The typical redemption estimate of a mile is 1 cent. Often $250 tickets are 25,000 miles, $500 tickets are 50,000 miles, etc. When you find a $1000 ticket for 25,000 use miles. I've seen $600 tickets for 125,000 miles. That's a bad use of miles.
Many credit cards give you about 1% bonus (points, miles, whatever) and miles cards give you a mile per dollar spent. 1% of a dollar is 1 cent. So this math makes sense.
He got 1000 miles for 2.50. If each mile is worth 1 cent, that's a 4x benefit. Great, but not amazing. He got a tax deduction too, so maybe it was a 5-6x benefit. Sounds like a bit of a hassle, but the other perks sound great.
Anyway, the article should say $15,000 worth of miles. The airline might sell them to you for $150,000 but that's why you should never buy miles unless there's a tiny gap in what you have/need for a flight. For example, United will sell you 50,000 miles for $1881.25 which you can then redeem for a ~$500 ticket and not earn miles on that flight.
Reaching a gold status for life is worth more than the miles alone. You pretty much always fly first class for free, and you get 2-5x miles on every flight. Also, all tickets effectively become like full fare tickets. Want to extend a trip by a few days? Just call the number and it will be taken care of.
He now has 4M miles, by taking advantage of the status.
American Airlines gold status (the lowest frequent flyer status level) is not actually that generous. It's basically priority boarding, a little bit of priority on the upgrade queue (if you want to pay for the upgrade with upgrade vouchers or cash), and that's about it. Lounge access doesn't even come until platinum, one level above gold, and then only on international flights.
I'm sure he makes lots of good things happen by paying for them with his copious of miles, but it's not from the gold status :)
Eh most elite status programs have been severely nerfed. AA doesn't do unlimited upgrades (like Continental and now United) except at the highest tier. (Upgrades are only mostly domestic AFAIK.) Gold level bonuses on miles are like 50%, and it depends which fare class. Lounge access on United only happens if you're Gold and going International.
They reduce or eliminate the fees for certain things like award booking, and same-day flight changes. Changing tickets still also depends on the fare class of the ticket. If you buy a low-end restricted fare, you'll pay heavily to change it. They aren't magically turning your tickets into full fares.
Depending on where you work, a great benefit of status is that you can expense economy tickets (Y/B fare) but have a near 100% chance of upgrading.
Personally, I would think you are using miles incorrectly if you're getting a 1 cent value for them. It depends on the airline, but 1.5+ cents per mile is a more reasonable value.
If you are flying intercontinental, to Alaska/Hawaii, or anything but economy the value can be much, much higher.
If you only fly economy flights within the continental US, you're probably paying peanuts for flying anyway.
$0.01/mi redemption is pretty bad. Save your miles for international flights where the redemption value is higher, especially for business and first class.
Right, there's an average around 1 cent (across all domestic and international travel) and you're suggesting that you should save them for when it's to your advantage. I agree.
Personally, I've never seen a flight where redemption matched the article at around $0.10/mi, e.g. a $5000 ticket for 50,000 miles. Let me know when you see one and I'll book a ticket and we can discuss this over coffee.
International first class flights can cost $15-20,000+. Granted you're probably not willing to spend that much so you may value it at less than face value but the actual redemption rate is way higher than 1 CPM.
Many credit cards give you about 1% bonus (points, miles, whatever) and miles cards give you a mile per dollar spent. 1% of a dollar is 1 cent. So this math makes sense.
He got 1000 miles for 2.50. If each mile is worth 1 cent, that's a 4x benefit. Great, but not amazing. He got a tax deduction too, so maybe it was a 5-6x benefit. Sounds like a bit of a hassle, but the other perks sound great.
Anyway, the article should say $15,000 worth of miles. The airline might sell them to you for $150,000 but that's why you should never buy miles unless there's a tiny gap in what you have/need for a flight. For example, United will sell you 50,000 miles for $1881.25 which you can then redeem for a ~$500 ticket and not earn miles on that flight.