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Maximize Frequent Flyer Miles: Know the value of a mile

The key to redeeming miles lies in knowing how the airlines value them. Since miles rewards programs were introduced, the industry rule of thumb has always been that a mile was worth about two cents. The underlying formula: 25,000 miles were required for one round-trip domestic coach ticket, which was estimated to have an average price of $500. (In other words, $500÷25,000=$0.02.) But discount airlines and Internet fares have forced ticket prices down: The average domestic round-trip fare was $362 in the third quarter of 2008, according to the Bureau of Transportation Statistics. One mile has depreciated to around 1.5 cents today.

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