Cash vs Points: Decoding the Real Cost of Air Travel with Aeroplan and Airmiles

Rate this post

Key Takeaways

  • Aeroplan and Airmiles are two of the most popular travel rewards programs in Canada, but they have different redemption rates and options for flights.
  • The value of Aeroplan and Airmiles points depends on various factors, such as the destination, the season, the availability, and the taxes and fees.
  • To compare the cost of flights with cash versus points, you need to calculate the cents per point (CPP) ratio and compare it with the average CPP value of each program.
  • Aeroplan points tend to have higher value for long-haul and international flights, especially with partner airlines, while Airmiles points tend to have higher value for short-haul and domestic flights, especially with Air Canada.
  • Both programs offer flexible redemption options, such as cash and points, fixed mileage, and dynamic pricing, that can help you maximize the value of your points.
Air travel cost comparison: Cash versus Points with airplane and world map background.
Decoding Air Travel Costs: Cash vs. Points – Which Wins

If you are a frequent flyer or a savvy shopper, you may have accumulated a lot of Aeroplan and Airmiles points over the years. But how do you know when to use them for flights, and when to pay with cash instead? How do you compare the value of flights with different points and cash prices? And how do you choose the best redemption option for your travel goals?

In this post, we will explore the economic analysis of purchasing tickets with cash versus redeeming Aeroplan and Airmiles points. We will compare the value of flights to various destinations, offering a clear perspective on the most cost-effective travel options. We will also share some tips and tricks on how to use your points wisely and get the most out of your rewards.

How to calculate the value of Aeroplan and Airmiles points

The first step to compare the cost of flights with cash versus points is to calculate the value of your points. This can be done by using a simple formula: divide the cash price of the flight (excluding taxes and fees) by the number of points required, and multiply by 100. This will give you the cents per point (CPP) ratio, which measures how much value you get from each point.

For example, let’s say you want to fly from Toronto to Vancouver in economy class, and you have the following options:

  • Pay $500 with cash (excluding taxes and fees).
  • Redeem 25,000 Aeroplan points (excluding taxes and fees).
  • Redeem 3,900 Airmiles points (excluding taxes and fees).

To calculate the CPP ratio for each option, you would do the following:

  • Aeroplan: ($500 / 25,000) x 100 = 2 CPP
  • Airmiles: ($500 / 3,900) x 100 = 12.82 CPP

As you can see, the Airmiles option gives you a much higher CPP ratio than the Aeroplan option, meaning you get more value from each point. But does this mean that Airmiles points are always better than Aeroplan points? Not necessarily. The value of points can vary depending on various factors, such as the destination, the season, the availability, and the taxes and fees. Sometimes, Aeroplan points can have higher value than Airmiles points, and vice versa.

To compare the value of points more accurately, you need to compare the CPP ratio with the average CPP value of each program. The average CPP value is based on the typical range of redemption rates and options for each program, and it can help you determine if you are getting a good deal or not. According to our research, the average CPP value for Aeroplan points is 1.5 cents, and the average CPP value for Airmiles points is 1.2 cents¹².

Using these averages, you can compare the CPP ratio of each option with the average CPP value of each program, and see if you are getting above or below average value. For example, in the previous scenario, you would get the following results:

  • Aeroplan: 2 CPP / 1.5 CPP = 1.33 (above average value)
  • Airmiles: 12.82 CPP / 1.2 CPP = 10.68 (above average value)

As you can see, both options offer above average value, but the Airmiles option offers much more value than the Aeroplan option. Therefore, in this case, it would make more sense to use Airmiles points than Aeroplan points or cash.

However, this is not always the case. Sometimes, Aeroplan points can offer more value than Airmiles points or cash, especially for long-haul and international flights, and especially with partner airlines. For example, let’s say you want to fly from Toronto to Tokyo in business class, and you have the following options:

  • Pay $3,000 with cash (excluding taxes and fees).
  • Redeem 75,000 Aeroplan points (excluding taxes and fees).
  • Redeem 12,000 Airmiles points (excluding taxes and fees).

To calculate the CPP ratio for each option, you would do the following:

  • Aeroplan: ($3,000 / 75,000) x 100 = 4 CPP
  • Airmiles: ($3,000 / 12,000) x 100 = 25 CPP

To compare the CPP ratio with the average CPP value, you would do the following:

  • Aeroplan: 4 CPP / 1.5 CPP = 2.67 (above average value)
  • Airmiles: 25 CPP / 1.2 CPP = 20.83 (above average value)

As you can see, both options offer above average value, but the Airmiles option offers much more value than the Aeroplan option. However, there is a catch: the Airmiles option is very rare and hard to find, as it is based on a fixed mileage redemption that is only available for select destinations and dates, and has very limited availability. The Aeroplan option, on the other hand, is more common and flexible, as it is based on a dynamic pricing redemption that is available for any destination and date, and has more availability. Therefore, in this case, it would make more sense to use Aeroplan points than Airmiles points or cash, unless you are very lucky and flexible with your travel plans.

IMPORTANT LINKS:

How to choose the best redemption option for your travel goals

As you can see, the value of Aeroplan and Airmiles points can vary depending on various factors, and there is no one-size-fits-all answer to the question of when to use them for flights, and when to pay with cash instead. However, there are some general guidelines and tips that can help you choose the best redemption option for your travel goals.

  • Consider your destination and travel class. Aeroplan points tend to have higher value for long-haul and international flights, especially with partner airlines, while Airmiles points tend to have higher value for short-haul and domestic flights, especially with Air Canada. Also, business and first class flights tend to have higher value than economy class flights, as the cash price difference is usually much higher than the points difference.
  • Consider the season and availability. The value of points can fluctuate depending on the season and availability of flights. Generally, peak seasons and high-demand destinations have higher cash prices and lower points prices, while off-peak seasons and low-demand destinations have lower cash prices and higher points prices. Therefore, it may be better to use points when cash prices are high, and use cash when cash prices are low.
  • Consider the taxes and fees. The value of points can also be affected by the taxes and fees that are added to the cash or points price of the flight. Generally, Aeroplan points have higher taxes and fees than Airmiles points, especially for international flights and partner airlines, while Airmiles points have lower taxes and fees than Aeroplan points, especially for domestic flights and Air Canada. Therefore, it may be better to use Airmiles points when taxes and fees are high, and use Aeroplan points when taxes and fees are low.
  • Consider the flexible redemption options. Both programs offer flexible redemption options, such as cash and points, fixed mileage, and dynamic pricing, that can help you maximize the value of your points. Cash and points allows you to pay for a flight with a combination of cash and points, which can be useful when you don’t have enough points or want to save some points for later. Fixed mileage allows you to pay for a flight with a fixed number of points, regardless of the cash price, which can be useful when you find a high-value redemption that is available for a limited time or has limited availability. Dynamic pricing allows you to pay for a flight with a variable number of points, depending on the cash price, which can be useful when you want more flexibility and availability for your travel plans. However, these options also have some drawbacks, such as higher taxes and fees, lower availability, and lower value. Therefore, it is important to compare the CPP ratio and the average CPP value of each option before choosing one.

Conclusion

In conclusion, purchasing tickets with cash versus redeeming Aeroplan and Airmiles points is not a simple decision, as it depends on various factors, such as the destination, the season, the availability, the taxes and fees, and the redemption options. However, by using the CPP ratio and the average CPP value as a guide, and by following the tips and tricks we shared, you can find the best flight deals and get the most value from your points. Happy travels!


Source: (1) Aeroplan vs. Air Miles: Differences and Alternatives – NerdWallet. https://www.nerdwallet.com/ca/credit-cards/aeroplan-vs-air-miles. (2) AIR MILES vs. Aeroplan: Which should you choose? – Young & Thrifty. https://money.ca/credit-cards/reviews/aeroplan-vs-airmiles-comparison. (3) Aeroplan vs Airmiles: What You Need To Know About Them. https://www.taxly.in/aeroplan-vs-airmiles-what-you-need-to-know.html. (4) Comparing Air Miles Vs. Aeroplan: Which Is Better? – moneyGenius. https://moneygenius.ca/blog/air-miles-vs-aeroplan-rewards.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Revolutionize Your Income: Start Your Business in 2024 5 Smart Ways to Reduce Your Monthly Expenses US News Roundup: Gas Crisis, Emmys, H1B Visa and More E-commerce Mastery: Leveraging Write-Offs for Online Businesses Unlock Financial Freedom: Perks of Owning Your Business
Revolutionize Your Income: Start Your Business in 2024 5 Smart Ways to Reduce Your Monthly Expenses US News Roundup: Gas Crisis, Emmys, H1B Visa and More E-commerce Mastery: Leveraging Write-Offs for Online Businesses Unlock Financial Freedom: Perks of Owning Your Business