Paying Fuel Surcharges vs. Redeeming More Points Or Miles

Fuel surcharges can be a major buzzkill when you’re trying to redeem points and miles.  If you have points that are transferrable to several airlines, such as Chase Ultimate Rewards or American Express Membership Rewards, you may be able to find an alternative way to book an award ticket that doesn’t involve fuel surcharges.  The problem is, the alternative may require more points or miles.  That leaves us with a decision:

Would you rather redeem less miles and have high out of pocket fees?  Or would you rather redeem more miles but not pay fees?

While writing my post about using Virgin Atlantic Flying Club miles to book flights between the US and Europe, I decided to pull a whole section and give the topic its own post.  The section was about determining whether or not it makes sense to book an award flight with high fuel surcharges.  No matter what frequent flyer program you use to book a flight, this is a dilemma you’re likely to come across when booking international award tickets.

I’m going to use Virgin Atlantic for my example since I already have the screenshots, but fuel surcharges aren’t unique to Virgin Atlantic!  In fact, here is a post specific to British Airways and Iberia.

In this post, I’ll go over some scenarios to consider when you’re trying to decide the best way to use points or miles to book a plane ticket.

This post is written with the assumption that you’ve read a little bit about taxes, fees, and fuel surcharges.  Click here for more info.

Before we get started, I want to say a few things about cents per point value on redemptions since it’s something I often include in posts.

What makes a redemption a ‘good redemption’?

Before transferring points from Chase Ultimate Rewards or Amex Membership Rewards to an airline or hotel for any given redemption, I calculate the cents per point (cpp) value.  Generally, I want to make sure I’m getting at least 2 cents per point in value.  But it’s not that simple, because a redemption value of less than  2 cents per point isn’t necessarily a bad redemption.  On the other hand, while it’s always exciting when you get a value of 5-10 cents per point, you don’t get a prize for getting the highest redemption value.

Calculating cents per point value is a way to objectively measure your redemption value, but it’s not the only factor that you should use to make a decision.

One factor that must be considered is out-of-pocket fees known as fuel surcharges.  An award ticket that has added fuel surcharges may give you 2 cents per point in value, but that doesn’t change the fact that there are fuel surcharges.  On the other hand, you may find an option that has no fuel surcharges but requires more miles or points and gives a value of less than 2 cents per point.  Neither of these is right or wrong.

Ultimately, the definition of a good redemption is going to vary from person to person.

Click here for more info about calculating the value.

Fuel surcharges on award tickets to Europe

One way to get around fuel surcharges when redeeming Virgin Atlantic miles is to fly to Paris or another European city instead of London. But it may cost more miles.  Click here for more info.   Another way to avoid fuel surcharges is to explore other possible Ultimate Rewards options.

Some award tickets come with fuel surcharges

Award tickets on flights between the US and Europe are particularly notorious for fuel surcharges.  Virgin Atlantic and British Airways are two programs that always add fuel surcharges to award tickets on their own flights to Europe.

Using Virgin Atlantic Flying Club miles, the amount required for ATL-LHR roundtrip on a flight operated by Virgin Atlantic is 25,000 miles (in economy).  This is an excellent redemption price considering several programs require that amount or more EACH WAY! But there is one little problem: the fuel surcharges are $465.

I kind of equate this to a points + cash redemption.  You redeem a lower amount of miles, but you have to pay a cash copay.

It is important to factor in fuel surcharges when you’re calculating the cents per point value

The fare of the exact flights above is $1287.  To say I’m getting $1287 for 25,000 points would be wrong since there’s that $465 charge.  The correct way to calculate would be to subtract the fuel surcharges from the fare (1287-465).  Then I would use that number to determine if 25,000 miles are worth it.

Here is another way to look at it: to get 2 cents per point out of 25,000 miles, you need to be getting $500 cash value.    On this particular redemption, the paid fare would need to be $500 (to justify the 25,000 miles) plus $465.  That means roundtrip ATL-LHR would need to be ~$965 if I was going to redeem 25,000 miles and pay $465.

If I were paying for my flight (with money, not points or miles), I don’t necessarily need that exact flight, so I searched for all nonstop flights between ATL and LHR on those dates.

Nonstop roundtrip ATL-LHR on the above dates with any airline is at least $1158.

I’ll use $1158 to calculate the cents per point value:

  • $1158-$465 (fuel surcharge, fees, taxes) is 693
  • So the question is, is $693 a good enough value for 25,000 points?
  • I’ll spare you the math (see link above if you want) but that’s about 2.8 cents per point, so I’d say yes, it’s a good cents per point value.

While 2.8 cents per point is a good value for the 25,000 points required, there is still the $465 you’re going to have to pay out of pocket!

How bad do you want that nonstop flight?

I prefer nonstop flights when possible, but I sorted by price to see if a flight with a connection would have a lower fare.  This gave another option, so now we have some decisions to make.

If you’re okay with a connection, the fare comes down to as low as $636.  That’s $500 less than the nonstop flight!!

If I had no miles or points and I was paying with cash, I would definitely be booking that flight with the connection to save $500.  But using miles and points to book the route creates a dilemma.

Note: Always check other Ultimate Rewards partners (or Amex if you have Amex MR points) because other partners may have equal or better redemption costs than Virgin Atlantic for any given route.  To my knowledge, out of the Ultimate Rewards airline transfer partners, Virgin Atlantic Flying Club has the lowest redemption cost for this particular route. I do not know of another Ultimate Rewards transfer partner that has roundtrip ATL-LHR for less than 25,000 miles.

Here are my options for booking the ATL-LHR route with a connection with miles and points

The flight is a United flight.  I could transfer Ultimate Rewards points to United at a 1:1 ratio.  United has a zone-based chart and requires 30,000 miles each way for flights between the US and Europe, or 60,000 miles roundtrip.  That’s assuming saver level flights are available.  60,000 is more than double the 25,000 miles required for Virgin Atlantic, but United’s frequent flyer program, Mileage Plus, has 2 things going for it:

  1. Fuel surcharges aren’t ever collected.  Not even on partner flights.
  2. Adding a connection does not add to the amount of miles required on award flights.  This is good if you live in a city that doesn’t have nonstop flights to Europe (or wherever you’re traveling).   For example, Houston to London requires the same amount of miles as Baton Rouge to Houston to London.

Anyway, 60,000 miles roundtrip for a flight that costs ~$636 is just slightly more than 1 cent per point.  Not a good value.

Chase’s other Star Alliance partner, Singapore Airlines Krisflyer, could also be used to book the United flight, but it’s not much better.  Singapore Airlines would require 27,500 Krisflyer miles each way, or 55,000 miles roundtrip for the United flight.  You could do better, though.

You would be better off booking through Chase’s redemption portal.  This means you are basically using your points as cash (at a fixed value) to book the flights.  Higher fare means more points required.  Lower fare means less points required.  Your Chase Ultimate Rewards points are worth a fixed value of 1.25 cents per point with Chase Sapphire Preferred or Chase Ink Business.  If you have the Chase Sapphire Reserve card, points would be worth 1.5 cents per point.

For a $636 flight, this comes out to ~42,000 or ~51,000 Ultimate Rewards points (depending on which card you hold) and $0 out of pocket to book through the redemption portal.  Click here for more info about Chase’s redemption portal vs. transfer partners.

Options for the United flight:
  • 60,000 UR transferred to United (no surcharges, but you will have to pay London taxes and fees which are high)
  • 55,000 UR transferred to Singapore Airlines (no surcharges but you will have to pay London taxes and fees which are high)
  • ~42,000 or ~51,000 Ultimate Rewards points and $0 out of pocket to book the $636 fare through the redemption portal
  • $636 out of pocket, save my points

If I were to use points, the Ultimate Rewards redemption portal is the best cents per point value for the United flight.  But I’d also consider paying cash.

Now let’s consider the nonstop ATL-LHR Virgin Atlantic flight vs. the ATL-LHR United flight with a connection.

Which flight would I book and would I use points?

Here are our options:

Virgin Atlantic ATL-LHR nonstop roundtrip flight (paid fare is $1158-$1287)

  • 25,000 Virgin Atlantic miles* plus $465
  • Cents per point value is 2.8
  • Since UR transfer to Virgin Atlantic at a 1:1 ratio, this would be 25,000 Ultimate Rewards points plus $465

*To be clear, this is off-peak pricing.  While there is no chart for Virgin Atlantic’s peak pricing, this particular route is 45,000 miles roundtrip at the lowest I could find for peak dates.  45,000 plus $465 would definitely be a no-go for me.

United ATL-LHR flight with a connection (paid fare is $636)

  • 42,000 or 51,000 Ultimate Rewards points when booking through the redemption portal.
  • Depending on which Sapphire card you hold, you get a fixed value of 1.25 or 1.50 cents per point.

First, you have to decide if you want to use points and miles at all.  Some may prefer to pay out of pocket and save the miles and points if you can find a low fare like the United flight.

If you do want to use miles and points, the best option for you comes down to a few things:

  • Preference of nonstop vs. connecting flights
  • Would you rather use less points, get a good cents per point value, and pay some cash?
  • Or would you rather redeem more points and pay no cash, but get a lower cents per point value?

Final thoughts

Some people just want to get from point A to point B for as little cash as possible.

Let’s play a game of would you rather:

  • 25,000 Ultimate Rewards points plus $465 for a nonstop flight (2.8 cents per point value)
  • 42,000 or 51,000 Ultimate Rewards points plus 0$ out of pocket (1.25 or 1.50 cents per point value) for a flight with a connection.

There is no right or wrong choice, but let’s review the factors:

The nonstop flight costs less points, and it’s a good cents per point value, but it costs more money out of pocket.  Being nonstop, it’s also more convenient.

The flight with a connection requires more Ultimate Rewards points, but you won’t have to pay anything out of pocket. You’ll also earn miles as if you paid for the flight with cash.  Even though using the portal results in a lower cents per point value, I’d still consider 42,000 or 51,000 Ultimate Rewards points for a roundtrip ticket to Europe a solid redemption.

Be sure to explore all of your options before transferring Ultimate Rewards or Amex Membership Rewards to a partner airline.  Then use your points and miles the way you feel is best for you.

Fuel surcharges on award flights to London

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