What is the Value of a KrisFlyer Mile?
Tl;dr: Take the price you’d realistically want to pay for a particular flight, then divide that amount by the number of miles required to redeem that flight. It should give you an indication of how much miles are worth to you.
This is probably a rather contentious topic, and also one that has been explored by quite a few people online. I feel the need to chip in as my valuation of miles is quite different from what I’ve read so far, and also the fact that knowing the value of miles is very important to guide what cards you put your spending on.
It seems to me that cashback lovers tend to ignore that miles have value, preferring cashback even when it’s a poor rate, while chasers typically overvalue them at almost 2 cents per mile. My personal valuation of miles, specifically the KrisFlyer variant, is that they are roughly 1 to 1.5 cent each.
How banks value miles
For many travel cards like OCBC 90°N, UOB KrisFlyer, or DBS Altitude, the banks would gladly credit you 10,000 worth of miles as long as you pay the annual fee, typically $192.60 ($180 + 7% GST). It goes to show one should never spend higher than 1.926 cent per mile, as banks are more than happy to sell them to you at this rate.
When banks offer to buy back miles from you, they usually offer anywhere between a meagre 0.5 to 0.7 cents per mile, to a rarer and more generous 1 cent per mile:
| Miles Per 1 Dollar | Cost Per Mile | ||
| DBS | 100 DBS Points (200 Miles) | 0.5 cents | |
| Citibank | 440 ThankYou Points (176 Miles) | 0.56 cents | |
| OCBC | 360 OCBC$ (144 Miles) 100 Travel$ (100 miles) | 0.69 cents 1 cent |
How the banks buy/sell miles is very telling of the true cost of miles: they don’t cost more than 2 cents, and they are definitely worth a little more than 0.5 cents.
Valuation based on banks: somewhere between 1 to 1.926 cents per mile
How Singapore Airlines values miles
If we look at a short-distance trip to nearby Bangkok, we can see the following ticket prices and the required miles needed to redeem the flights:
| SIN to BKK | Economy | Business |
| Miles + Taxes | 25,000 + $85 | 43,000 + $85 |
| Ticket Price | $250 to $350 | $1,200 |
| Mile Value | 0.66 to 1.06 cents | 2.59 cents |
The longer the trip and higher the cabin class, the more valuable your miles tend to be. Going to a place 2 hours away in Economy is therefore pretty poor value for your miles.
If we look way further and have our eyes on the US, the value of each mile goes up significantly.
| SIN to SFO | Economy | Business |
| Miles + Taxes | 76,000 + $100 | 190,000 + $100 |
| Ticket Price | $1,600 to $2,200 | $6,200 |
| Mile Value | 1.97 to 2.76 cents | 3.21 cents |
Even Economy flights to San Francisco give pretty decent value for your miles. If you have enough, 190,000 miles accords you a comfortable 17-hour flight at what would otherwise cost at least a princely $6,200 – that’s SQ putting a value of 3.21 cents per mile!
Valuation based on SQ: anywhere between 0.66 to 3.21 cents per mile (a lot more, if you include First Class/Suites)
How much do you value premium flights?
Of course, the value of a mile highly depends on your own personal valuation of premium flights. Just because a business class flight is priced at $6,200 doesn’t mean that it is worth $6,200 to everyone. If you’re someone who would drop more than six thousand dollars on a flight, then the miles are truly worth 3.21 cents each.
Otherwise, if you’re someone who just wants to get from Point A to B and would never have considered spending thousands on a business class flight, miles would never be worth near 3 cents each to you.
Someone who’d only spend $1,000 on an economy flight to the US – and there are flights to the States as cheap as $1,200 on airlines like Air Japan, and even $700+ if you are willing to settle with lesser-known airlines with more/longer layovers – exchanging your miles for an economy flight on Singapore Air would price them at roughly 1.18 cents per mile. You would be getting the SQ experience and perhaps better flight routes, which may (or may not) increase the value of the miles for you.
Personally, I’m quite okay with taking economy flights on airlines outside of SQ, so I don’t really value an economy flight at the $1,600 to $2,200 that SQ typically charges. To me, getting there on an economy cabin should cost closer to $1,200, putting my personal valuation of the miles at 1.45 cents each.
I do, however, want to experience business class flights, but the most I would realistically pay for a return flight to the States is a maximum of $2,000. That’s right – much to the shock of people who would rush to take out their credit cards when a business class flight to the States is say $2,500, I would not pay for it even when it’s more than 60% off an already promotional price of $6,200. Is it really worth spending more than twice an economy ticket just for some additional comfort? I can see why it’s a yes for some people, but at my current socioeconomic status I would rather tough it out in economy to save that sum of money (or miles, which innately are worth money) unless I can greatly reduce the cost of business class (which miles can do).
| Miles + Tax Required | What I would pay | Value per mile | |
| BKK Economy | 25,000 + $85 | $250 | 0.66 cent |
| BKK Business | 43,000 + $85 | $400 | 0.73 cent |
| SFO Economy | 76,000 + $100 | $1,200 | 1.45 cent |
| SFO Business | 190,000 + $100 | $2,000 | 1 cent |
That means that when I use miles to redeem a business class ticket, I am opting to trade 190,000 miles for what I perceive is $1,900 value ($2,000 minus $100 taxes I still have to pay while using miles), making it 1 cent per mile. It seems odd that it’s lower than an economy flight, but that’s because I don’t place as high a premium on the luxury of business class as much as SQ does when they set the number of miles to be 2.5 times of what’s required for economy.
To optimise the value of my miles, I would not redeem at anything that values my miles too far below 1 cent each. Bangkok trips and the like would have to be paid for with cash.
Valuation based on how I would make use of miles: somewhere between 1 to 1.5 cent per mile
Other odds and ends
We also need to consider that redeeming flights with miles is not as straightforward as simply booking a flight with money. There are often waitlists to be on for popular routes (it’s not uncommon for people to waitlist months to a year in advance) and a fair amount of planning is required for you to get your desired flight, as well as to make sure your miles are used optimally.
This has to put a dent in the value of miles, but I think it’s counterbalanced by the fact that miles give you the opportunity to heavily discount flights you might otherwise never experience. I may personally value a business class flight to SFO at $2,000, but there’s no way to actually price it as that aside from using miles.
Miles can be more valuable than low cashback %
It is not difficult to see why cashback people remain cashback people since the miles game can be a little too much trouble. Some miles people might be aghast at my low valuation miles, but at the same time I want to persuade cashback chasers that they would rather spend on a 4 mpd card than a 1.5% cashback card. Using the miles for a trip to Bangkok, even if it’s not optimal, transforms your 4 mpd into 2.64% cashback. Even letting your bank buy back your miles at a horrible rate of 0.5 cents per mile gives you 2% cashback.
An easy rule of thumb I follow is to simply go for the larger number where possible: 10% cashback is definitely better than 4 mpd which is in turn better than 1.5% cashback.
How much do you value each mile? Do let me know in the comments below.