of all on credit cards are often the introductory offers, to entice you to switch from one card to another. The offers can be worth hundreds of dollars, enough for a short-haul flight. But hefty annual fees are invariably attached to these cards, so revert to a no-fee card as soon as possible after taking advantage of the introductory offer.

Organizations: Air Miles, Costco, Air Canada

Geographic location: Vancouver, Ottawa

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Recent comments

  • jimmy crackorn
    August 09, 2016 - 11:53

    The trick is.. don't change your shopping habits. Don't buy something just for the airmiles. You collect as you collect and redeem for free things and it's a bonus. If you don't so what. They give you a bonus in exchange for your shopping habits and loyalty. Don't be loyal based on AM and just spend what you happened to get and you end up ahead.

  • bruce elliott
    November 30, 2015 - 11:30

    What is the logic or reason behind Airmiles collector card not allowing you to move points earned under dream miles to cash miles when redeeming points? Are they earned at different rates? This certainly not highlighted at the outset.

  • bruno cauhon
    July 21, 2015 - 13:37

    Plus.... When they Split the program in 2012 if you had chose the wrong program to transfer your miles your done. I call them and speak to a superviser to explain my mistake. The answer..no. The superviser say.. it was impossible to transfer back my air miles . Wrong answer. Airmiles that's the end of the story for me after more tahn 12 years of fidelity. That's what we call customer first ???

  • Hiram
    February 07, 2015 - 15:35

    I have used that .10 value for an Airmile for years, when seeing whether an offer is worth taking advantage of. Occasionally I have received as much as .16 per mile with some flights. The real joke is that if you wish to transfer your airmiles, or inherit them, they now charge a fee of .15 per mile. That's MORE than they are worth! So really they are not transferable under any circumstances.

  • Dan
    December 21, 2013 - 17:54

    Air miles are simple deception. all card rewards have to be less than what the merchant is charged. Most merchants pay 2 to 3.5%. Theses same merchants add at least 5% to the price of the product to cover this. Rewards in air miles are hidden and obscured. The truth is 1% and in certain purchases 1.5 or 2%. Most card holders pay much higher fees than they reciev miles. In other words the card company wins and the card holder loses. Want a real discount? Try offering cash!

  • CowgirlJunkie
    July 28, 2013 - 13:11

    Actually your airmiles are worth a whole lot less than 10 cents. You must factor in what you have to spend to GET each airmile. You get 1 airlmile for every $20 you spend at the grocery store. It takes 95 airmiles to get back $10 in groceries. so I have to spend $1900 to get 95 airlmies for $10 in groceries. That means I get back .005 cents for every dollar I spend, or about 1/2 cent. Yeah, that's some reward.

    • Raj
      November 06, 2013 - 20:09

      Hi Cowgirl, The article says 10cents for 20$ and not 1$, which of course work out to .005cent / dollar!

  • thiago daluz
    June 21, 2013 - 12:48

    Sure, you can't get everywhere in your car, but I know I've gotten much better rewards through my car insurance in Toronto. On one side, I agree with the author, we let ourselves get bought cheaply. On the other hand though, are rewards the only advantage, and why should we get them anyway?

  • hab cooper
    March 18, 2013 - 17:02

    I pay an annual fee for an Amex Platinum Air Miles Card which gives me, over and above what the retailer gives me, 1 airmail per $10 spent at sponsors and all other grocery stores, gas stations, and drug stores and 1 per $15 spent elsewhere. I cash my air miles at the rate of 95 for $100 gift certificates for Marlin Travel. I watch for vacation sell offs at various sites on the internet. When I find a good deal I call Marlin Travel and book it through them. Some Marlin Travel outlets limit the amount of gift certiicates they will cash in, but not mine. Works well for me, but I'm currently looking at the Costco Amex to see if I can do better with their rebate. Doesn't make sense to me not to at least have a credit card that gives a rebate. If you don't get a rebate or points, you still pay the same price as everyone else but no bonus. Good thought provoking article.

  • Kathy Finlayson
    January 23, 2013 - 17:06

    In Western Canada the grocery chain Safeway routinely offers spend $100 earn 100 Air Miles or earn $200 get either 300 or 500 Air Miles depending on the current promotion. On top of that you get the weekly flyer offers of buy 5 cans of whatever get 15 Air Miles. So a canny shopper can easily rack up anywhere between 300-700 Air Miles on a big grocery shop. If you are shopping for a family of 4 or 5 that's easy to do almost weekly. Plus if you pay a small fee with the right card you earn 1 Air Mile for every $15. If you put all your monthly automatic payments on there - charitable donations, utilities, child care, house/car insurance, etc you can on top of other purchases such as vacations, eating out, gasoline you can easily rack up another 500-700 a year. If you do your research you can easily earn 8 - 10 free plane fares a year. Sure you may pay a slight bit more at Safeway than a discount store - but not the equivalent of 10 plane fares which is approximately $4,000. if not higher. Perhaps I could save $50-$75 a month on my food budget shopping in a discount store but that would fall short of my earnings with Air Miles. I find those who slag the reward programs are those who haven't learned to use it properly.

    • patrick venton
      April 15, 2013 - 16:49

      If you cant save upwards of 50 % by shopping at other than Safeway or Thriftys in Victoria,BC you havnt been trying very hard...... although there are some products that are the same price everywhere. .... Reward programs are for those who dont need to look to hard......

  • Chris
    January 17, 2013 - 14:19

    You say Typically, these cards offer rewards of about one per cent of the sum spent on the card. So, $10,000 in annual spending earns about $100 towards a reward. _____________ $10000 divided by 20 = 500. At 10 cents per airmile...that's 50 dollars not 100 as you suggest. Spend 10000 with Presidents Choice MC and you get $100. Not sure of your reasoning.

  • pianoman
    December 21, 2012 - 15:27

    All good advice. I've collected Airmiles for some time and now, used them only once, and now would like to take a trip to the UK. Kayak lists some non-stop return flights from Toronto to London at around $912 return. Not bad I suppose for Jan-2013. The Airmiles site offers non-stop departure and one-stop return for 4106 Airmiles + $645 taxes! I think that means each Airmile is worth about 6½ cents and the bulk of the fare is taxes and fees. Most estimates of such fees are $250 max. Someone is misleading the public and charging more than they claim.

  • Frank Corbin
    December 01, 2012 - 18:44

    Hi, just an observation in regards to Airmiles, it looks like a skunk, smells like a skunk, no it's worse than a skunk, it's Airmiles. Someone with authorization should look into this organization, Something smells awful and it not a skunk! Broke and confused

  • Jeff
    August 03, 2012 - 16:50

    OK, this artical is about Airmiles, not Aeroplan. Aeroplan points are worth about $0.03; they will actualy sell you points for 3 cents each if you don't have enough. Collecting is all about promotional items. I just spent $333 as Safeway on stuff I needed anyway and got over 500 airmiles. If they are indeed worth $0.15 each, that is over $75 worth. Pretty good. However, if I didn't buy the promotional items I would have only got 16 airmiles. That is not good.

    • Raj
      November 06, 2013 - 20:12

      Jeff, you got to factor how much each points are worth while redeeming. For example, 1500 airmiles might take you to Calgary, but you might need 25000 aeroplan miles for the same trip.

  • Lance Soskin
    June 21, 2012 - 13:19

    Aeroplan really does not offer good availability for their typical point - you usually have to pay double or triple the normal total for the same ticket. Your points also expire within a year if there's not activity in your account. If you would like to contact an Aeroplan executive to discuss why your Aeroplan points have expired you can find their email addresses at http://bit.ly/LgzyOq . You can also vote on whether you think Aeroplan's policy of expiring points is ethical on eQuibbly.com .

  • Greg
    May 27, 2012 - 13:05

    Yes, Aeroplan does offer actual inventory on other airlnes, so if you are looking for an 'aspirational' award like first class or a trip to an expensive far flung location it will give you a better value per mile than Air mile and other mock currencies. Aeroplan actually fared quite well in terms of availability relative to some of the U.S. counterparts: http://milecards.com/4325/best-and-worst-airlines-for-miles-with-free-travel-in-2012/

  • Peter Quinlan
    May 24, 2012 - 12:18

    Thanks for your excellent advice, AeroPlanner.

  • Peter Quinlan
    May 22, 2012 - 08:27

    Good article, Michael. These loyalty programs are not necessarily all they deem to be. In the case of AeroPlan, one might even say they are misleading the public. Take for example myself--I've got alot of points & decided to cash them in for a trip to Barbados next April (11 months away). Going by AeroPlan's website, I should be able to redeem 40,000 "miles" for a "Free" trip. No way. AeroPlan wants 107,000, almost 3 times what their website specifies. And this is 11 months out, a long time frame. I can understand if it was next month (or short notice) but 11 months out?? I'm sure many others have a similar story to tell. I wonder if there are grounds for a Class Action suit here, since the numbers posted by AeroPlan are blantently false.

      May 22, 2012 - 16:45

      Obviously this is your first time redeeming aeroplan miles. As a seasoned aeroplan redeemer, I can tell you that aeroplan's availability is actually quite good. From what I understand aeroplan actually has inventory on all star alliance airlines. This is much different from other frequent flyer programs that purchase tickets using a mock currency. The seats that are actually aeroplan inventory are the ones that cost the posted reward scheme. Inventory is released some 340 days in advance, and believe me, people are lined up booking international flights the day those seats are released. Inventory is also released month by month, so it's actually quite fair. The mileage that you have been quoted is for seats that are beyond aeroplan's inventory. This supplemental program mimics other f.f.programs, but I have done the math and aeroplan is still way cheaper. Another option worth your while is booking through the call centre, even if theres' a booking fee, its well worth it. Take my experience as an example, I wanted to book 3 tickets to Sydney, Australia and wasn't getting anywhere on the web, called in and 30 mins later I had 2 points tickets 2 @75,000 points and the girl told me to call back later next month, well I did and got the seat! No need for a class action lawsuit, just read the help or support sections of the aeroplan website...