When frequent flyer programs were first developed, award pricing was simple. You could get a U.S. domestic round trip flight for 25,000 miles. This pricing was the same across all the major U.S. domestic airlines. Pricing was predictable and transparent. Today, airlines price their flights dynamically, based on distance, destination, or any number of other factors.
Understanding how an airline prices its flights can help you determine what kind of value you can get from a program. Should you be saving up your miles for a special trip? Or should you spend them as soon as you can?
Here’s our overview of how airlines price award flights.
Different pricing schemes at a glance
Here’s a quick overview of the different award pricing schemes that airlines use.
|How pricing is calculated
|Opportunity for great value
|Awards available on every flight
|Based on the distance between origin and destination.
May be point-to-point or based on cumulative length of segments.
|Based on a number of factors.
Usually (but not always) correlates with cash prices.
|Fixed point values
|Points have a fixed value.
Prices in points track cash prices.
|Determined by the “zones” of your origin and destination.
|Some combination of the above.
About each pricing scheme
Here’s a bit more about each of these award pricing schemes.
Distance-based pricing is probably the easiest to understand. Flight prices in miles are determined by the distance flown. The price you’ll pay in terms of miles equals the distance you fly. Depending on how an airline calculates distance, you might pay based on the total cumulative distance of the segments you fly. Or you might pay based on the direct distance from your origin to destination.
Airlines with distance-based pricing typically make their pricing transparent by publishing an award chart. For example, here’s Air Canada’s award chart for flights between the North America and Atlantic zones:
Distance-based awards are typically capacity-controlled, meaning that an airline will only release certain seats on specific routes. You won’t be able to book distance-based award pricing on every flight
With a distance-based program, you’re likely to find the best value with shorter flights that typically have higher prices or with flights that are on either side of the breakpoint. Using the example of the Air Canada award chart above, you might find excellent value in shorter flights from the U.S. northeast to nearer European destinations where flights are under 4,000 miles.
Airlines with dynamic pricing vary award prices based on a number of factors. Award prices offered by programs that price dynamically usually vary with price, but not always. An airline might take into account seasonality, route, promotions, price, sales or any other factor into consideration when determining award prices. The bottom line with dynamic pricing is that you are unlikely to get great value with a dynamically-priced program, but you might get decent value.
To illustrate how much dynamic pricing can vary, here’s a look at some award prices on Delta between Minneapolis and Sydney. You can see that the prices in terms of miles vary from 650,000 SkyMiles to 850,000 SkyMiles.
On this route, cash prices also vary from $9,952 to $13,202. A round-trip departing on April 2 and returning on April 16 is one of the lowest-priced itineraries in dollars ($9,952) but is one of the highest-priced itineraries in miles (850,000, plus $122 in taxes/fees).
Airlines that have dynamic pricing will usually allow you to book any available seat with your points. But many of these redemptions can offer very poor value.
Programs that truly price award travel dynamically are tricky. Sometimes they offer moderately good value, but sometimes they offer incredibly poor value. Most of the time, dynamically priced programs will offer relatively stable value for your miles. You’ll want to check award ticket prices with dynamically priced programs against cash prices and consider how much value you’re getting for your miles before booking.
Dynamic pricing with fixed point values
Some airlines peg their points to a specific value, meaning that award prices will track cash prices of tickets. I consider this a subset of dynamic pricing since airlines usually price their flights dynamically. There may be some variation, but you’re always going to get consistent value for your points.
Southwest is an example of an airline that uses fixed point values. As you can see from the example below, the prices the airline offers for Rapid Rewards tickets tracks the cash prices of its tickets.
With programs that offer fixed point values, it usually makes sense to book with points if you have them. Your points are unlikely to go up in value over time. Sometimes change, cancellation, and refund policies can be different depending on how you book your ticket. For example, if you’re booking a ticket that you might need to cancel for someone else, it can be to your advantage to use miles. Award ticket refunds typically get redeposited into your rewards account, whereas cash ticket refunds typically result in a voucher tied to the passenger.
Region- or zone-based pricing
With region- or zone-based pricing, airlines divide the world up into zones. The price of an award ticket is calculated based on your origin and destination zone. Generally, you can fly any valid routing that the airline allows and your award cost will be the same.
Here’s an example of airline zones used by Air France and KLM for Flying Blue awards on their own flights.
When airlines use zone-based pricing, they will typically publish an award pricing chart detailing their prices. Like distance-based awards, airlines typically only offer a limited number of seats on certain routes with zone-based pricing.
Programs with zone-based pricing usually offer the most opportunity to get outsized value on flights in premium cabins. You usually won’t be able to find award seats during peak season, but shoulder season and off-peak travel can yield some incredible award values.
Some airlines offer a mixed award pricing model that combines two or more of the above pricing mechanisms. Some flights may be priced dynamically, and some flights may be priced using a fixed pricing scheme like zone or distance pricing.
If an airline knows that it isn’t likely to sell all of the seats on a flight, it may offer those seats under a distance- or zone-based pricing scheme. It may offer other flights with dynamic pricing. Ultimately, mixed pricing usually represents the best of both worlds—you can find opportunities for great value and you can usually use your points for any flight.