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Premium Flying: Award or Upgrade with Miles?

SmarterTravel

Should you use miles for a premium class award or should you buy an economy ticket and upgrade it with fewer miles? How to escape the cattle car most efficiently has been a question since the beginning of the frequent flyer programs. Originally, for most of you, the answer was a no-brainer: Conserve your mileage by buying a cheap economy ticket and upgrading it with a lesser number of miles. Recently, however, most of the big airlines have started to assess “co-payments” in addition to miles to upgrade a cheap economy ticket; most have also raised the minimum economy fares you can upgrade. The result is some uncertainty, as illustrated by a recent inquiry:

“My husband and I tried to upgrade a flight to Europe using our Alaska Airline miles on British Airways. We discovered that, when using our Alaska miles on a partner airline, we were unable to use miles to upgrade our seats but had to “buy” the business class tickets with miles. Though we purchase domestic tickets primarily with Alaska and Virgin America, we would like to use our miles to fly internationally and would prefer to use them to upgrade to business class. What is the best way for us to do that? Right now we have an Amex Starwood card (which has been fantastic but Amex is not honored everywhere) and an Alaska Visa. We are thinking about closing the Alaska card and getting another bank-buy or airline affinity Visa or Master Charge card instead. What would be the best way to accomplish our goal of using points or miles to upgrade?”

As usual, the answer—in this case, even the normal “short” answer—is complicated. Here’s a look at the current situation. This review is aimed at ordinary travelers who do not have high “elite” standing in any airline’s program; those of you fortunate enough to enjoy exalted status probably know more about working the upgrade system than we do.

The Basic Picture

We compared the current award schedules on the five biggest lines (the schedule effective next January for United) for premium-seat travel using just miles for a seat with buying the cheapest available coach/economy ticket and upgrading it with miles plus whatever fee might be applicable. We did this for the three most popular frequent flyer routes: domestic 48-state, 48-state mainland to Hawaii, and 48-state mainland to Europe.

Surprisingly, upgrading an economy ticket is one area where the big lines do not march in lock-step. Although the miles required for award travel are similar, co-payments vary considerably. The main differences:

  • American, Continental, and United assess co-pays on most upgrades; Delta does not, and US Airways adds a co-pay only for Europe.

  • American charges just one upgrade fee, regardless of the economy fare you buy; fees on Continental and United vary with the fare you pay; in our analysis, we figured the lowest fare and therefore the highest co-pay.

Most of the airlines now allow upgrades on any published economy fare; Delta allows upgrades only on selected fares—well above the lowest levels—but it does not post those fares online.

Comparing the Options

For each option, we compared the difference between getting an all-miles premium seat and upgrading a cheap economy ticket. For this comparison, we had to make some really imprecise assumptions about the costs of representative trips. For a minimum-price economy ticket, we figures round-trip prices of $300 for the 48-state area, $700 for the Hawaii, and $800 for Europe; we assumed higher figures for Delta because of that line’s higher minimum fare requirement.

We then ran a simple model to calculate the costs of each sample trip, on each line, first assigning frequent flyer credit a value of 1 cent per mile and again for a value of 3 cents a mile. The results, for a frequent flyer value of 1 cent a mile:

  • For the 48-state trip, mileage awards beat upgrading cheap tickets by $100-$300 for all lines except US Airways, where the costs were the same either way.
  • For the Hawaii trip, mileage awards beat upgrading cheap tickets by $350-$1350 on all lines.
  • For the Europe trip, mileage awards beat upgrading cheap tickets by $800-$1700 on all lines.

If you put a higher 3 cent value on your miles, the situation changes:

  • For the 48-state trip, upgraded cheap tickets beat mileage awards by $250-$600 for all lines.
  • For the Hawaii trip, mileage awards beat upgraded cheap tickets by $100-$650 on all lines except US Airways, where the upgraded cheap ticket was better by $350.
  • For the Europe trip, mileage awards beat upgraded cheap tickets on Continental, Delta, and United by $600-$700; American was a wash, and upgrading a cheap ticket beat a mileage award on US Airways by $400.

Keep in mind that these variables can change dramatically if you input different figures for the base price of the cheapest economy ticket you can buy.

General Conclusion

A general pattern seems to hold:

  • Upgrades tend to look best for 48-state trips
  • High valuation for mileage credit favors upgrades
  • High prices for base economy tickets and high co-pay charges favor mileage awards.
  • But there’s no substitute for doing your own calculation for your specific trip.

Partner Lines a Bust

The miles-or-upgrades question becomes much simpler for travel on partner lines: In general, you can’t upgrade the cheapest economy tickets on a partner airline at all. Continental, Delta, and United allow mileage upgrades on some foreign partners, but only on expensive economy tickets. Some foreign lines don’t even offer upgrades in their own frequent flyer programs.

Our Reader’s Question

This context helps us respond to our reader. The main points:

1. If you’re looking for international travel on upgrades rather than mileage awards, forget partner airlines; foreign partners of U.S. lines either permit no upgrades at all or permit upgrades only from relatively high economy fares. Instead, earn your miles on whichever of the big domestic lines best serves your home town and goes to the most international places you want to visit. And for a credit card, get one cobranded by your chosen airline, or, depending on your airline preference, an American Express card (convert card miles to Continental or Delta) or Diners Club (convert card miles to American or Delta).

2. If your calculations steer you more in the direction of mileage awards rather than upgrades, you can get a co-branded credit card from any US airline that has a decent partnership list or just about any foreign airline that flies to the places you want to go. AmEx and Diners also transfer miles to more than a dozen foreign lines. Diners is interesting because (1) it provides primary collision coverage for rental cars and (2) it benefits from MasterCard’s widespread acceptance.

3. Forget about any bank-buys card for premium class travel. Those cards basically buy tickets; they can’t buy upgrades at all, and the cash prices of business or first class tickets are very high, compared with the mileage prices.

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