What is the value of a mile?

The entire miles game pivots around one fundamental question: what’s your valuation of a mile?

That’s because your valuation of a mile underpins every action you take, whether it’s paying a 3% foreign currency transaction fee, choosing between 5% cashback on Shopback and 3 miles per dollar on KrisFlyer Spree, or spending your miles at 0.66 cents each on KrisPay. You can’t make any of these decisions without a clear picture of what a mile is worth.

Unfortunately, there’s no black and white answer here because the value of a mile is subjective. And although there’s some maths we can do to establish the upper and lower limits, where you fall within that continuum is entirely dependent on you.

Ever since I started The Milelion in 2015, I’ve been using a 2 cent valuation in my calculations. But a lot has happened since:

  • There were two KrisFlyer devaluations in March 2017 and Jan 2019
  • Numerous platforms like RentHero and CardUp have sprung up, allowing you to buy miles from 1.2 cents each
  • Banks have launched their own payment facilities (e.g. Citi PayAll and SCB EasyBill), offering miles from 1.25 cents each
  • Credit cards have launched limited-time promotions allowing customers to buy unlimited miles from 1.7 cents each

In light of this, I think the existing 2 cent figure needs a refresh, and in this post I’ll talk about how I came to my new valuation. Keep in mind, this isn’t a purely mathematical exercise- the valuation of a mile is as much art as it is science. Some people will disagree with my valuation, and that’s just fine. More important is that you come away with a figure that makes sense for you.

tl;dr:  The maximum price I’d pay for miles is 1.8 cents each, and the minimum value I’d accept for redemptions is 2.0 cents each 

How do we value a mile?

Setting the floor for our KrisFlyer mile valuation isn’t that difficult. We know that SQ’s Pay with Miles function allows you to pay for revenue flights with miles at a value of 1.02 cents each. 

How the 1.02 cent valuation is derived- $283 revenue ticket versus 27,734 miles. This valuation holds constant across destinations and cabins

Needless to say, this is terrible value, but at least it tells us that we shouldn’t accept anything less than 1.02 cents for our miles.

What redemption options would give you less than 1.02 cents per mile? 
•Paying for Scoot flights (0.95 cents)•KrisFlyer vRooms (0.8 cents)
•KrisShop (0.8 cents)•KrisPay (0.66 cents)

It also means that you can’t lose if you’re able to acquire miles for anything less than 1.02 cents each- it’s basically arbitrage.

If buying miles below 1.02 cents sounds overly optimistic to you, I’d like to state for the record that there have been instances where this was possible. Back in June 2017, Citi PremierMiles Visa customers got the opportunity to buy miles at 0.76 cents each. More recently, Grab sold 10,000 Grab points for $10 and cut the price of KrisFlyer transfers by half, yielding an effective price of 0.44 cents each

Similarly, finding the ceiling value of a mile isn’t difficult. The ceiling should be the maximum possible value you could get for a mile based on the most expensive revenue flight available*. This works out to be around 7 cents (see working below).
*this is a theoretical maximum because of the implicit assumption that you’d otherwise have been willing to pay cash for this flight, but it still helps set the ceiling

The most expensive flight in the Singapore Airlines network? Round-trip Suites to New York JFK, at just under S$20,000

So we know the value of a mile must fall between 1 cent and 7 cents. Where do we go from there?

Acquisition cost

One way of thinking about the value of a mile is to consider the price at which you can buy them. For the record, here’s a rundown of all the ways you can currently buy miles in Singapore:

MethodIncome RequiredCPMAnnual Miles Limit
SCB Visa Infinite Tax Payment (Spend >$2K p.m)$150K1.14Tax bill
UOB Reserve/DBS Insignia with RentHeroInvitation1.14Rental amount
HSBC Visa Infinite Tax Payment (Spend >$50K p.a in prev year)$120K1.2Tax bill
BOC Elite Miles World Mastercard with RentHero$30K1.21Rental amount
HSBC Premier MC Tax PaymentAUM: $200K1.25Tax bill
Citi PayAll with Citi UltimaInvitation1.25Bill amount
UOB PRVI Miles/SCB Visa Infinite (>$2K p.m)/UOB Visa Infinite Metal with RentHeroUOB PRVI Miles: $30K
SCB Visa Infinite/ UOB Reserve: $150K
1.30Bill amount
HSBC Visa Infinite Welcome Gift- Premier customer$120K + AUM $200K1.3935K
SC EasyBill with SCB Visa Infinite (Spend >$2K p.m)$150K1.43Bill amount
HSBC Visa Infinite Tax Payment (Spend <$50K p.a in prev year)$120K1.5Tax bill
DBS Altitude with RentHero$30K1.51Rental amount
Citi PayAll with Citi Prestige/Citi PremierMiles AMEXCiti Prestige: $120K
Citi PremierMiles AMEX: $80K
1.54Bill amount
SCB Visa Infinite Tax Payment (Spend <$2K p.m)$150K1.6Tax bill
Citi PayAll with Citi PremierMiles Visa$30K1.67Bill amount
SCB Visa Infinite Welcome Gift$150K1.6835K
CardUp with BOC Elite Miles World Mastercard$30K1.69Bill amount
HSBC Visa Plat/Revolution Tax Payment$30K1.75Tax bill
Citibank PremierMiles AMEX Annual Fee$80K1.7815K
Cardup with UOB PRVI Miles$30K1.81Bill amount
HSBC Visa Infinite Welcome Gift- Regular Customer$120K1.8635K
OCBC VOYAGE Tax Payment$120K1.9Tax bill
UOB Reserve VI Payment FacilityInvitation1.9Unlimited
Citibank PremierMiles Visa Annual Fee$30K1.9310K
DBS Altitude AMEX/Visa Annual Fee$30K1.9310K
KrisFlyer UOB Credit Card Annual Fee$30K1.9310K
OCBC VOYAGE Payment Facility$120K1.9 or 1.95Unlimited
UOB Metal VI Payment Facility$150K2.0Unlimited
UOB PRVI Pay Facility$30K2.0 (until 30 Sept 19)Unlimited
SC EasyBill with SCB Visa Infinite (Spend <$2K p.m)$150K2.0Bill amount
Cardup with DBS Altitude/Citibank PM Visa$30K2.11Bill amount
OCBC VOYAGE Annual Fee- Option 2$120K2.14150K
Citi Prestige Annual Fee$120K2.1425K
DBS Altitude Tax Payment$30K2.5Tax bill
OCBC VOYAGE Annual Fee- Option 1$120K3.2515K

What’s remarkable about this table is the extent to which it’s grown over the past few years. Back in 2015, many of these options didn’t even exist.

The way I see it, there are two main determinants of the acquisition cost of miles.

What’s your income?

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It’s somewhat inegalitarian, but those those earning $120K and above have access to cheaper miles.

For example, the SCB Visa Infinite ($150K p.a) and HSBC Visa Infinite ($120K p.a) offer the cheapest tax payment facilities in Singapore at 1.14 and 1.2 cents respectively, as well as low-cost miles through their welcome gifts. 

In the same way, the 1.6 mpd earn rates on the UOB Reserve, DBS Insignia and Citi Ultima (all of which have eye-watering $500K p.a income requirements) help bring down the cost of buying miles on CardUp and RentHero to as low as 1.17 cents. 

Do you have bills to pay?

Even if you’re not earning at the $120K mark, you can still buy miles relatively cheap provided you have a tax or rental bill to pay.

For example, a UOB PRVI Miles ($30K p.a.) cardholder could take advantage of RentHero’s special 1.9% promotional rate to buy miles at 1.33 cents each.

Granted, not everyone rents, but almost everyone pays taxes- and a BOC Elite Miles World Mastercard ($30K p.a.) cardholder could use CardUp’s 1.99% income tax promotion (code: MILELIONTAX) to buy miles at 1.3 cents each.

The number of miles you can buy through such methods are capped at the amount of your actual bill, but there’s also the option of buying unlimited miles through a service like UOB PRVI Pay. The regular price is 2.1 cents, but numerous cardholders have been targeted for a lower 1.8 cent fee from now till 31 July.

If all that still doesn’t work for you, you could still buy miles through the annual fees of cards like the DBS Altitude, Citi PremierMiles Visa and KrisFlyer UOB Credit Card at ~1.93 cents.

In light of these developments, it’s very hard to argue that people should be paying 2 cents per mile anymore. I personally wouldn’t pay anything more than 1.8 cents based on where the market is right now.

Redemption value

The other way to think about the value of a mile is to consider the value a mile “buys” when used for an award ticket.

The general formula is

(Cost of revenue flight – Taxes and surcharges on award flight)/ Number of miles required= Value Per Mile

For example, if a flight on SIA from Singapore to City X costs either $1,000 or 30,000 miles + $100 of taxes for a Saver award, then the value per mile is

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(1,000-100)/(30,000)= 3 cents per mile

It’s important to highlight the limitations of this calculation:

Award tickets are flexible

Award tickets can be cancelled for a small fee (except Spontaneous Escapes), while the cheapest revenue tickets are usually non-refundable. This added flexibility should increase the value of a mile, but we can’t objectively model it.

Revenue tickets earn miles, award flights don’t

The above calculation ignores the miles earned on your revenue ticket. But those miles have a value, and this technically reduces your redemption value (because of the opportunity cost of forgoing those miles).

Saver award availability assumption

My math assumes that Saver awards are available. However, experience tells us that’s not always true. Your value per mile is reduced if you have to pay Advantage prices. A truly robust valuation would also estimate what percentage of the time you’d be able to pay Saver prices, and what percentage of the time you’d have to pay Advantage.

What are my realistic alternatives?

If I used the above formula for a First Class flight, I’d get a value of roughly 6-7 cents per mile. However, I can’t say that I value my miles at 6-7 cents each unless I’d have otherwise paid for First Class out of pocket. 

To put it another way: you’re walking down the street and someone gives you a 10% off coupon for Tiffany. You go to Tiffany and buy a $10,000 diamond ring and say “wow, that coupon was worth $1,000!” That’s mathematically correct in one sense, but wrong in another unless you’d have bought the Tiffany ring anyway. 

Similarly, if your alternative to redeeming a flight is to buy a budget ticket, then your redemption value is lower because, realistically speaking, the expense your miles are saving you from incurring is lower.

Long story short, this methodology isn’t perfect, but it at least gives you the range within which the redemption value of a mile must fall.

To calculate this, I took three destinations from each of SQ’s award zones* and looked at the value per mile in Economy, Premium Economy (where applicable), Business and First (where applicable) Class redemptions.
*except Zone 5 and Zone 8, which only have two cities each

Sample Destinations
Zone 2Zone 3Zone 4Zone 5
KUL, CGK, DPSBKK, HAN, MNLHKG, TPE, CTUPVG, PEK
Zone 6Zone 7Zone 8Zone 9
DAC, BOM, MLEICN, KIX, HNDPER, DRWSYD, MEL, AKL
Zone 10Zone 11Zone 12Zone 13
JNB, IST, DXBLHR, CDG, FRASFO, LAX, SEAEWR, JFK, IAH

Here’s what it looks like for Saver awards…

…and for Advantage awards

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Given that airfares have generally fallen over the past four years while award prices have increased, it’s not surprising that the value per mile has come down since the last time I looked at this.

Graphic from The Economist

The table below summarizes the seven different ranges, depending on cabin and award type.

Saver Range | (Median)Advantage Range | (Median)
Economy0.4-1.7 | (1.0)0.2-0.8 | (0.5)
Premium Economy1.0-2.6 | (1.6)Only saver awards are available for Premium Economy
Business1.7-4.7 | (2.7)0.9-2.7 | (1.9)
First4.4-7.0 | (5.7)2.4-3.9 | (3.1)

In my case, I’d almost never redeem my miles for Economy (except on certain high-cost destinations like Koh Samui, or for partner airlines sweet spots like Alaska Airlines domestic USA flights) and I’d never redeem my miles for Premium Economy (because it offers marginal comfort over Economy Class for about 75-80% the cost of Business Class).

At the same time, although I always look to redeem Business or First Class where possible, I’m certainly not in a position where I could pay for those out of pocket. This means it’s probably an overestimate to look at Saver valuations, and a more realistic figure would be closer to Advantage pricing.

Based on this, my gut feel is that I’d look for at least 2 cents per mile when redeeming miles.

Bringing it all together

To summarize what I’ve said so far: I won’t buy miles for more than 1.8 cents, and I won’t take less than 2 cents when redeeming them.

Why the gap? Because we need to account for so-called “non-cost” factors. There’s an unspoken cost in playing the miles game:

  • the time spent formulating your strategy (e.g spreadsheets, spreadsheets, spreadsheets!)
  • the inconvenience of optimization (e.g. traveling further to a different furniture store because it accepts Paywave, or putting up with BOC’s antiquated internet banking for the sake of earning 3 mpd on overseas spending)
  • the reduced options (e.g. picking your lunch based on who accepts GrabPay rather than who you really want to dine with, in order to earn 4 mpd via Citi Rewards top ups)

I simply have no way of putting a price on these, which is why I think it’s best practice that you set one figure for buying miles, and another, slightly higher one for redeeming them. Otherwise, it’s as if you implicitly understate your cost.

For what it’s worth, here’s what other sites have to say:

  • One Mile at a Time: 1.4 US cents/ mile (~1.9 SG cents)
  • The Points Guy: 1.3 US cents/ mile (~1.78 SG cents)
  • Points Hacks: 1.7 Aussie cents/mile (~1.60 SG cents, based on acquisition cost)

Keep in mind that these websites are based overseas, and their valuation will naturally be different based on the opportunities to acquire and use KrisFlyer miles in their country.

Conclusion

At the risk of sounding like a broken record, you shouldn’t take my valuations as the final word. The valuation of a mile is inherently personal, and depends on your individual travel patterns and preferences.

Nonetheless, it’s an exercise you should frequently revisit as the market changes- the miles game isn’t static, and your valuations shouldn’t be either!


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13 comments

  1. Hi Aaron,

    Thanks for the article.
    Not sure when this article was written but it was definitely a good read.
    On the technical side, I am curious about your thoughts on miles devaluation i.e. SQ decides to up the miles required for an award ticket. I see/hear airlines doing this quite a lot… what has been SQ’s pattern so far?

    Thanks a mil,
    JT

    1. hi JT- I wrote this article way back when the site got started. looking back, I wonder if I was a bit overgenerous with my valuation. when i read what the laojiaos have written on this subject, the consensus seems to be that krisflyer miles are worth 1.6 US cents (2.2 SG cents) each, versus the 4-5 cents I’m claiming. I think the reason for the discrepancy is this- expected value. If you can always redeem your miles for business or first class saver travel, you will always get at least 4 cents of value per mile. But that won’t always be the case. sometimes you will have no choice but to fly economy. Sometimes business saver will just not clear and you will book business standard just because you’re desperate not to spend a long haul red eye in economy. So you need to factor in some sort of probability calculation that says how often will i be able to redeem at 4-5 cents of value. I think when you do that the value comes down somewhat (whether it’s 2.2 cents I don’t know, but it will be lower than 4-5). Of course, if you redeem for first class saver 100% of the time, then you should be valuing your miles at 6-7 cents each. the fundamental principal is that you value your miles depending on your redemption pattern.

      as for your question on devaluation, SQ last did a major devaluation in 2012. The truth is, however, that SQ has probably been stealth devaluing their program for a long time through higher surcharges and less saver availability. I’m actually in the midst of an article about this that will hopefully answer more of your questions

  2. Hi Aaron,

    I would like your opinion on the calculations to evaluate which of these two is better:
    1) to redeem an SQ Biz class ticket to Europe, which will cost 68000 KF Miles & SGD300
    2) to buy an SQ Econ ticket for the same trip for about SGD750, and earn about 6500 miles

    My quandary is that I thought it seems like a bargain to earn 100% miles for $750 (flight to Europe); on the other hand, I’m afraid with a possible KF devaluation, my miles will drop in value the longer I wait to redeem them.

    Thanks for your advice!

    1. not sure how i missed this but i hope it’s still relevant to you. KF devaluation has come and all is well for now. i’d definitely redeem if you’re able to find saver availability to europe.

  3. Very good article, thank you! Didn’t ever consider using miles to redeem premium flight tickets, aka Business or First class. But when you put it into perspective, yes, I too agree that it allows me to maximise the value of my miles and I would rather now choose to buy premium class over economy flight tickets.

  4. Hi. I’m new at this whole business of redeeming miles and hope you can advise me please.

    I recently redeemed a one-way business saver ticket from SIN to TPE on EVA Air for 27500 miles + $164 fuel surcharge+taxes. The flight currently costs $1844 on EVA Air’s website.

    Qns 1: Does this mean I got about 6 cents/mile of value? [$(1844-164) / 27500]
    Qns 2: Is this considered ‘worth it’?

  5. Hi there,

    Another BIG advantage for business class flyers is that, often, a “mileage one way trip” costs only 1/2 of the miles needed for a round trip. While for paying tickets a business one way trip is always quite expensive because always without discount ( business class round trips, while not cheap, are sometimes reasonably priced because discounted). So if someone wants to have an open gap in a business class ticket, it is usually a very good deal to get 2 one way trips (often on different airlines serving different cities in the same country). If one can reserve them in advance it ends up much much cheaper than buying a full fare business “multi cities” or “open gap” ticket. F.D.

  6. Hi Aaron,

    This is a good article. It helps to put everything into context.

    Eg. I subscribe to your valuation of 2 cents per mile.
    I’m using Citi Prestige too. So for my overseas spend, I’m getting 2.0mpd, which equates to 4 cents per dollar.
    That’s equivalent to a 4% reward (indirectly).

    Definitely crushes all the cash back cards out there.

    Meanwhile, I noticed that this article was written in 2016.
    Are the redemption rates updated for 2019…?

    1. Did you factored in the foreign currency transaction fee of 3% ? For foreign currency spendings, you are actually “buying” miles at 1.5cts per mile (3cts divide by 2 miles). If you value the mile at 2cts, your actual reward is 0.5cts.

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