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From the reader mailbag… reader TC asks:

How much is too much to pay for going with your airline of choice? We do not have elite status on AA but do have a bunch of miles on them–Their tix this summer cost more than Delta. Thoughts??

Great question. I’ll assume you’re looking at the same dates and same class of service. So what do you do? The answer will require a little research into how many miles you’ll earn, as well as a decision regarding what you can afford.

A slightly more expensive on a preferred carrier may be worth it if you 1) collect miles you can use, 2) get closer to elite status, and/or 3) if the value of the miles you earn exceeds the cost difference.

It’s an issue we’re dealing with ourselves right now in the house of Better Living Through Miles: My wife will need to fly from Chicago to Boston in August. AirTran, departing Midway Airport, started a fare sale earlier this week, bringing the lowest available fare for her dates to $178, including taxes. American Airlines has matched the fare from O’Hare, with more flights to choose, and thus greater scheduling flexibility. United has lowered their fares a little, but not all the way to the same level: $218, including all taxes.

Should she spend $40 extra to fly on United, or take the cheapest offer around?

She has no elite status with United, and I won’t be traveling with her, so Premier Executive status perks, such as more legroom in complimentary Economy Plus seating, priority check-in, shorter security lines, and early boarding for easier carry-on storage won’t come into play. Nonetheless, she has a respectable sum of miles in her Mileage Plus account. In contrast, she has no relationship with AirTran or American Airlines: no miles at all.

In our case, both the existing business relationship with United and — importantly — a number of bonus offers that powerfully boost the earned mileage make the United fare more attractive than the American or AirTran itinerary. There’s a double-mile offer, plus 1000 online purchase miles, 500 miles per online check-in, plus 500 extra miles for doing both online purchase and check-in. While I hope the flights will be on-time, if the flight is late for any reason, the BusinessOne guarantee gives 500 extra miles. (Note: registration for some of these offers is necessary.) Finally, if the fare drops at any point after she purchases the ticket, she can request a voucher on UA for the difference.

American has a double mile offer, (less generous) online purchase bonus, etc., as well, but those would be the only miles in her account. Especially since orphaned miles are of little use and have minimal value. For my wife, those miles aren’t very attractive.

But how much is too much? How do you figure out how much premium is worth paying, and at what point does loyalty not make any sense?

First, see how much cheaper the competition is. I tend to use Kayak or ITA Software for this.
Second, see if there are any offers (such as double miles) running for the route you’re flying. MileMaven is a great way to check this, but it doesn’t catch all the options that are available to all purchases, such as online check-in bonuses. It’s best for route-specific offers.
Finally, do the math: Assign a conservative value to the total miles you’ll earn, and compare this to the fare difference. I assigned an excessively low value of 1 cent per mile, making the 5968 total miles she’ll earn worth $59.68. $59.68 is greater than the $40 cost difference for buying the cash fare.

For a $40 premium, we’ll buy the United ticket.

This is a case study for how frequent flyer programs can extract more money out of a customer than the cheapest price. Earning miles is like crack: In our case, they’ve made it hard to break the United habit. But as long as the economics still favor collecting some miles, which we’ve had good luck cashing in for great travel, we’ll pay a few bills more when necessary.

tags: travel | air travel | UAL Corp | AMR Corporation | AirTran Holdings Inc. | frequent flyer miles