American has been consistently lowering the price that they will sell miles for. After the merger with US Airways they took the Dividend Miles approach of putting miles on sale three fourths of the year. The only purpose that ‘regular price’ serves is to be a reference point that allows them to announce a huge (always on) sale.
Ben Schlappig once wrote that US Airways sold miles the same way Jos A Bank sold suits.
When American moved to the US Airways model they first hovered a little over 2 cents a mile, then the price point fell to 2 and then below 2 cents. Each promotion would vary a bit but the trend has been downward. For June and July the price hit a new low of 1.72 cents. For August they bumped the price to 1.83 cents apiece. (These prices are still more than AAdvantage miles are worth.)
Now they’re offering up to 100,000 bonus miles or a 66.7% bonus with purchases made by November 27.
Here’s the offer table:
Buying 150,000 miles and receiving 250,000 works out to a price of $4786.88 or $0.0192 apiece. (Of course you may be able to claim the taxes back from the IRS.)
Terms and conditions:
AAdvantage members must purchase at least 10,000 AAdvantage miles or more in a single transaction from the Buy or Gift Miles program from 7:00:00am CT November 6, 2017 to 11:59:59pm CT November 27, 2017, to be eligible to earn bonus miles. The applicable bonus miles are awarded to the recipient for Gift Miles transactions. Bonus miles earned do not count toward the annual purchase limits.
The miles purchased with the Buy Miles program and received with the Gift Miles program do not count towards AAdvantage Gold, AAdvantage Platinum, AAdvantage Platinum Pro, AAdvantage Executive Platinum or AAdvantage Million MilerSM status qualification. Transactions are nonrefundable and nonreversible. The miles successfully purchased or transferred usually post to the designated account right away, but please allow up to 8 hours for processing. Each AAdvantage member is limited to purchasing or receiving in a calendar year, a combined total of no more than 150,000 AAdvantage miles. Miles purchased through the Buy Miles program or received as a gift through the Gift Miles program count against this total. A confirmation email will be sent to the primary buyer/gifter and/or recipient, using the email address(es) associated with the AAdvantage account(s) and any additional email address provided. AAdvantage accounts less than 30 days old are not permitted to Buy or Gift Miles. The price of your purchase is in U.S. dollars. Your credit card company may add a currency conversion fee.
At 1.92 cents I can’t recommend buying unless it is for a specific award where the paid ticket you would otherwise buy is more expensive and you can find the availability and put space on hold before purchasing.
In fact with more frequent premium cabin sales than in the past it isn’t even always cheaper to buy miles than just to buy the ticket.
It is not at all surprising to see the price of American AAdvantage miles falling with the value of those miles falling, but clearly they’re testing to see what bottom looks like and whether 1.72 (or lower) drives more purchases than 1.83 or 1.92. And of course they need to switch things up if only to make “Buy 1 Suit Get 7 Free” look like a limited time offer!
- They increased the miles price of awards
- And have very limited availability of saver awards on their own flights.
- They even increased the miles price of standard or rule buster style awards.
On average across all customers American sells miles for about 1.3 cents apiece. They make good money doing so — they’ve historically accrued liability for transportation of 1/7th to half a cent per mile although this figure should go up January 1 with new accounting standards in place (which may be why American is promising to improve award availability).
All that said it’s better to buy miles at a lower price than a higher price so if you’re likely to need to do it anyway, great to know that there’s a bonus for it. My guess though is that we may see a better deal before the end of the year whether tagged to Cyber Monday or the Christmas holidays.