Horde Your Miles
You don’t really think everyone in the front of the plane is paying $10,000-$15,000 for their roundtrip do you?
The airlines and credit card companies have provided you with the means to game the system and to take advantage of them, all it takes is a little bit of effort. Granted the world of routing rules, airport codes and availability tools can seem daunting at first, but once you gain a minimum level of proficiency and score your first great award flight, there will be no turning back.
Don’t use cash…ever, if you can avoid it. Simply put, paying with cash is like leaving money on the table. When you pay with airline branded credit cards, or other credit cards that earn miles you are not only getting the item you purchased, but you are earning additional value that you wouldn’t get had you paid cash.
Spend Smart. There are three major airline alliances (Star Alliance, OneWorld and SkyTeam). Pick a “home” airline for each alliance, open a frequent flier account and credit all of your flights within that alliance to the “home” FF account. This will allow you to build up the maximum # of miles quickly.
Open credit cards branded to your home airlines. Some examples of good deals out there…Both United and Continental (who are soon to merge and thus will merge all the accrued points together so you should open both cards for maximum benefit) offer Chase cards that come with a 50,000 mileage bonus upon first spend. British Airways offers a card that credits the user 100,000 BA miles after a modest initial spend. Air France even offers a Flying Blue branded AMEX that gives the card holder not just RDM (miles that can be redeemed for flights) but EQM (miles that count towards airline elite status). Thus a holder of the Air France card could qualify as a high level elite without ever setting foot on an Air France plane (a good thing).
Regular AMEX cards can also be very valuable, as AMEX Membership Rewards points can be transferred to 20 or so airlines frequent flier programs without a fee.
Do not redeem your miles on short haul flights. It might be tempting to save yourself 200 bucks and waste 20k miles to fly from NYC-Chicago, but it is a horrible, horrible decision.
The real value of frequent flier miles comes in redemptions for awards flights in premium cabins on long-hauls. There are some great deals to be had out there. Star Alliance for example offers a Europe to Southern Africa First Class award for 100k miles. You are also allowed a stopover (or 2 based on the routing rules of the carrier you book through). Through careful planning and studying the rules you can pull off trips like Europe to South East Asia to Australia and back in first class for ~160k miles and maybe $300 in processing fees. Never pay a premium to ride up front again.
Never blow your credit card miles on goods through member rewards programs either. I think AMEX membership rewards was charging something like 50,000 points for either Ray Ban Aviators or a Tumi Travel bag. I can’t recall which product, but it was an item somewhere in the $100-$300 range…for 50,000 points! My flight from JFK-FRA tomorrow will be on Singapore Airlines in First Class. By registering a Singapore frequent flier account (they rarely if ever release First class seats to partners), transferring AMEX points to SQ KrisFlyer miles and holding out for a one-way saver award, this trip is costing me 47,500 miles (less than a pair of sunglasses). Had I paid cash for the same flight it would have cost $6,280.30 (as of today). Seek out the best value for your points.