What Do Airline Miles Cost?

Here's a scenario.  United Airlines sends you a brochure with all kinds of nice merchandise: iPads and flat screen HDTV sets for the guys; handbags for the ladies. 

An Apple iPad 2 16GB Wi-Fi - Black is listed for 74,700 Award Miles. 

Should you use your hard-earned airline miles to buy this iPad?  Here are some examples why you should not. 

Many frequent flyer sites state that one airline mile should equal about 2 cents.  With this reasoning, the iPad 2 above is worth about $1494!  That's a lot of dough for an iPad 2. 

This same iPad sells for $413.89 on Amazon today. 

United Airlines recently sent me an email, offering to let me purchase miles.  I've attached a screen grab from their website, showing how much they would charge me for 100,000 or so miles (their rate was about 2.6 cents per mile).