My April Vacation to Korea and Japan Booked with Miles!

I’m going to interrupt this stream of finance oriented posts with the details of my award ticket for my upcoming vacation to Japan and Korea in April. One of the major things I want to do when I’m financially independent is travel the world (and keep the costs down while doing it). So “travel hacking” is one of the things that I have been strategizing for the past couple months, and now I have finally booked a major flight using miles (I have booked a short domestic flight on United before, but that’s not that exciting).

“Travel hacking” is the act of substantially reducing the costs of a trip through various means. The most common way is to utilize credit card signup bonuses – typically you are required to spend $1000-$3000 in the first three months after approval of certain credit cards to get the bonus. For higher end cards, this bonus can be 50,000 miles (or sometimes, even more). Sometimes you can get miles from bank accounts (though this is somewhat rare, and not used as often). Using credit card signup bonuses for airline miles and hotel points is the common way that people engage in travel hacking.

So today I’m going to explain how I got the miles I used for the flight, how much that cost me in both money and time, and some technical difficulties I had in booking.

The Booking

When I booked my flight I was charged 70,000 Delta Skymiles and $81.60 in taxes and fees. The itinerary is

ATL -> ICN on Korean Air (non-stop flight), 4/6

NRT -> ATL on Delta, 13 days later (non-stop flight), 4/19

ATL: Atlanta Hartsfield-Jackson International Airport
ICN: Incheon International Airport (services Seoul, South Korea)
NRT: Tokyo Narita International Airport

Notice how even though I am using Delta’s Skymiles, I can book a Korean Air flight (because Delta and Korean Air are part of the SkyTeam alliance).

How I Acquired My SkyMiles

  • 2190 miles by flying Delta when I visited my undergrad in 2013 with some friends. I paid for this flight out of pocket.
  • 9670 miles by flying Delta when I went to a conference to Spain June of last year. My school paid for this flight, so I got the miles for free. The flights I just booked would not be possible without these miles I got for free!
  • 576 miles by flying Delta when I flew back home last summer. I paid for this flight out of pocket.
  • 58000 miles transferred from my Amex Membership Rewards account.

So all but the last transaction are pretty self explanatory for anybody who understands frequent flyer miles – every time you fly, you earn miles for the distance flown. Well, except now in 2015, Delta awards miles proportional to the ticket price, as opposed to distance flown. And United is doing this too, though I believe their switch is going to occur in March. But the miles I acquired were all under the old system.

Now for the last transaction. In November I signed up for 2 American Express cards: the Premier Rewards Gold (PRG) and the Everyday. The publicly available offer for the PRG is a 25,000 point signup bonus for $2000 in spending in the first three months. However, I got targeted for a 50,000 point signup bonus for $1000 in spending in the first three months. Based on this, I signed up for the card. Also, the Everyday has a 10,000 point and a free year of Amazon Prime as it’s signup bonus for $1000 in spending in the first three months.

The PRG has a $175 annual fee, which is waived in the first year. So my plan with this card is to cancel it around October, before the annual fee hits (it’s generally not a good idea to cancel right after the signup bonus posts to your account).

The Everyday has NO annual fee. This is the only no annual fee credit card that has transferrable points.

The signup bonus points are American Express Membership Rewards points. These points can be transferred to 17 different airline partners’ frequent flyer programs and 4 hotel groups’ points programs at a 1:1 ratio (for most programs. For a few programs, the transfer ratio is not 1:1). Because the points are transferrable, they have a lot of flexibility. Unfortunately, the only major US airline that is a Membership Rewards transfer partner is Delta. Other US partners include JetBlue, Virgin America, and Frontier.

How I Met the Minimum Spend Requirement

I can not normally spend $2000 in 3 months on my credit cards. So, I bought Visa gift cards at Best Buy, Kroger, and Walmart. These Visa gift cards do have a fee in the 4.95 to 6.95 range. Usually the cheapest ones are at Kroger and Walmart – $4.95 fee for a $500 Visa gift card. However, American Express sometimes has Amex offers. If you sign up for them, you can get a statement credit at a particular store for spending over a certain amount. There was an Amex offer at Best Buy, $25 statement credit for a transaction of at least $250. I bought three $200 Visa gift cards, each with a fee of $5.95 for a total of $17.95 in fees. I bought three $200 Visa gift cards so that I could split the $617.95 transaction into two, and charge at least $250 to each of my Amex’s in one go. Otherwise, I would have had to buy 4 $200 gift cards, and paid for 2 them with each Amex. I then bought more cards at Kroger and Walmart to fulfill the spending requirements (there was no Amex offer for this).

I was then able to return the money back to my bank account using some techniques that I will describe in a later post—it’s a lot of detail I don’t want to get into at the moment.

Total Out of Pocket Cost for the Booking

  • $81.60 in taxes and fees charged by Delta
  • $34.80 to transfer 58,000 points from Amex Membership Rewards to Delta (unfortunately Delta charges 0.0006 cents per point to transfer points to a domestic airline)
  • -$16.32 in fees from Visa gift cards to meet the minimum spend requirement (really it was $33.68 in fees from Visa gift cards. But, I got two $25 Amex Offers for buying the cards at Best Buy, so I’m using that to offset the Visa gift card fees. Some may protest in accounting for the fees in this way….whatever)

Total: $100.08

Miles Valuation

This is a popular metric that people like to use in the miles and points world. One reason is because you should do this to evaluate whether you should put regular everyday spending onto an airline mile earning credit card (because the alternative is to put your everyday spending on a 2% cash back card such as the Fidelity Amex or Citi Double Cash).

I’m going calculate this two ways. The first is more common – I’m going to use the actual cash value of my flights:

  • $1195.70: ATL-> ICN non-stop on Korean Air,  as listed on Orbitz
  • $2567.99: NRT-> ATL non-stop on Delta, as listed on Delta after conversion from Japanese Yen
  • Value per mile, after subtracting out fees charged by Delta (but not the Amex transfer fees – usually when people do valuations like this, they don’t include Amex transfer fees. And even if I did include that cost, it doesn’t change very much):
    • (1195.7+2567.99 – 81.60)/70,000 = 5.26 cents per mile

This type of value is actually incredibly rare in the miles and points world! Typically the best valuation you’ll get is around 2 cents a mile (unless you happen to be using British Airways Avios – I’ll explain this at some point). To see this, take a look at The Points Guy’s estimates (a big name blogger in the miles and points world). He values Delta Skymiles at 1.3 cents a mile (all of these valuations are estimates based on what he perceives to be the average value you’d get out of miles from different programs). Now how did I achieve such a high valuation? I’ll explain that in the next section – it stemmed from an error on Delta’s part.

The second way I can put a value on these miles is to use the cash value of similar enough flights that I would be okay with booking if I were paying in cash.

  • $792.30: ATL ->SFO -> ICN on United, as listed on United. The transfer window of only one hour would make me nervous, but let’s say I’m okay with it for the sake of the argument, because the next best itinerary costs $300 more, and I don’t think I’d be willing to pay that much for a better itinerary that still has a transfer.
    • There was also a United flight with 2 transfers-in Chicago and ironically Tokyo-for $114 less. But I don’t think I’d be willing to buy that flight – having two layovers is quite a burden. And one of the transfer windows is just 1 hour.
  • $949.60: NRT-> MEX -> ATL on AeroMexico + Delta, as listed on AeroMexico. The transfer is in Mexico City, which is kinda cool.
  • Value per mile, after subtracting out fees charged by Delta (but not the Amex transfer fees – usually when people do valuations like this, they don’t include Amex transfer fees. And even if I did include that cost, it doesn’t change very much):
    • (792.30+949.60-81.60)/70000 = 2.37 cents per mile

Now this valuation is obviously not quite an apples to apples comparison, as both of these flights involve a transfer, whereas the flights I booked are non-stop flights. But I still think it’s interesting to look at.

Again, even this valuation of my Delta SkyMiles is far better than The Points Guy’s valuation. The main reason for this is because I have a very flexible itinerary. Delta has five tiers of awards, and it can be difficult sometimes to find availability at the lowest tier if you must fly on certain days. However, as a grad student, I have incredible flexibility with how I take time off – I just casually sent an email to my advisor asking if he would be okay with me taking two weeks off, and he said sure, enjoy your vacation! If you want to get the best value out of miles, you need to be flexible with your travel arrangements.

Now at the end of the day, in reality, both of these valuations don’t mean much at all, because

  • These points came from a signup bonus, which cost me nothing to meet (and I actually made money doing it – see the above section).
  • I would not have booked these flights with cash – I just would not go at all.

But I’ve included them here because it’s interesting to do, and something people commonly do in the miles and points world.

My Booking Mishap and Resolution

My original plan was to book the NRT -> MEX -> ATL flight for the return leg that I listed in the second way I valuated my miles. (Notice how this is an AeroMexico flight, but I can book the flight with Delta SkyMiles because AeroMexico is also part of the SkyTeam alliance). This flight was the only flight that showed up on Delta’s website for award flights priced at 35,000 one way.

However, when I went to complete the booking, I got an error saying the fare was sold out. I thought this was strange, so I tried it again (and the flight was listed as available). But this error occurred again. After a couple more tries, I just called Delta to book the ticket. The ticketing agent found that there was an eror and the AeroMexico flight didn’t actually have any award seats available. So she called over a manager, and then was able to override the system to give me a flight that would normally cost 65,000 miles for just 35,000 (thereby keeping my total miles for the entire trip at 70,000). [The agent didn’t actually tell me that’s what the manager did, but when I search for the flight she booked for me, it is priced at 65,000 miles). This worked out really well for me because the Delta flight is a non-stop flight, whereas the AeroMexico flight has a transfer in Mexico City, Mexico. I much rather prefer non-stop flights.

I’m Flying on the New Airbus A380!

My Korean Air flight to Seoul is an Airbus’s new A380, the fully double decker plane. I’m pretty excited.

The original AeroMexico flight I was trying to book would have been on Boeing’s new 787-8 Dreamliner. Meaning my trans-Pacific flights would have been on Airbus and Boeing’s new planes. I’m a little bit sad I won’t be able to fly in a Dreamliner, but the fact that I get a non-stop flight on Delta is definitely worth it.

So that’s the story behind my airline ticket booking using miles. I think some of the details may not have made sense, because there’s a lot of other things about travel hacking and airline miles that I didn’t explain. But I don’t want to take the time in this post to explain all that. There will be a future post on airline miles – but after I finish up my discussion on taxes and investing. Though certainly, if you have any questions, feel free to comment and I’ll get back to you.

I’m just really excited about this trip and the fact that I was able to pull off this award booking. So much so that I thought I’d write about it.

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