How to Value EQM vs RDM

I mentioned yesterday that I will be taking a mileage run to Bahrain in a couple months. To those of you who are already pros at this, the only real objectionable part of my trip was that it was slightly on the pricey side (but still under 5 cpm) and I couldn’t upgrade all the segments.

To the rest of you, who only travel when you absolutely must, you probably think I’m out of my mind. Hour after hour in coach? Spending $860 to go nowhere in particular? I’ll admit it’s a bit egregious. However, mileage running has its own peculiar logic. I’m not spending $860 to go to Bahrain. I couldn’t care less where I’m going. I’m spending $860 to get 18,354 elite qualifying miles (EQM) and 36,708 redeemable miles (RDM). These names for these terms vary from airline to airline (medallion qualifying miles on Delta, premier qualifying miles on United, etc.) but they have the same meaning.

Redeemable Miles (RDM)

RDM are the miles you use to redeem for a free flight, an upgrade, or something less airline-related like a hotel stay or iPad. They are earned through credit card bonuses, various promotions, and through flying. RDM may or may not expire depending on the program, but it is very easy to keep the account active by redeeming a few for a magazine or making a small purchase with an affiliated credit card. If you are an elite, usually there is a multiplying factor used to determine how many you earn through flying. In my case it’s 100%, but it can go higher or lower depending on the airline, your status, and the type of fare and cabin booked. Because frequent flyer programs have basically turned into little businesses of their own, miles are minted like worthless pennies (about what they’re worth) and sold to banks, hotels, and other programs that give them out as part of their own promotions. One reason Chase offers great sign-up bonuses for getting a United credit card is that they were able to buy millions at a very low price when it offered financing during United’s bankruptcy. However, it’s also a very profitable business. For example, Air Canada’s Aeroplan was spun off as separate company. According to the Toronto Star:

[Robert] Milton is frequently lauded as an industry visionary for realizing that Air Canada’s former frequent-flyer program, Aeroplan, was potentially worth more than the airline itself (or most airlines for that matter).

The good news for you is that all this fuss makes it very easy to get hundreds of thousands of RDM each year, even without spending much money. I don’t mileage run for RDM because I have plenty that I can get from cheaper sources. As you’ll see at the end of this flight, usually the RDM I earn through flying are just enough to offset the cost of the flight entirely, sort of like paying in advance for that future award flight to Paris in business class.

Elite Qualifying Miles (EQM)

EQM, however, can generally only be earned by sitting in an airplane, and there are bonuses only for buying full-fare tickets. Unlike RDM, they reset every year. Sometimes this is on January 1, sometimes it is on a rolling schedule based on when you opened the account. Very rarely any miles not used to achieve status that year, e.g., you had 55K EQM and only needed 50K EQM to reach a certain level, will roll over to the next year. Delta’s SkyMiles program does this, so you would start out the year 5K EQM ahead. Still, the EQM can’t be used for anything. They just serve as a marker for how close you are to the next elite status tier.

There are a few ways to earn additional EQM through very limited promotions, but not many. For example, airlines will occasionally offer double EQM (DEQM) promotions when they really need to drum up some business. American Airlines is running two of them right now: one for all routes that runs through January and another on routes between San Francisco or Los Angeles and Dallas-Forth Worth or Chicago that runs through March. They can be combined to earn triple EQM on certain flights out of California. However, American Airlines is also in bankruptcy, so you can see that a promotion like this (similar ones were offered during the Great Recession) are a sign of desperation.

Some credit cards also offer EQM. My United MileagePlus Select Visa from Chase (no longer being offered, sorry) offers 1 EQM per dollar spent on airfare at United.com up to a maximum of 5,000 EQM per year. The Continental Presidential Plus MasterCard from Chase still offers Flex EQM that can be used at a time of your choosing to reach the next status level, but you have to spend a lot to earn them and they can’t be used to reach the top-tier 1K status of the new combined MileagePlus program. Other cards, like Delta’s Platinum American Express card have similar offers of EQM after you spend a certain amount.

Finally, there are very limited programs to buy EQM. US Airways is notorious for selling as many as you need. If you want top-tier Chairman’s status, you can pay $4,000 to get 100K EQM. Continental is more subtle and allows elite members to buy miles through its OnePass Maximizer program. You can double or triple the number of RDM you earn from a particular Continental flight by paying a price based on the base miles earned, usually around 3 cpm. If you are an elite member, you can pay an additional amount to earn EQM, too. Usually this is around 4.5 cpm at the beginning of the year and climbs quickly near the end of the year as people become desperate to maintain their status. Since you have to buy both, the total cost is 7.5 cpm at a minimum and can go up higher than 20-30 cents each. I usually value RDM at about 2 cpm, so the actual cost per EQM if you plan ahead is 5.5 cents. While some airlines offer short-term “will they? won’t they?” programs to top off your account each winter, Continental and US Airways are among the few who provide this as a standing offer.

Why worry about EQM?

Hopefully you’re starting to get a picture here of how mileage earning works. There are lots of ways to earn RDM, not only lots of approaches but lots of approaches that earn them cheaply or for free. There are very few ways to earn EQM.

Some people are into this game almost entirely for the free miles that they redeem for award trips. The Frugal Travel Guy, Million Mile Secrets, Frequent Miler, Mommy Points, …I could go on. Sure maybe a few of these bloggers have elite status, but they don’t talk about it very often and there’s a reason. It’s hard for the average person to do. Everyone wants to read about how to fly to Thailand in first class for free. No one wants to read about flying to Bahrain in coach.

But spending that weekend in a plane is why Megan and I get upgraded on most of our domestic trips for free or at least get extra legroom in coach. It’s why we never spend more than 10 minutes in the check-in or security lines. It’s why we could check bags full of presents for free when we visited our families in Texas and California over Christmas. And it’s why I when I complained about my bags going missing on a trip to Baltimore I got a personal email from the OnePass Platinum desk that even I thought was excessively apologetic in response to my gentle reprimand. When you are an elite, the airlines pay attention. And in a world where lines and standby lists run everything, it’s nice to know that your name goes to the top.

As the media write more and more stories about how horrible air travel has become in this country, with added fees and reduced services, I can quietly claim that my experience has only gotten better. Maybe not as good as it once was for people who had top-tier status a few years ago, but it’s still an improvement from my perspective.

So EQM are very valuable to me. The lowest tier at most airlines, requiring that you fly at least 25K miles a year, has been significantly diluted since I joined United’s MileagePlus program in 2006. The tier once called Premier and now renamed Premier Silver provides only one free bag instead of two, a lower chance of upgrades, and no longer is access to Economy Plus at confirmed at booking (now you’d have to wait until check-in). It’s not like the competitors are much better. I think the 50K tier, previously Premier Executive and now called Premier Gold, is probably my minimum requirement thanks to access to the elite security line and free international lounge access. Yes, the RDM bonus has been reduced from 100% to 50%, but it’s good enough. I’m looking forward, however, to having 1K status this year, including the international upgrade certificates and (almost) top priority for free domestic upgrades.

I’ll compare elite status levels later, but my point is that status has value, both the cash value of not paying for bags or better seats in coach as well as the intangible value of not waiting in lines and getting better customer service. While I place a very rough (and perhaps generous) value on my RDM at 2 cpm, my EQM are worth another 1-2 cpm on top of that. This is why I see value in a mileage run at anything less than 5 cents per mile flown (1 mile flown = 2 RDM + 1 EQM). But when you need 100K miles a year, every fraction of a penny really counts. That’s why I’m so focused on learning to Hack My Trip!

I’m paying $860.20 on this trip to Bahrain. In return I will get RDM worth $734.16, which means I am effectively paying $126.04 for 18,354 EQM, or less than 0.7 cents each. A very good deal. An even better deal when you consider the EQM I earned from buying the ticket with my United credit card. Yes, I’ll be in a plane for two days, but I have a lot of work I already plan to do during my time. It’s actually kind of nice to have some time to myself to read and think and look forward to the next adventure. :D

UPDATE: I later received 10,000 bonus RDM as compensation for various issues during this trip. This changes the math significantly. And yes, it counts, because I wouldn’t have experienced those issues and been able to claim compensation had I not taken the trip. While I try not to be a whiner, flying 100K miles a year means you experience a lot more service failures than the average traveler, and the elite status usually results in better compensation. Using the above valuation of 2 cpm, I actually got PAID $73.96 to take this trip.

Scott created Hack My Trip after learning how to travel better on a budget during grad school. He now flies over 150,000 miles every year.
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  • http://thefrequentmiler.com Frequent Miler

    Actually, I very much agree with you about the value of EQMs. A lot of what I do and write about involves ways to spend a lot of money on credit cards and get most of it back. The main reason I care about doing that is to get EQMs from high spend on my Delta Reserve and Platinum cards. If I can manage to max out spend on both cards, I’ll get 50k Delta EQMs beyond what I’ll get from flying alone. In a way, I suppose you can think of some of my gift card churning as no-fly mileage runs :). I also did my first mileage run in December (read my Dec 9th post for more).

    Anyway, keep up the good work. I’m really enjoying your blog!

    • http://hackmytrip.com Scottrick

      Oh, I didn’t mean to imply you didn’t care about EQMs, but you have to admit your blog (and others I mentioned) are much more focused on the free RDM aspect of travel hacking. I’m hoping to fill in the other half.

      • http://thefrequentmiler.com Frequent Miler

        Yes, that is true. Keep it up!

  • http://twitter.com/vvagabondages Lucie Aidart

    Thank you for this very interesting post. I am just a BA member for now, but I understand some points much better now. Thanks!