United Airlines basically pays for my first class travel around the world

I thought I’d post an update as to where I am in re-qualifying for Mileage Plus 100,000-mile 1K status for 2012, and reveal just how much I’ve spent to get there & the end return-on-investment for my passionate hobby. As of this morning, here are my total elite qualifying miles (EQMs) and segments (EQSs):

I’ll most likely never achieve 1K status in segments, which now requires 120 per year, so you’ll see I’m a little more than ¾ of the way to 100,000 EQM miles. Not bad considering it’s May 11th and I have an entire half-year to fly another 22,691 miles. In fact, I already have enough reservations on the books to achieve 1K, so I thought this would be a perfect time to break it down financially. Anyone employed by United Airlines can stop reading now, please.

The metric used for mileage runners in determining the viability of a mileage run is known as cents per mile (CPM). This is calculated by dividing the all-in fare (including taxes & fees) by the total amount of elite qualifying miles for the trip. So, for example, my first mileage run of the year had an all-in fare of $159.30 and I earned 4,490 EQMs for the trip. This results in a CPM of approximately 3.55.

Historically, a “good” mileage run fell at 3 CPM, with anything lower considered a great find. Fares this year, especially after February, have increased considerably so finding runs around 3 CPM has been difficult, although I was able to find a run early in the year for 2.46 CPM, and I did two of those.

I keep a running tally of all of my flights each year, including the fares and EQM amounts, on a spreadsheet that totals everything up for a nice annual snapshot of my flying patterns (I’ll share it in a future post). For now, I can tell you that the amount “spent” on airfares for the reservations flown and upcoming to hit 1K status is $4,061.92. The amount of EQMs I receive for those reservations is 95,854, which then yields a CPM average of 4.24. (Not all of my trips are mileage runs, by the way.)

You probably noticed the EQM total is only 95,854, not 100,000. My total EQM, however, is actually more than 100,000 because of bonuses achieved for rebookings into higher classes of service during irregular operations.

Now, it’s important to know I haven’t actually spent more than $4,000 on airfares this year. Through using a combination of bump vouchers where I volunteered my seat on oversold flights, and redeeming e-certificates for service failure issues, my total out-of-pocket spend as it stands right now is $1,962. Achieving the top-tier mileage-based elite status for under $2,000 is downright ridiculous, and probably sends United’s CEO Jeff Smisek and the Revenue Management (RM) department into a tizzy.

If the revenue factor isn’t shocking enough, the amount of redeemable miles I will earn this year and their value will certainly make them cringe. In total, for the reservations flown and on the books later this year, I will earn 196,284 miles for all of my flying. That’s enough for a free roundtrip First Class flight to Australia and an economy roundtrip within the 48-States, or even to the Caribbean, Central America or Northern South America under the current Saver award chart.

A discounted first class roundtrip to Australia on United currently runs about $20,000, and I’ll use $1,000 as the value of the economy class award redemption. The return-on-investment, then, for the $2,000 I will spend out of pocket this year to achieve 1K status and the $21,000 in free trips comes to 950%! There is basically no way to put that figure into perspective as it’s way off any chart, but uber profitable big oil company Exxon Mobile, for example, is showing a ROI of 17.03% according to Reuters. And yes, for technicality, additional factors come into play when calculating ROI, such as the value of my time, meals while traveling, etc., so this is a unscientific calculation simply for demonstration. Also, 950% is low since I didn’t factor in the value of the six Systemwide Upgrades (SWUs) I earn for flying 100,000 miles each year. Conservatively, those could be valued anywhere from $600 to $800 or more.

So my hobby not only brings me immense joy in flying around, it also pays significant dividends in award redemption opportunities for grand vacations. I have a prediction of how frequent flyer programs might evolve in the future to inhibit such an incredible return for people like me, so stay tuned for that post in the near future. In the meantime, I’m enjoying a fantastic time having United Airlines pay my way around the world in style.

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Comments

  1. Let’s hope CO (I mean UA…) doesn’t go with a dollar-based system of earning miles. I hope that is not what you are alluding to! Or no EQMs for the cheap fare buckets. God forbid!

    You’ve done well to make 1K for so cheap. I don’t know exactly what I’ve spent this year, but I think it is closer to $3K out of pocket to make 1K.

  2. @Matthew: The good news for United, I forgot to post, is that I have a lot more flying to book with them this year, so my actual contribution will increase as the year progresses. Still not to the level they’d prefer, of course.

    An EQM reduction for certain buckets is more what I’m referring to. Should have my post ready in the next week or so on that. And yes… I’m cringing at the prospect, too… but they HAVE to be thinking about it.

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