Does Northwest’s ‘Cash and Miles’ Offer Compute?

Redeeming miles for airline tickets can be a great value proposition, when consumers are able to exchange a reasonable number of miles for an otherwise pricey ticket. But the problem of limited award seat availability often sours the equation, putting seats on desirable flights out of reach or requiring more booking time or travel flexibility than most consumers can muster.

And while paying for tickets eliminates the capacity controls that so exasperate would-be award travelers, prices have been rising and are expected to increase even more this fall.

It’s a dilemma that naturally leads to the thought that maybe a combination of miles and cash can provide the best of both with the downsides of neither.

That’s the promise implicit in [[Northwest_Airlines | Northwest’s]] periodic Cash and Miles offer, which is again available for flights between September 3 and December 18. Both domestic and international coach tickets may be purchased with various combinations of miles and cash. Among them:

Domestic
10,000 miles plus $209 – $299, depending on flight distance
20,000 miles plus $109 – $209

International (Europe)
10,000 miles plus $689 – $799
20,000 miles plus $589 – $699

As always, the question is whether these options are economically sensible. Unfortunately, there’s no simple answer. Consumers will have to consider their choices on a case-by-case basis, comparing the prices for paid tickets with the prices for Cash and Miles tickets, and then computing the value of the miles.

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For example, a 14-day advance-purchase ticket for travel between San Francisco and New York could be purchased on Northwest’s website for $376.27, exclusive of taxes and fees.

If the same ticket were bought using Cash and Miles, it would cost either 10,000 miles plus $299, or 20,000 miles plus $209. In the former case, the miles would have an effective value of 0.76 cents each, assuming the 10,000 miles were used to cover the difference between the published fare and the Cash and Miles fare. In the latter case, the miles would be worth 0.84 cents each. Neither represents good value.

What is good value? While there’s no correct answer, I always suggest that travelers aim to receive 2 cents or more for each mile redeemed. Otherwise, they should consider purchasing a ticket and saving their miles for a more lucrative opportunity.

In our cross-country flight scenario, the price of the all-cash ticket would have to be $499 for the Cash and Miles option of 10,000 miles plus $299 to yield the desired 2 cents per mile. And in the 20,000-mile case, the target price for the paid ticket would be $609. With the current uptrend in fares, the prices we’ve set as benchmarks may become commonplace. But unfortunately, even in this inflationary environment, consumers will still have to do the math before deciding whether to pay Cash and Miles or just cash.

On a semi-related side note to the discussion of Cash and Miles, and pricing generally, I couldn’t help but be struck by the asterisked copy on Northwest’s website describing the associated taxes and fees. Bonus miles for anyone who can read and comprehend this:

*Fares shown are roundtrip per person in Coach Class and available at nwa.com. A ticket purchased through Northwest’s U.S. Reservation call centers will be $20 USD higher than the advertised fare and a ticket purchased at a Northwest airport location in the U.S. or Canada will be $35 USD/CAD higher. All charges will be included in the fare quoted to you. Fares shown do not include Passenger Facility Charges of up to $18 USD roundtrip and a September 11th Security Fee of up to $10 USD roundtrip. In addition: For travel within the U.S.: Fares do not include U.S. segment taxes of up to $3.50 USD per flown segment. A flown segment is defined as one take-off and landing. For travel from U.S. 48 to Canada: Fares do not include U.S. segment taxes of up to $3.50 USD per flown segment, U.S. immigration fee of $7 USD, Air Travelers Security Charge of up to $24 CAD and Canada airport improvement fee of up to $20 CAD. For travel from 48 U.S. to other international destinations: Fares do not include departure/arrival, customs and immigration fees of up to $284 USD. For travel within North America: A $15 USD fee for the first piece of checked luggage and $25 USD fee for a second piece of checked luggage may be assessed. Fees are charged each-way. Any of the charges set forth above are subject to change without notice.