Recently, I transferred 18,000 American Express Membership Rewards points to Hawaiian Airlines, then transferred them from Hawaiian Airlines to Alaska Airlines to book a round trip positioning flight on American Airlines for my wife Jenn and I. To anyone other than a hardcore travel hacker that seems insane. Yet, to hackers, that sounds like a normal rational decision.
This process was actually rather easy, but there is a lot to unpack in that sentence. Doing this has only really been possible for a few days, and for me it is the result of learning a lot about travel hacking over the course of the last few years. A recent merger between Alaska Airlines and Hawaiian Airlines is the reason why this is suddenly possible.
What is a Positioning Flight?
A few months ago, we booked a trip to Italy using Flying Blue miles to fly KLM to Rome from Chicago and we booked United Airlines to fly back to Chicago from Rome. The problem is that we live 3 hours away from Chicago O’Hare Airport. The reason why we booked it out of Chicago is that the flights were much cheaper than out of our home airport, Quad Cities International.
A one-way ticket from Chicago to Rome was 20,000 Flying Blue miles and $122, but if you tack on the Quad Cities to Chicago leg, it becomes 53,000 Flying Blue miles and $127. It seems insane that from Chicago to Rome was 20,000 Flying Blue miles but adding the leg from Moline to Chicago was 33,000 miles. I’m not doing that.
We were okay with driving to O’Hare, but we didn’t want to. Instead we (originally) used American Airlines miles to book a separate flight from the Quad Cities to Chicago that would save us the drive. Those flights were 7,500 American Airlines miles per passenger each way, or a total of 30,000 American Airlines miles. This is called a positioning flight because we had a separate booking to position us to the airport we wanted to fly out of.
What is a Transfer Partner?
Transfer partners are basically what makes the points in banks’ reward programs so powerful. The reason why people covet Amex Membership Reward points or Chase Ultimate Reward points is that they can be transferred to various airline and hotel programs. Having transferable points lets you keep your points flexible while you’re earning them and then choose the best way to use them when you are redeeming those points.
American Express Membership Rewards have a number of transfer partners. One of those transfer partners is Hawaiian Airlines. You can transfer your Membership Rewards points to Hawaiian Airlines at a rate of 1:1 with a minimum of 1000 points transferred. American Express does charge an excise tax of 60 cents per 1000 points transferred.
OK, But you Booked with Alaska Airlines Not Hawaiian Airlines
Alaska Airlines has been an amazing program for a long time. According to their website, they partner with 31 different airlines. You can redeem Alaska miles for flights on many of them, when they are available. There have been several times that I’ve used Pointsyeah.com to find the best award flight, and Alaska has had the best price.
The problem with Alaska Airlines was that it was hard to amass a lot of miles in their program. There are only a couple of credit cards issued by Alaska, and the signup bonuses are lackluster. They also, until recently, haven’t had any transfer partners. They did, recently, sign a deal with Bilt Rewards to be a transfer partner, but Bilt doesn’t have signup bonuses so amassing a stash of Bilt Rewards points can be difficult.
Nevertheless, when Alaska Airlines and Hawaiian Airlines agreed to a merger, they made an agreement to allow transfers between the two programs. This opened up a back door to move points from American Express Membership Rewards to Alaska miles through Hawaiian. This is fantastic, because amassing a large number of American Express Membership Rewards points is not difficult.
Exact Flights, Different Prices
One of the most consistently baffling things to me about points and miles is the fact that sometimes the same flight is being offered by different programs at different prices. In this case, we had an American Airlines flight booked with American Airlines miles leaving on a Sunday night and returning on a Sunday night. Using American Airlines miles it was 30,000 AA miles and around $22 in taxes for the two of us.
When we originally booked with American Airlines, I saw that Alaska had the same flights for 4,500 points and around $18 per person per flight, so in other words, 18,000 Alaska miles and around $72 in taxes and fees. At the time, I didn’t have access to Alaska miles.
When the backdoor transfer option from American Express to Alaska Airlines materialized, I checked to see if that was still available and it was so I jumped on it. American Airlines has free cancellations, so it wasn’t a difficult to have my points and fees returned.
Saving American Airlines Miles
One big reason that we changed how we booked this flight was being able to use something other than American Airlines miles. American Airlines doesn’t have any transfer partners and lately it seems like whenever I’m comparing prices on award flights American Airlines always has competitive pricing. I didn’t want to use AA miles that I find so valuable if I don’t need to.
Also, earning 30,000 AA miles using just credit card spend requires a lot of spending. If we did it using the Barclays Aviator Red card, all purchases except American Airlines purchases earn 1 point per dollar spent. That means I would have to spend $30,000 on that credit card to earn 30,000 points.
On the other hand, I transferred 18,000 American Express Membership rewards points to Alaska and those are much easier to earn. When I buy groceries or dine out using my American Express Gold Card, I earn 4 Membership Rewards points per dollar spent on that card. That means I would only need to spend $4,500 on that Amex Gold Card, assuming I only use it for groceries and dining out, to earn the 18,000 miles necessary to book the flight. That’s a huge difference! Yes, the Alaska flights cost an extra $50 in fees but I was happy to spend that to keep those 30,000 AA miles.
Will This Back Door Transfer Option Remain?
It is unclear at this point whether transferring American Express Membership Rewards points through Hawaiian to Alaskan Airlines will remain an option. We know that transferring points between Hawaiian Airlines and Alaskan Airlines will be around for the foreseeable future. This has created a lot of interest in the travel hacking community for Hawaiian Airlines credit cards.
In the past, most travel hackers weren’t very interested in Hawaiian Airlines credit cards. Hawaiian miles weren’t worth a whole lot and because of that, the credit cards weren’t interesting. In fact, the Points Guy used to value Hawaiian miles at .9 cents per point and Alaskan miles at 1.5 cents per point. Moving 100,000 Hawaiian miles to Alaska Airlines increases their value, according to these valuations, by $600. That’s a big deal.
The problem for American Express is that now this throws their agreement with Hawaiian out of balance. If Hawaiian miles are suddenly worth more, will Hawaiian Airlines/Alaska Airlines demand more money to sell those miles to American Express? I don’t know, and there has been a lot of speculation in the travel hacking community that this transfer agreement could end.
The potential end of this agreement has me tempted to move some Membership Rewards to Alaska, but I don’t really have enough to just move them without a flight in mind. Instead, I think I’ll just wait and hope that Membership Rewards continues to allow transfers to Hawaiian Airlines. That being said, I might just be looking at a Hawaiian Airlines credit card soon. It’s never a bad idea to take advantage of a great deal when it pops up.
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