The day has lastly arrived.
After months of growth and intensive validation testing, at present, TPG is thrilled to launch our new data-driven methodology for valuing a few of the most vital loyalty applications on the market. This method builds on earlier efforts to leverage intensive, real-world inputs to help readers decide when they need to use their hard-earned factors and miles versus when they need to merely pay money.
With this considerably expanded knowledge set, we’re additionally refining our methodology for the foremost transferable point programs to raised seize the worth that savvy vacationers can get from their bank card rewards.
This is all the things it’s worthwhile to learn about this new method.
New technique for airline valuations
The primary thrilling side of this announcement is our new methodology for valuing rewards from many widespread airways.
Our editorial staff is consistently looking for award tickets, and we additionally use rewards regularly. The numbers we have revealed over time mirrored these private experiences.
Now, now we have intensive knowledge to help these numbers for loyalty applications from six main U.S. airways:
To crunch the numbers, we checked out greater than 23,000 particular person knowledge factors on round-trip itineraries throughout the U.S. and all over the world, emphasizing home routes together with flights between the biggest U.S. airports and leisure locations in Hawaii, Mexico, the Caribbean and South/Central America. We additionally included a few of the high European gateways after which layered in a curated set of widespread locations for vacationers, together with spots like Sydney Airport (SYD) and Tokyo’s Narita Worldwide Airport (NRT) and Haneda Airport (HND).
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This is how we weighted these knowledge factors to attenuate one redemption kind from skewing the calculation:
- Home economic system: 20%
- Home enterprise/top quality: 10%
- Hawaii: 10%
- Brief- to medium-haul worldwide economic system: 25%
- Transatlantic economic system: 15%
- Lengthy-haul enterprise class: 20%
This weighting was adjusted proportionally when carriers had no flights in a particular bucket, and we used a three-month rolling common of information to attenuate outlier pricing in periods of excessive demand (like the vacations). Lastly, we rounded numbers to the closest five-hundredths of a cent for ease of calculation.
As anticipated, we did discover a variety of values for particular person redemptions with 4 of the six airways (JetBlue and Southwest have been a lot narrower, which is sensible given the revenue-based nature of those applications). Nonetheless, the last word numbers are primarily based on the above weights to present a well-rounded view of the anticipated worth you may get throughout an airline’s community.
Right here is the place the ultimate numbers landed for the September valuations:
| Airline program | September 2023 valuation |
|---|---|
| Alaska Airways Mileage Plan | 1.4 cents per mile |
| American Airways AAdvantage | 1.5 cents per mile |
| Delta SkyMiles | 1.2 cents per mile |
| JetBlue TrueBlue | 1.4 cents per level |
| Southwest Fast Rewards | 1.4 cents per level |
| United MileagePlus | 1.45 cents per mile |
It is value noting that the information is sort of fully primarily based on flights operated by the desired airline. Whereas we do embrace a handful of companion redemptions, the capability controls on these tickets — particularly in premium cabins — imply that they are laborious to depend on as a dependable side of a given program.
Certain, there are methods to get outsized value out of your factors and miles in case you’re versatile or make the most of transferable factors (extra on that beneath). Nonetheless, whenever you’re sitting on a steadiness of rewards in a particular airline’s program, this technique (and the numbers above) can assist determine when it is best to use your rewards.
Refined bank card methodology
Along with the up to date valuation of those six currencies, now we have additionally refined our methodology for the five major transferable credit card programs.
Essentially the most highly effective side of transferable currencies is their flexibility. Moderately than being restricted to a single airline or resort program, you may maintain on to your rewards till you are prepared to make use of them — whether or not that is to benefit from a transfer bonus or soar on a once-in-a-lifetime redemption like Singapore Suites.
We have now up to date our mannequin to make use of the above airline-specific knowledge whereas additionally accounting for the next options of every program:
- The bottom worth for cash-equivalent rewards (e.g., assertion credit, money again, Amazon.com redemptions)
- The bottom worth for journey redemptions
- The amount (and high quality) of switch companions
Our proprietary components makes use of this data to compute the additional worth a savvy traveler can unlock by leveraging key transfer partners and reserving award sweet spots by every program.
With this tweaked methodology, this is how the cardboard currencies now stack up:
As you may see, Bilt Rewards factors and Chase Final Rewards factors now high our valuations for card currencies, as each carry important methods to optimize switch companions alongside essentially the most priceless direct journey redemptions by Bilt Travel and Chase Travel (respectively). Amex Membership Rewards factors come subsequent, with Capital One miles and Citi ThankYou factors following carefully behind.
In fact, all of those applications nonetheless have alternatives for enchancment that would enhance their valuations even additional:
- Amex: Rising base worth for assertion credit or Amazon.com redemption, each of which at the moment stand at 0.7 cents
- Bilt: Rising base worth for Amazon.com purchases (0.7 cents) and direct lease redemptions (0.55 cents), or including further switch companions
- Capital One: Including new, priceless switch companions — together with a U.S. airline program — or boosting cash-equivalent redemptions (0.8 cents for Amazon, 0.5 cents for money again)
- Chase: Including further switch companions
- Citi: Rising base worth for Amazon.com redemptions (0.8 cents) or including further switch companions
We’ll proceed to observe updates to those applications and can recalculate our valuations when essential.
Future tasks
We’re not executed enhancing our valuations to raised equip you — our readers — with what it’s worthwhile to determine on the best credit cards to get and when to place these rewards to make use of. We’re persevering with to discover further tasks to present much more actionable data, together with (however not restricted to):
- A revamped valuation methodology for resort factors
- New data-driven valuations for extra airline applications
- Extra instructional content material on how (and when) to redeem your factors and miles
All of those will serve our final purpose of empowering you to optimize your rewards, whether or not it is to discover extra of the world or put more cash again in your pocket.
