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Million Mile Secrets reader Amit writes in:
My parents live in India and they wanted to utilize the US Airways 100% bonus offer by buying 50,000 miles + 50,000 bonus for approx $1,800. They like to travel business. Do you think with the merger in the future with American Airlines 100,000 miles will help them redeem business class return ticket from India to US? Thanks
P.S. They have option to fly into Seattle, Los Angeles, Washington DC or Chicago.
US Air 100% BONUS
Now through August 31, 2013, US Airways is offering a 100% mileage bonus for purchasing or gifting miles.
Buy US Air Miles for 1.88 Cents per Mile
Amit’s parents can buy a maximum of 50,000 miles (per US Air account) and get a 100% bonus, so they will get 100,000 miles for the cost of only 50,000 miles.
Buying 100,000 miles (including the 50,00 mile bonus) will cost $1,881, including the 7.5% excise tax each or ~1.88 cents per mile ($1,881 ÷ 100,000 US Air Miles).
US Air Leaving Star Alliance
US Airways will soon be leaving the Star Alliance - which includes airlines like Lufthansa, Swiss, United, etc.
When US Airways leaves the Star Alliance and joins the Oneworld alliance (after the merger with American Airlines), US Air miles will become American Airline miles. And Amit’s parents can redeem for flights on Oneworld partner airlines such as British Airways or non-partner airlines such as Etihad.
US Air Will be Joining the Oneworld Alliance
Amit’s parents should be able to book a return trip for 120,000 US Air miles, on Star Alliance airlines, up to around November or December of 2013, before the merger with American Airlines is complete.
However, American Airlines charges 135,000 miles for a round-trip business class flight to India which is 15,000 more miles than what US Air charges (120,000 miles)
American Airlines’ main partner airline to India, British Airways, charges high fuel surcharges. For example, we paid ~$350 in fuel surcharges for the British Airways First Class flight from London to Mumbai with Emily’s mom. The taxes and fees would be higher if we had flown on British Airways from the US to London as well!
Amit’s parents will pay 67,500 miles + $642 each for a 1-way flight – in addition to the cost of the miles!
67,500 Miles + $642 In Taxes For a 1-Way Award if You Fly on British Airways Using American Airlines Miles!
That said, American Airlines also partners with Etihad Airways which flies to Washington, DC, New York, Chicago, & Toronto and doesn’t charge expensive fuel surcharges. Amit’s parents could then connect on American Airlines flights to other cities in the US.
There are also a few more ways to get to the US without paying expensive fuel surcharges when using American Airlines miles, but they involve extra connections or are on Jet Airways which doesn’t have very good award availability.
Using Miles To Get To the US From India
US Air doesn’t allow one-way awards, so Amit’s parents would need to get 20,000 extra US Air miles to book the return business class trip for 120,000 US Air miles. You also have to pay the taxes and fees, which should be less than $150 if you use a US Air Star alliance partner like Lufthansa or United.
Link: US Airways Award Chart
You are limited to only 100,000 miles through the US Air promotion, but US Air has been running similar offers every few months, so Amit’s parents may be able to buy the extra miles needed for a business class trip the next time US Air has a similar offer.
If Amit’s parents used US Airways miles to travel from India to the US (and vice versa) it would cost:
80,000 miles roundtrip in coach (~$1,504 @1.88 cents per mile)
120,000 miles roundtrip in Business class (~$2,256 @1.88 cents per mile)
160,000 miles roundtrip in First class (~$3,008 @1.88 cents per mile)
Link: American Award Chart
However, if Amit’s parents bought US Air miles, but waited for them to become American Airlines miles to travel from India to the US (and vice versa) it would cost:
90,000 miles roundtrip in coach ($1,692 @1.88 cents per mile)
135,000 miles roundtrip in Business class (~$2,538 @1.88 cents per mile)
180,000 miles roundtrip in First class (~$3,384 @1.88 cents per mile)
But be careful of the high fuel surcharges on British Airways Flights which, for a round-trip, could run from ~$600 if you fly only from London to India on British Airways or ~$1,200 if you fly from the US to London and London to India on British Airways.
So you could pay up to $1,200 in fuel surcharges PLUS the cost of the miles!
Worth it or Not?
Should Amit’s parents use 120,000 US Air miles or 135,000 American Airlines miles (after the merger) to fly Business Class from India to the United States? Or should they just pay for the ticket?
Let’s look at a few examples:
1. Cost of a Paid Business Class Ticket
Amit’s parents should compare the cost of buying miles to the price of the cheapest paid business class ticket. I did a random search for the cheapest business class ticket from Bombay to Chicago on May 27, 2014 and returning on June 12, 2014. The cheapest business class ticket costs $2,929.
This journey is ~17,000 miles and depending on the fare class, Amit’s parents could earn 17,000 to 34,000 miles. 17,000 miles at a conservative value of 1 cent per mile is worth ~ $170. So the total cost of a paid business class ticket is ~$2,759 ($2,929 for the business class ticket less $170 for the value of the miles earned).
Cheapest Return Business Class Ticket From Mumbai To Chicago Is $2,929
You also get MUCH more flexibility with a paid ticket since you don’t have to hunt for award availability and can fly whenever you want!
2. British Airways Business Class Ticket from Bombay to Chicago
It costs ~$3,819 to buy a British Airways ticket on the same dates from Mumbai to Chicago. But Amit’s parents should compare the cost of the cheapest paid ticket (from #1) above to the cost of using miles for the British Airways flights.
It Costs $3,819 for a Paid British Airways Ticket
Amit’s parents would pay 135,000 American Airlines miles PLUS $600 to $1,200 in fuel surcharge
So they’d pay $2,538 for the 135,000 miles (assuming they buy US Air miles which later becomes American Airlines miles) plus an extra $600 to $1,200 in fuel surcharges. So their total cost is ~$3,138 to $ 3,738 with the British Airways fuel surcharges.
This isn’t worth it when they can buy a paid business class ticket on British Airways with much more flexibility for $3,819 (which will also earn them miles) and because the cheapest paid business class ticket costs $2,759 (from #1) above.
3. Lufthansa Business Class Bombay to Chicago
It costs $4,745 for a roundtrip ticket in Business Class from Bombay to Chicago on Lufthansa.
But Amit’s parents should compare the cost of the cheapest paid ticket (from #1) above to the cost of using miles for the Lufthansa flights.
It Costs $4,745 for a Paid Lufthansa Business Class Ticket
Buying US Air miles at 1.88 cents per mile and later using them to redeem for flights on Lufthansa (before the US Air and American Airlines merger) will cost~$2,256 (120,000 miles X 1.88 cents per mile). They will also have to pay ~$150 in taxes and fees, so their total cost of using US Air miles is $2,406.
But the cheapest cash ticket can be bought for $2,759 (from #1), so Amit’s parents should compare the money saved by using miles to the cheapest cash price. In this case, they would save $503 ($2,759 – $2,256). But they have more flexibility when they pay cash for a business class ticket than when they buy miles.
Bottom Line
It could make sense for Amit’s parents to buy US Air miles and use them for a business class trip from India to the US. But they shouldn’t buy miles and then redeem them for business class flights on British Airways, because they’d pay high fuel surcharges. It would be cheaper to just pay cash for a business class ticket!
They won’t have enough miles to book a round-trip flight with only 100,000 miles, but they could wait for a similar promotion in a few months to get the additional miles.
As always, they should do the math for their specific travel dates to see if it makes sense to buy US Air miles or not.
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Comments
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What about Etihad or Jet ariways by Shon
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