Thinking about the US Airways 100% Share Bonus? Read this.

There’s a deal on starting tomorrow, December 2nd 2013 running through to December 6th where if you share US Airways Dividend Miles (USDM) Airmiles Program with another customer they get a 100% bonus.  Many people are doing this in order to boost their points balances and effectively buy miles for as low as 1.135 cents per mile.  Here is how it would work:

You need to have the account open for 12 days prior to the transfer in order to leverage this, so if you don’t have one you out SOL.

Lets look at an example where I have 50,000 USDM in my account and the better half has zero (but her account has been open for a long time) I send 50,000 USDM to Mrs Saverocity the following things happen:

1. I am charged a transfer fee of $567.50
2. My Account Balance goes from 50,000 USDM to Zero
3. Her Account Balance goes from Zero to 100,000 USDM (my 50,000 plus a bonus of 50,000 from US Airways)

She could then, if she wanted send back 50,000 to me for another $567.50; the end result would be that we now have:

• Me: 100,000 USDM
• Her: 50,000 USDM
• Our Bank Account (-$1135)

In many ways this is an amazing opportunity, but before you get your credit card out you should do some thinking.

First thing to consider worry about is that one business day after the company is closing this bonus, they are supposed to start the merger with American Airlines.  Once fully merged the USDM Airmile program will become obsolete, so all the miles that you buy/share in this promotion will be transferred to American Airlines at a 1:1 ratio.  That merger of Frequent Flyer program may not happen immediately, but it is going to happen reasonably soon, so the clock is ticking.  Given the current award charts for American Airlines that isn’t a bad thing at all, as there is lots of great value, but it’s also my opinion that the American Airlines AAdvantage Program is well overdue for devaluation.

Therefore, you need to ask yourself, are you playing the buying/sharing game because it is what the cool kids are doing, or can you actually use the miles up in an instant?  If you can’t buy them and book with them instantly then you are buying into volatility and therefore the risk of change should be factored into your decision.

Let’s look at the upside of this deal.  One of the best redemption’s from the USDM program would be flying on their partner airlines within the Star Alliance (which is also going away when the merge with AA and they will be part of the OneWorld Alliance).  An aspirational award would be 120,000 USDM miles from North America to Asia, which they allow you to route via Europe in First Class.  And what’s good about it is that it burns up a bunch of miles in one fell swoop.

It’s worth noting at this point that in order to actually get the 100% bonus you need to share 30,000- 50,000 miles with your Buddy, any less grants a less bonus, as per this chart:

Additionally, from a pure mathematical equation it is better to share more than less miles.  This is because they price the transfer as follows:

• Cost per Point Transferred 1 Cent (variable cost)
• Cost per transaction $30 (fixed cost)
• Cost of tax (7.5%)

If you were to transfer 1 mile it would cost you a total of $32.26, and if you were to transfer 100 miles it would cost $33.33, since the $30 is a fixed transaction cost the more you can push through each time erodes the punitive nature of this fee and adds value to the exchange.

So, you know the value is in transferring the full 50,000, you know that (perhaps) the best award is the trip to Asia via Europe for 120,000, you have just enough miles in the account to make this happen after the bonus and it sounds like a bargain for one last Star Alliance ‘Hurrah’ before the merger.

Before you pull the trigger on the transfer, just go onto the US Airways website and start checking around for award space.  Personally I have found that despite it being possible to get some great value tickets in theory, in actuality it is not such an easy task. When I searched for space in Business Class from New York to Paris for an upcoming trip I was thrown a curve ball on these prices, according to the USDM Partner Award Chart I should be able to get to Paris RT in Business for 100,000 miles.  However, when I try to book it, I am offered firstly just US Metal for the price range of 100,000 – 165,000 EACH WAY.

As you can see here, they actually deploy a three tier award chart, so if you are buying/sharing to get one of these amazing awards, perhaps you should realize that the journey could cost a lot more than you expect.  Also, like any tiered award system they offer a few spaces at the lowest price, and more at the highest price.  As we already know that the Frequent Flyer program of USDM is about to end, you can bet that the majority of real USDM customers are burning up their miles, and burning them on the low cost awards…

Luckily all hope isn’t lost, US Airways can still offer that much lower price to get to CDG by making the flight on a Partner airline (should space be available).  Typically the rule is that if ‘saver’ space is available on a Partner then US can access it.  If we search on the United website there is a flight from New York La Guardia – Paris via Chicago, it is likely that if you can dial in and speak with an agent you can book this route, which does mean doubling back on yourself, but also means that you can fly Trans Atlantic for 45,000 each way in Business Class rather than the 100,000 each way on US Airways metal.

A good tool to hunt around for this valuable partner space is the ANA website, by putting in dummy bookings you can see if there is space available for you, that you can then dial in and confirm.  Lucky from BoardingArea has a good post about using this tool to build an award here.

Bonuses are apparently instantaneous, and US will frequently hold space for you if you call in to price the award,  so if you can find the space, you can have them hold it for you, make the transfer, call back and book.  Any other strategy, such as a buy and hold play is not recommended.  And if you aren’t thinking that you are going to lay out a nice partner award route in advance, and just transfer for the sake of ‘value’ then you are quite possibly throwing your money away on this transaction.