I often get offers from the various airline programs to purchase miles via a “special” sale. Often these sales advertise bonus miles if you purchase a certain amount of regularly priced miles. Buying miles when they are not on sale is almost always a terrible value, unless you need just a handful to increase your mileage balance for a high value redemption. However, sometimes, when the miles are on sale it can make sense to purchase them. Let’s take a look at this current American Airlines sale.

AA Early Cyber Monday Bonus sale

This morning I received an e-mail touting up to 75,000 bonus American Airlines AAdvantage miles if I purchased up to 125,000 miles. This sale appears to be available to anyone via this link: AA Bonus Sale

The breakdown of the bonus miles is as follows:

As you can see, you have to purchase 125,000 miles to earn the highest bonus, but you can purchase a smaller number of miles and get smaller bonuses. In order to maximize any one of these tiers you would want to purchase the least amount of miles in order to get that particular bonus. So, for example, to get a 60,000 mile bonus you would want to purchase exactly 100,000 miles; to get a 40,000 mile bonus you would want to purchase exactly 70,000 miles.

What do AA miles normally cost?

In order to determine whether this is a good sale or not, you have to understand how AA normally charges for purchased miles. Each mile that you purchase from AA (for sale in 1,000 mile increments) costs 2.95 cents when not on sale. Paying 2.95 cents for a mile is absolutely a terrible value. However, AA also charges tax and a $30 processing charge for ANY mile purchase. Thus the actual cost per mile is higher.

For example, if you purchase 100,000 AA miles for $2950 (2.95 cents per mile), you will also pay $221.25 in Federal taxes, plus the $30 AA processing fee, bringing the total cost per mile to 3.2 cents per mile (total cost $3201.25). OUCH!

With this sale, if you purchase the same 100,000 miles, you will pay the same cost of $3201.25, but your cost per mile will reduce to only 2.0 cents per mile–obviously a better deal.

If you maximize the offer and get the 125,000 miles with a 75,000 mile bonus you will pay a total of $3994.06 for 200,000 miles, bringing your cost to about 1.99 cents per mile.

But wait, there’s more

What if you use your American Airlines credit card to make the purchase? Purchases from American Airlines with their co-branded credit cards earn 2 miles per dollar spent. Therefore, if you purchase $3994 in miles via this promotion you would actually earn an additional 7,988 miles on top of the 200,000 miles you were purchasing, effectively lowering your cost to about 1.92 cents per mile.

Is it worth it?

The easy answer is no, not really. Buying miles is rarely a good value, and even during this sale, best case you are going to pay just over 1.9 cents per mile. Unless you have an immediate high value redemption in mind where you know for sure that you can really maximize the value of this purchase (and have the cash to spend) this is not really a good deal. Conservatively, a good valuation for AA miles is around 1.7-1.8 cents per mile, but you can get AA miles relatively easily and for much less cash outlay via credit card sign up bonuses.

Bottom line

Airlines put their miles on sale quite often in order to entice people into purchasing relatively expensive miles to pad their accounts. Rarely are these sales a good deal. However, they can be useful if you need to top off your account in order to redeem your miles for a high value award. American Airlines miles do have several really good high value redemptions. Perhaps my favorite, and certainly one that I aspire to use one day is flying Cathay Pacific First Class one way from the US to Southeast Asia for only 67,500 AA miles. This is an amazing value redemption since Cathay has one of the nicest First Classes on the planet and tickets normally run anywhere from $5k-$7k one-way–well over 7 cents per mile in redemption value. Always do the math when you see these mileage sales to determine if it’s a good value purchase for your situation.