An Introduction to Chatflights Hack School - Booking Flights for Miles and Credit Card Points

Welcome to our Hack School, a 9-part series where we share all the tips and tricks we use to get you the best travel solutions for points and miles possible. This is meant to be a candid and plain English description of what we do every day at the office, we think it’s fascinating stuff.

First, we’ll start by explaining how award flight tickets are actually priced and what those pesky taxes and surcharges actually mean. Next, we’ll get into the credit card rewards market, the various transferrable points currencies and finally we'll discuss which are the best airlines for award redemption and why. Enjoy!

Airline pricing has always been confusing, the internet is full of blogs trying to explain it. It's all over the place; you can sometimes pay as little as $50 and as much as $2,000 for the same seat on the same flight. We're not going to try to explain that here.

When it comes to award tickets however, things are a bit simpler. For years, airlines have priced their award tickets based on fixed charts where the price is determined by departure and destination zones and/or distance flown, as well as the class of travel. In recent years however, airlines have moved away from fixed pricing to dynamic pricing on award tickets, we'll start by explaining the difference below.

Pay 8 times less compared to booking via your credit card portal

A very important thing to keep in mind is that what we are going to describe in these pages and ensuing blog posts, is the art of finding AWARD SEATS. You can always go to your credit card portal and book a flight for points, but in that case the credit card companies are in essence using your points to buy a ticket for you in cash from the airlines. They are actually not tapping into actual award seats, and you'll end up spending up to eight times (!) as many points as you would had you transfered points to an airline to book an award seat, which is what you'll learn to do here.

Booking flights through your credit card portal can cost you up to 8 times as much for the same trip

The caveat is availability. Since those credit card companies are buying regular seats when you book through their portal, you will always have availability unless the plane is physically fully booked. This goes to the essence of travel hacking, it really boils down to the art of finding availability and the best possible value.

Here are some examples of what we mean

The below redemptions for Business Class seats show clearly what we mean by "actual award seats" and what they cost compared to booking through your credit card portal.

New York (JFK) – Tokyo (TYO) 7-17 Nov 2021 with ANA

  • $9,402 in cash ($1,566 in economy)
  • 723,000 American Express points through Amex portal
  • 626,000 Chase points through Chase
  • Chatflights solution: 85,000 Amex Points through All Nippon Airways + $49. (8.5x cheaper)

New York (JFK) – Maldives (MLE) 10-19 Sep 2021 with Emirates

  • $10,388 in cash ($3,098 in Economy)
  • 799,000 Amex points through Amex portal
  • 675,000 Chase points through Chase portal
  • Chatflights solution: 170,000 Amex or Chase points though Emirates + $489 (~4x cheaper)

New York (EWR) – Paris (CDG) 12-20 Sep 2021 with Air France

  • $3,352 in cash ($570 in Economy)
  • 257,000 Amex points through Amex portal
  • 223,466 Chase points through Chase portal
  • 164,000 Delta points through Delta portal
  • Chatflights solution: 88,000 Amex points through ANA Mileage Club + $50 (4x cheaper)

Find the best deals by focusing on fixed award pricing

Airlines who use fixed award pricing publish their award pricing on a fixed chart. Some airlines use zone-based award charts, where the price is calculated based on the departure and destination zones. In many cases there are sweet spots to be found where travel between certain zones can be cheaper despite having a greater distance than other more expensive zones with a shorter distance.

Award charts can also be distance-based, where the price of the award ticket is calculated based on the distance flown. Typically, these charts are divided in distance blocks e.g 0-500 miles, 501-2,000 miles, etc.

The class of travel is also a determining factor, but what most fixed award charts have in common is the fact that the price difference between the classes is relatively small. For instance, whereas the price in dollars for a business class ticket is usually around 5x the price of an economy class ticket, the difference in an award chart is often 20%-50%. This is why business and first class is almost always the best value in award travel.

The biggest advantage of a fixed award chart is that your itinerary isn’t subject to any price fluctuations, and that you will always know exactly how many miles your trip will cost. The biggest downside of course is availability. Award seats priced this way aren't always available to be booked, once they are taken, they are taken.

An example of an Award chart, ANA in this case.

What is dynamic award pricing?

Dynamic award pricing (also called variable pricing) works in the same way as regular, paid pricing, it’s simply a function of supply and demand. Here, the price of a paid ticket and the price in miles of an award ticket are directly correlated. 

The main benefits of dynamic award pricing, is that it offers customers better choice and availability. Some airlines such as JetBlue will make all seats on any given flight bookable using miles. If you’re booking a last-minute ticket you can expect to pay a high price, whereas tickets booked far in advance can be had for cheap.

While dynamic award pricing offers better choice and flexibility, it does come with one big, fat downside, which is that award prices are generally higher, often significantly so.

Interested in flying 1st Class? Then look for fixed award pricing, not dynamic.

What are taxes and surcharges?

There’s a common misconception that award tickets are free flights, and while that’s partly true, you will still need to fork out some cash for your “free” flight. Simply put, the actual base fare of an award flight is 0 dollars but you are still charged airport taxes and in some cases airline surcharges. Below we’ll give you the skinny on what these charges actually are.

The words “airport taxes” mean all taxes and fees levied by governments and airport operators. Airport taxes tend to be low; for a long-haul redemption you can expect to pay between $50 and $300 USD per person for a round trip.

Watch out for Fuel Surcharges

Airline imposed surcharges, also known as fuel surcharges, are imposed by the airline that operates the flight. They are called “fuel surcharges” because they were initially introduced as a way for the airlines to cover the extra cost of fuel, but with today’s low oil prices they are really just a cash grab. Fuel surcharges differ depending on your departure zone and destination. Flights originating in the US are known for having notoriously high fuel surcharges ranging upwards of $1,500 on airlines such as Lufthansa Group, Virgin Atlantic and British Airways.

Some frequent flyer programs will pass on the entirety of these surcharges to the customer, whereas other programs will only charge airport taxes for award redemptions. Additionally, there are some airlines that don’t impose fuel surcharges on award redemptions, regardless of which frequent flyer program that was used to book the flights.

There are many ways to avoid these surcharges, for instance to fly out of a country that bans them, such as Brazil, or by routing your itinerary on airlines that don’t charge them for award redemptions.

Using your credit card points or airline miles to book travel

Part 2 of this introduction will give you a basic understanding of the currency used to book flights, the points. Once you understand this, you can dive deeper into the process of actually booking travel.

The US airline and credit card rewards market can be divided into 2 categories:

  1. Airline miles or frequent flyer programs.
  2. Credit card rewards programs or transferrable points currencies.

Airline Miles

Airline miles can be accrued either through flying or by spending on an airline co-branded credit cards. The largest airline frequent flyer programs (and their alliances) in the US are:

  • United MileagePlus (Star Alliance)
  • Delta SkyMiles (SkyTeam)
  • American Airlines AAdvantage (Oneworld)
  • Alaska Airlines Mileage Plan (Unaffiliated, future member of Oneworld)

Miles in these programs can be used on the airline’s own flights or on partner airlines, the latter being the more lucrative option. If you are a frequent flyer with one of these airlines, it makes sense to focus your earnings with a single program, in particular if your main source of miles comes from flying.

Credit Card Rewards Programs

Credit card rewards programs, also referred to as transferrable points currencies, are issued by banks and credit card companies. These are the main ones, we’ll delve into this world in more detail below: 

  • American Express Membership Rewards
  • Chase Ultimate Rewards
  • Citibank ThankYou Rewards
  • Capital One Rewards

Transfer your points to a multitude of airline frequent flyer programs and hotel loyalty programs

The transfer ratios for the majority of partners is 1:1 (with some exceptions). In practice, this means that one Amex Membership Rewards point equates one mile in your preferred partner program. 

The points are rewarded through credit card spend, the typical earning rate is one point per dollar. Additionally, bonus points are rewarded based on certain spend categories. One good example of this is the American Express Gold Card, which earns 4 points per dollar on restaurants.

American Express Gold Card redemptions
Certain credit cards award bonuses in different spend categories, like the American Express Gold Card that offers 4 points per dollar in restaurants

You can choose the best transfer partner based on price and availability

One of the major benefits of using transferable points currencies such as Amex Membership Rewards is the fact that each airline partner sets its own prices for award tickets and controls the award inventory on its own flights. In other words, you have the option to choose the best transfer partner based on your price and seat availability, which can sometimes yield some surprisingly lucrative opportunities for arbitrage. 

Not following? Consider this example: Amex Membership Rewards partners with All Nippon Airways and Virgin Atlantic, and both airlines share reciprocal frequent flyer agreements which means that Virgin Atlantic miles can be used to book flights on All Nippon Airways and vice versa.

  • A first class award ticket from Los Angeles to Tokyo will cost you 110,000 Virgin Atlantic miles round trip, which equates 110,000 Amex Membership Rewards points.
  • The same flight booked using All Nippon Airways’ own miles will set you back 165,000 miles. Still not a bad deal, but considerably more expensive than the former option.

This illustrates the opportunities to look for in order to get the best possible value.

Next article - Our "Blue Chip Partners" offer superior value for credit card points

We have put together a list of airline transfer partners that offer superior value for credit card points, either in terms of low award pricing, good award availability, low surcharges, flexible routing rules or a combination of all. We call these our Blue Chips.

Blue Chip partners are the transfer partners that we’re most likely to recommend, making them the programs that will see the highest number of bookings through Chatflights Award Booking Service.

Thus far we’ve identified the following transfer partners as Blue Chip partners:

  • Air Canada - our Star Alliance go-to, good rates and fare rules as well as low surcharges on most partner airlines.
  • All Nippon Airways - one of the worlds best airlines and another great program that provides excellent value for the miles
  • Singapore Airlines - also a fantastic airline and the only frequent flyer program that can book the elusive Suites in A380
  • Virgin Atlantic - often overlooked, great for partner redemptions
  • Cathay Pacific - the most useful Oneworld partner, especially for multi-airline redemptions
  • Emirates - great for credit card points transfer and a large route network

Go ahead and read more about each airline in our Blue Chip list in this article. We have also published a full blog post on each airline individually if you want to go really deep, that's for later.

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