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On Friday I published news that Lufthansa had introduced a Cash & Miles option for customers who wanted to pay or part pay for a cash ticket using their Miles & More miles. At the time of writing I couldn’t see just what sort of value customers could get from their miles if they used them for Cash & Miles purchases but, over the weekend, things got a lot clearer and the news is anything but good.
Firstly it’s important to point out that “Cash & Miles” purchases are not taking the place of the existing Miles & More awards which are booked wholly with miles. The regular Miles & More awards are still in place and haven’t changed in any way.
Here’s the award chart for anyone that’s interested (click thumbnail to enlarge)
The “Cash & Miles” purchases are supposed to give flyers an additional way to use their Miles & More balances – put simply, a value has been given to a Miles & More mile and customers can now use their miles to reduce the price of a regular cash ticket.
On the face of things this sounds great.
- Because the miles are being used to purchase a cash ticket you don’t have to wait for award availability to open up – as long a there’s seat for sale on the aircraft customers can use miles to pay (or part pay) for that seat.
- Because part-payment are allowed customers are not limited by the number of miles in their accounts (as long as they have a minimum of 7,000 miles to use).
Unfortunately, while the above two points remain correct, it turns out that value that has been assigned to a mile makes “Cash and Miles” option a very bad deal for almost all travelers.
I still don’t have any miles in my Miles & More account so I can’t see what sort of discount the miles will offer….but a lot of other people have checked this out and the answer isn’t good.
Cash & Miles purchases appear to be valuing Miles & More miles at around 0.5 cents each…and that’s terrible value.
A Miles & More Business Class award flight between the US and Europe will cost 105,000 miles roundtrip and, as you can see from this randomly selected set of dates, a JFK to Frankfurt roundtrip will cost around $2,500:
At $0.005/mile this Business Class flight would cost 498,586 miles if booked using the Cash & Miles option.
That’s 393,586 miles more than the regular Miles & More award.
Ok, there are two downsides to Miles & More awards…..
- You have to find award availability
- You have to pay taxes and fees of around $620 on the award
…and there is an upside to the Cash & Miles award:
- Cash & Miles awards are eligible for elite and mileage earning
But Cash & Miles awards are still terrible value.
If you assume that $2,500 is a fair price for a Lufthansa Business Class roundtrip ticket then, allowing for the $620 in fees you have to pay on the award, 105,ooo miles is getting you $1,880 of value.
That’s equivalent to 1.8 cents per mile or over 3.5x the value you get from a Cash & Miles award.
If you have more Miles & More miles than you can possibly use or if you only have a few miles in your account and there’s little prospect of adding to them, then using the new Cash & Miles option may be a good idea to save some money. Otherwise it’s a bad proposition.
You would be far better waiting for a regular award to open up and using your miles that way rather than squandering them at 0.5 cents each.