If you have a frequent flier account with American Airlines (AAdvantage) you likely received an identical copy of the above promotion: you can buy American Airlines’s miles at a discount.  You may wonder whether this is a good deal.  No worries, so did I.

In order for this deal to potentially be worthwhile, you should calculate the cost of the miles.  American normally charges 2.95 cents per miles, but the discount and bonus miles completely changes the equation.  I provided calculations below based on the base number of miles purchased (taxes included in the cost):

• 20,000 miles: you receive 27,000 miles for $601 (2.25 cents per mile)
• 40,000 miles: you receive 55,000 miles for $1,172 (2.13 cents per mile)
• 60,000 miles: you receive 82,500 miles for $1,742 (2.11 cents per mile)
• 75,000 miles: you receive 105,000 miles for $2,171 (2.07 cents per mile)
• 100,000 miles: you receive 142,500 miles for $2,884 (2.02 cents per mile)

As you can see, you get your best redemption value of 2.02 cents per mile by buying 100,000 miles.  Of course, you’ll have to spend a ton of money to get those miles.

Second, you’ll need to decide what value you’ll receive from redeeming the miles.  If you plan to book your award flight with these miles before mid-March (when American Airlines devalues its award flight rates), you’ll be charged the following redemption rates:

• 25,000 miles required for a round trip award flight within North America (Hawaii not included)
• 40,000 miles required for an off-peak round-trip award flight from North America to Europe
• 35,000 miles required for a round-trip flight from North America to Machu Picchu (Cuzco, Peru) in economy
• 60,000 miles required for a round-trip flight from North America to Machu Picchu (Cuzco, Peru) in business class
• 90,000 miles required for a one-way, first-class trip from North America to the Middle East on Etihad’s new A380 (it has a shower and a large “apartment”)

American Airlines charges 40,000 miles for an off-peak, round-trip flight from North America to Europe (and London).  Given that you can usually find fairly cheap fares to London, you’ll want to redeem miles for flights to harder to reach cities.

These examples are some of the best redemption rates that you can find from North America when using American Airlines miles.  With that in mind, here are the break even rates in fares that you’ll need to find for you to even consider buying miles at the best rate of 2.02 cents per miles:

• Domestic economy flights over $505
• Economy flights to Europe over $808
• Economy flights to Machu Picchu over $707
• Business class flights to Machu Picchu over $1,212
• One-way, first-class flight on Etihad over $1,616 (this flight usually costs around ~$10,000)

Even those numbers don’t tell the whole story.  You can buy the miles for slightly under 2.02 cents per mile if you use a credit card that gives you extra miles/ points for spending on travel.  In addition, award flights do not earn either elite or redeemable miles so some folks may be willing to pay a little more than the above-estimated fares because of these perks.  Award flights charge varying fees ($5.60 – hundreds of dollars) so you’ll want to research what fee American Airlines charges for the flight that you want.

Conclusion

You’ll need to assess your own situation to evaluate whether buying miles makes sense.  For most people, buying miles doesn’t make sense because other strategies can earn miles, but certain flights are significantly cheaper if you use miles.