What's the value of a Citi PM or a JP mile? My value for them is...

...Indeterminate. That's right. Like shape shifting demons, the value of these mile isn't really something specific. It depends on the time, the place, who's redeeming, for what, etc. And this is one of the most important factors that I consider when I have to choose between redeeming JP miles and Citi PM miles.

This is the second in a 3 part series on Citi PM and JP miles:

Part 1 covered earning opportunities
Part 2 (this post) discusses the value of a Citi PM mile and of a JP mile
Part 3 will deal with redeeming those miles for award tickets

So the objective of this post is to deal with the real value of Citi PM miles and JP miles. But this post also serves another purpose. I'll soon be writing part 3, covering another important question of choice - what miles are most efficient to redeem for airline tickets: Citi PM or JP miles. Hopefully, the valuation aspects dealt with by this post will help with the one on airline redemption. But do read my future post on a detailed evaluation of Citi PM miles when redeeming for airline award tickets.

Cash and intrinsic values

Value of a currency (or indeed anything) depends not on what someone tells you it is worth - it depends on what use you, as the owner of that currency, has for it. Everything that has any use, has two values associated with it - a cash value and an intrinsic (or real) one. The cash value is what that thing (in our case, each mile) is generally worth. It therefore stands to reason, that each mile should, by and large, have the same cash value for each user. Intrinsic value, on the other hand, is what it is worth to a person, at a given point in time - this is the real value of a mile. Because this varies from person to person, intrinsic values could be lower or higher than the real / cash value. Effectively, real value is "what it costs" and intrinsic value is "what it is worth".

In theory, each Citi PM mile is worth Rs 0.50. This is not my calculation - it is Citibank's. And that's because that is the rate at which you need to burn Citi PM miles, to redeem for air tickets. On the other hand, you can buy JP miles at Rs 1.25 per mile (the price JP quotes for top up miles).

But I wish it were THAT simple! Let us take two quick examples:

• Redeeming Citi PM miles for air tickets is done for the equivalent of cash, in miles (more of that in part 3). Therefore, you would normally earn miles on that award ticket, in the program of the airline you're flying. Eg, redeeming Citi PM miles for an Emirates ticket will earn you Skywards miles for that flight. This increases the value of a Citi PM mile, since you now need to factor in that additional benefit.
• On the other hand, you would earn the same number of JP miles irrespective of fare class (except G), on a given sector. This means, that you aren't earning any incremental miles for that flight, just because you bought a higher fare ticket in the same service class. This situation would reduce the intrinsic value of a JP mile.

Values keep changing

Yes, and that's the most important thing to remember. Let me explain.

Citibank PM miles

As I mentioned before, and will be writing about in detail in part 3, Citibank values your PM miles at Rs 0.50 per mile, and "buys" award tickets by reducing the required number of miles from your account. This places a value of Rs 0.50 per Citi PM mile. However, you could choose to transfer your Citi PM miles to another partner program. This could well have an effect on the value of a Citi PM mile. More importantly, this could help you strategise and save some points and money too!

1. You transfer PM miles to Hilton HHonors program at 1 PM mile = 1.5 HHonors points.

For one night at a Category 1 property redemption in the Hilton HHonors program, you'll need 5,000 HHonors points. For instance, the Hampton Inn, Vadodara usually prices out at Rs 5,500 a night plus taxes. But by using Citi PM miles, you could get this for 3,334 Citi PM miles (which convert to 5,000 HHonors points). So, for a cash value of Rs 1,667 (3,333 PMs @ Rs 0.50 per mile) you get a more-than-decent room for a night, making a Citi PM mile worth Rs 1.65 - that's more than thrice that cost, and that's what I call value! However, this doesn't apply for higher categories, so beware. Also, transferring to any other program will have similar, widely varying results.

2. You transfer PM miles to Cathay Pacific's Asia Miles program at 1 PM mile = 1 Asia Mile

For a sample itinerary of BOM-HKG in, say September 2014, you'll require 45,000 Asia Miles. At this transfer rate, that's 45,000 Citi PM miles. However, the cash price of that ticket is around Rs 33,000. This instantly increases the value of your Citi PM mile to Rs 0.73 a mile, from Rs 0.50. More importantly, if you redeem Citi PM miles for this ticket, you'd have to forego about 66,000 miles, whereas by transferring to the Asia Miles program, you've saved yourself 21,000 miles (or Rs 10,500 in cash value).

In effect, all I'm asking is that you do a little bit of research, before burning up your hard-earned Citi PM miles. They may be worth more than what Citi tells you they're worth. A word of caution, though. If you don't really have the time or aptitude for research, and want to go with a base value of Rs 0.50 per mile, that's fine. I know a lot of people for whom that works just fine. However, do keep this in mind, that at a normal earning of 4 Citi PM miles per Rs 100 of spend, that's an earn value of Rs 2 per Rs 100 of spend - or 2%. If you could get a card that gave you a cash back of more than 2%, then you should probably get that instead of a Citi PM card.

JP miles

Jet sells you miles at Rs 1.25 a mile, and they'd like you to think that's what a JP mile is worth. Wrong. Nothing could be further from the truth. The reason Jet sells these at such a high price, is that you could buy those miles to top up your kitty, for a specific award ticket you're looking at. Technically, you can absolutely maximise the value of a JP mile on award redemptions, by flying between to of the farthest points in a given redemption zone. But how often does that happen? 

So the best you can hope for is if your JP miles have a value to you, that's more than what a Citi PM mile is worth to you. 

Is that kind of value hard to find? I'd say, definitely not. In addition to its own flights, Jet has a long list of airline and codeshare partners on which you can redeem your miles for award tickets. One classic situation I face is that when a client books a ticket for me, and I want to take my other half along, JP miles come in quite handy. This benefit automatically increases the value of a JP mile for me, though YMMV (literally and figuratively!).

The ability to transfer miles between JP members is also another useful benefit. Yes, there is a charge for this - Rs 200 per block of 500 miles. But that makes the cost of a JP mile only Rs 0.40. You'd rather do this, and pay someone up to Rs 0.85 (I'm not saying you should), which is more than a Citi PM value, instead of buying miles from JP at Rs 1.25 a mile, and still be in the money. It is a win-win proposition all the way. JP also comes up occasionally with offers on both redemption (up to 20% off on miles required for award tickets) and bonus miles on transfers between JP members. These will also automatically up the value of a JP mile.

On the other hand, absence of partners to transfer to handicaps the utility of JP miles. Unlike Citi PM miles, I can't hope to use JP miles to get a room for just over 3,300 miles! This lack of versatality could reduce the value of a JP mile - but only if you intended it to have other uses.

So, to conclude

There's no such thing as a fixed value of a mile - JP or Citi PM. It depends entirely on you, the time, the place, and the purpose. However, as a thumb rule, don't redeem your Citi PM points without exploring other options - especially transfer partner programs. Those may give you a better value, and at the end of the day, no matter what miles you have, your objective is and should be, to maximise their value. However, if it comes to redeeming for airline tickets, you should wait for and read part 3 of this series.