Traveling during major holidays like Thanksgiving can be expensive, as many people want to see their friends and family, wherever they are.
It’s especially tough this year with inflation soaring at the fastest rate since the early 1980s. Airline fares rose 43% in October from a year earlier; only a handful of categories increased more.
One way to take the hit to your wallet or purse is by using frequent flyer miles. While there is quite a bit of research on when is the best time to use cash for flights, we as travel lovers wonder if there is an optimal time to use miles. So, with the help of our research assistant, we investigated this question, focusing on flights during the Thanksgiving holiday.
Americans return to the skies
The day before Thanksgiving is one of the busiest days to travel in the US.
Before the COVID-19 pandemic upended travel, the Transportation Security Administration tested 2.6 million people on Thanksgiving Eve 2019, just shy of the record 2.9 million. While the number plummeted in 2020 as demand waned, it rose to 2.3 million last year and is expected to return to pre-COVID-19 levels this year.
Increased demand, coupled with significantly higher jet fuel costs, are key factors leading to more expensive airfares.
To offset these higher costs, many consumers may turn to frequent flyer miles, either accumulated from other trips or from credit cards, to avoid spending as much cash.
frequent flight 101
Frequent flyer mileage programs began in the late 1970s after the federal government stopped regulating air fares. Before the change, the rates, routes and schedules for all domestic flights were set by the Federal Board of Civil Aeronautics.
In addition to cutting fares, airlines responded by creating frequent flyer programs. Texas International Airlines, which eventually merged with United, and Western Airlines, which later joined Delta, were among the first to institute frequent flyer programs.
In a particular airline’s frequent flyer program, you earn miles when you fly with that airline. Many people also earn miles using their credit cards. These accumulated miles can then be redeemed for free air travel.
Frequent flyer programs are designed to build customer loyalty by offering a discount to regular flyers. They are also meant to lock travelers into a particular airline, since they have a strong incentive to fly only with that airline.
One downside is that many business travelers go out of their way to use their preferred airline, which increases their company’s travel costs.
And while airlines use frequent flyer programs to build customer goodwill, they frequently change the rules and rewards, often frustrating customers.
Researchers have analyzed the optimal time to buy airline tickets with cash. In general, they have found that prices tend to drop two months to three weeks in advance of travel dates. Prices are higher for those who want to book their flights well in advance, to be sure, and last-minute travelers who book just before departure dates.
How Frequent Flyer Miles Compare
To see when the best time to book with miles is, we looked at one of the busiest routes in the US: New York (JFK) to Los Angeles (LAX). Every month airlines have more than a quarter of a million seats flying direct on that route. There are around 30 non-stop flights a day, operated by three different airlines.
About three months before Thanksgiving, we collected weekly data from the online booking sites of these three airlines. We tracked the frequent flyer miles needed, as well as the price of each economy class flight scheduled for a week before Thanksgiving.
As miles are not generally interchangeable between airlines, we needed an alternative measure for a more direct comparison between different airlines. So we calculate how much a frequent flyer mile is worth by dividing the number of frequent flyer miles needed by the ticket price. We then compare the dollar value of 1,000 miles, based on the airline, the time the reservation was made, and the date of the flight.
Economic theory tells us that when there is a lot of competition and the product is nearly identical, the competition should result in all firms charging roughly the same price.
That was not what we found.
In mid-October, Delta was asking for 69,000 miles to fly the Tuesday before Thanksgiving. American Airlines was only asking 33,000 miles for roughly the same flight. This means that if you have a general travel rewards credit card that allows you to use miles on different airlines, it’s worth shopping around.
Just because an airline has a high mileage price doesn’t mean the price won’t go down. In early November, Delta wanted to fly 69,000 miles during dinner on the Tuesday before Thanksgiving. A week later, the airline reduced the price to 53,000 miles. A week after that, it was down to 36,500 miles, a price drop of almost 50% in two weeks.
While generally the earlier you book the better, booking too early can cost you. We found that the best time to spend your frequent flyer miles for Thanksgiving travel was to book during the first week of October, which was about eight weeks. In early October, 1,000 frequent flyer miles were worth more than $14 in airfare. The last week of October, about four weeks before Thanksgiving, those same miles were only worth less than $12.
The best day to fly
When it comes to the best day to travel to get the most out of your miles, there are two answers. On the Monday before Thanksgiving, your miles are usually worth more, averaging $15 per 1,000 miles. This is in stark contrast to $11 the day before Thanksgiving. However, flying on Thanksgiving itself required the lowest average number of miles, around 27,000 miles.
If you haven’t booked flights yet, it may be too late to find the best value in frequent flyer miles. However, while we are still collecting and analyzing data, it appears that these tips will hold for future holidays.
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