In the points hacking world, swapping your frequent flyer points for a ticket in Economy Class has been traditionally discouraged. There’s usually bigger rewards out there — namely Business and First class reward seats. But are there situations where Economy Class seats might be better value?
Background of Economy vs. Business redemptions
Some frequent flyer programs charge less than double the Economy points rate for a Business Class reward seat, which is quite good when you consider that a cash Business Class ticket is usually many multiples more than Economy Class.
A favourite example of mine is Singapore Airlines KrisFlyer and redemptions from Western Australia. Take a Perth-Singapore-Taipei flight: here’s how a one-way 2021 fare compares in cash and KrisFlyer miles.
|Cash fare||KrisFlyer Miles (+ taxes)||Value per KF mile|
|Economy Class||A$812||20,000 miles + A$109||3.5 cents|
|Business Class||A$3,139||36,500 miles + A$109||8.3 cents|
You can see that the Business Class cash fare is almost four times more than Economy, but with KrisFlyer miles, it’s not even quite double. The value per KrisFlyer mile is also significantly higher with Business Class.
Widening the Economy Class points gap
Recent events have highlighted how sometimes using frequent flyer points for an Economy ticket could be a better idea. The first is award chart devaluations like Qantas did in late 2019:
- Premium Economy, Business and First Class rates increased by up to 15%
- Economy rates stayed the same or decreased
This type of move widens the gap between ‘cattle class’ and the other premium cabins. At the top end of Qantas’ Classic Flight Reward table, a one-way flight from Sydney to London would need 55,200 points in Economy or 144,600 points in Business — getting close to triple the amount.
Let’s say a long-time Points Hacker has finally amassed 665,000 Qantas Points. With that bounty, they could book one of the following (all exclude taxes):
- Two people return Sydney-London in Business Class
- Six people return Sydney-London in Economy Class
- Two people around the world in Business Class
- Five people around the world in Economy Class
If that person is just travelling with one other, then Business Class makes sense. But what if they have three kids to travel with? Suddenly, it could be more tempting to book the family in Economy with points.
COVID-19 and regional flights
With our state borders restricted in many cases during the pandemic, there is an explosion of interest with intrastate tourism, particularly with larger states such as Queensland and Western Australia.
Locally in Perth, there is huge interest in flights to destinations such as Exmouth and Broome — both quite expensive to fly to most of the time, but quite reasonable with frequent flyer points.
The following example below yields a value of 2.3 cents per Qantas Point for an Economy redemption, which isn’t too bad at all.
Perhaps the most extreme example in Australia is the unique Lord Howe Island; located off the coast of NSW. A pristine volcanic remnant, the island has a cap of 400 visitors at any time and is re-opening for tourism from 3 August 2020 onwards.
Naturally, reward seats are extremely rare. But if you can snag them, you could be getting almost 8 cents per Qantas Points, like below.
How to work out if an Economy redemption is good value
To work out whether it’s worth using points for Economy Class, there is a quick calculation you could do. You need to know the following:
- Our baseline valuations of a point (e.g. Velocity = 1.8 cents)
- The cash fare for your flight
- The points and taxes needed for the points redemption
Our example below is a Virgin Australia flight from Perth to Kununurra — a town in the far north of WA, near the Northern Territory border.
- Economy fare: $415, or 17,800 points + $40
- Business fare: $599, or 35,500 points + $40
To do the rough sum, subtract the redemption taxes co-payment from the cash fare, divide that total by the number of points needed, then multiply by 100 to reach a final answer in cents per point.
- Economy = (415 − 40) ÷ 17,800 × 100 = 2.11 cents per point
- Business = (599 − 40) ÷ 35,500 × 100 = 1.57 cents per point
In this case, you can see that you’d actually get more ‘value’ per point with an Economy Class reward seat rather than Business Class (which falls below our threshold of 1.8 cents/point anyway), as the Business cash fare is not that much more than Economy.
Conversely, this also means that if you were going to buy a ticket with cash, it could be worth splurging a bit more and getting a Business Saver fare rather than the cheapest Economy Getaway ticket.
The main takeaway from this article is that if Economy fares are quite expensive and there are reward seats available, chances are that it could be a good deal. This effect is amplified by events such as COVID-19, which drive up the cost of flights.
While Velocity has not yet had a recent major points devaluation at the time of writing, it’s entirely possible that something like this will be on the cards after Virgin Australia moves to recovery mode. This could then make premium cabin redemptions pricier than Economy, à la Qantas style.
At the end of the day, don’t get too caught up on the numbers. If your points get you where you want to be in the class of travel you’re happy with, that’s a win in our book.