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The Mechanics of Airline Upgrades and Maximizing Loyalty Credit Cards

• Jeff Borman and Matt Brown

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How exactly to airline loyalty programs work, and is there any way to game the system? Credit cards play a huge factor, but do any of them give you the edge? We use American Airlines as our case study example of how plane perks and credit cards are so intertwined.

The more you know:
https://cwsi.net/aa.htm
https://viewfromthewing.com/trumps-team-discloses-they-violate-airline-rules-use-throwaway-ticketing-site-skiplagged-for-airfare/
RocketMiles.com
https://lpcalculator.com/#/landing

Matt:

Let's get a fresh start here. Let's go fresh. Let's go fresh. Hi everybody, it's no Show. I'm Matt Brown, joined as always by Jeff Borman. Today, we are talking about the Holy Grail of Travel Upgrades, and before we get into any of the things that we're going to talk about, Jeff, I just want to ask you right off the bat how often do you get upgraded for things? When and hotel?

Jeff:

Hotel. Quite often, I get great suites in hotels. Airlines total opposite, I'm Platinum Exec, which is the highest level of American Airlines Advantage program that you can earn without invitation. Right, there's concierge key, but you have to be awarded that.

Matt:

So as Platinum Exec, I still only get upgraded at 15% of the time I want to talk a little bit about how airlines put themselves in a corner with Upgrade Nation and all these crazy levels that they have that seem just impossible to keep up with. But first we're going to get into two recent articles by Gary Leff. Gary is the writer of View from the Wing. If you don't check it out on a regular basis, please do. And even as exceptionally frequent travelers who pay enormous attention to the business side of travel, we had to do a deeper dive just to understand some of the methodologies behind how airline upgrade points are really earned, in particular for the discussion today, the impact that American Airlines reservation systems have on our day-to-day travel. We chose American Airlines because they were easy to choose. Let's start with a couple of terms that Gary used. One is called skip lagging. Do you know what skip lagging is?

Jeff:

Yes, only because I had to look it up after I read Gary's article. Skip lagging is when you buy a fare to a destination you really aren't intending to go to because it has a layover at the place you do intend to go to. So if I'm flying from Dallas, let's say, to New York City, and my flight to Boston goes through LaGuardia, I just buy the flight to Boston for cheaper than flying to New York and then when I get to New York, I miss my connecting flight to Boston intentionally just to save on the better fare.

Matt:

I've not heard of that and I don't think I've ever done that. Maybe I should start.

Jeff:

The Trump administration recently disclosed how they used that technique throughout the I think it was campaigns.

Matt:

Oh wow, so wait, the Trump administration was actually saving money in travel. It was their own, not yours. Oh great, of course, of course, silly, silly me.

Jeff:

I'm amazed that airlines get away with the practice of charging for items that are paid for but not consumed. The economics just make no sense. Imagine if you were served dinner, you and a man to go to a restaurant. You served dinner and they charge you additionally for the portion you did not eat. No other business could get away with abusing customers the way airlines do, and skip lagging fees and penalties are about as good of an example as there is. I rented a car last week from Hertz. Imagine if I had not driven it anywhere. Does Hertz give the tiniest care? It's better for them. Less wear and tear in the vehicle, Nothing to clean. Same for hotels. I'd love for guests to just rent rooms, never check in. Right. All the revenue, none of the costs. Somehow, though, airlines have managed to create another unfriendly source of fees through the illegal practice of skip lagging.

Matt:

Well, illegal, allegedly illegal, of course. Let's not throw stones here. I have not heard any bipartisan congressional meetings about skip lagging recently, have you?

Jeff:

I have not, for all the saber rattling and rhetoric around resort fees and junk fees. All I've ever asked is that the opportunistic politicians who are behind that movement supposedly defending consumer rights, need to act on a more broad spectrum than just hotels. I don't understand how airlines are passed over in this. How has Telecom exempt Ticketmaster? How are they still exempt from junk fees? I recently bought tickets to a show where the ticket itself was $20 and the service fee was $25.

Matt:

The other view from the Wing article that took some sleuthing to understand was titled Changes to how American Airlines Processes Upgrades Within 24 Hours of Departure. Let's first talk about how upgrades are determined. A customer is added to the wait list by American Airlines reservations. This happens automatically when you book the ticket and if you have status, you don't have to do anything. Then we switch to upgrade priority. Okay, great, I'm in. The system made my reservation.

Jeff:

Let's break this down. The very first thing is a status, where it starts with, in the case of American Airlines, constituent Key, then Executive Platinum, then Platinum, then Gold. In that order, a exec platinum will always get the upgrade before the platinum. I think one of the things that's really changed and something we should dive into is how do you get that status? It's no longer by flying, but step one to get an upgrade status, step two the type of upgrade. So usually upgrades that are wait-listed, with first priority being for people who are offering to use miles for the upgrade, or VIP like a system-wide upgrade. So if you're giving something back to American Airlines, then you are in line to get that upgrade before the complimentary elite upgrade. So I'm a platinum exec and you are a platinum. If you are using a system-wide, you'll get it before me.

Matt:

We're only two steps into this and it's already impenetrable.

Jeff:

Well, so then it comes to the 12-month rolling loyalty points balance. I think this is self-explanatory, but probably well, you know what, Matt, it's not self-explanatory. That's to me, this isn't just about how much you fly. How much you fly is almost irrelevant, because these programs are owned by banks, not the airlines. And how much you have put on your credit card is going to get you a rolling 12-month balance of loyalty points. That matters a lot. It's not how much you fly.

Jeff:

Then and this gets even trickier it goes down to the booking code. This is the fare basis, and it's a little tricky here because they don't really publish this. But when you book a flight, you can book a Y fare, which is an economy, and you can book an M economy, and those different fare types will play into your priority for getting an upgrade. So go to cwsinet at AA if you want to look at the whole chart of booking codes and the fares. That will make a big difference. Then this is pretty easy. Date and time of request. So basically, when you add it to the list, you get all these things a month before me. Then you are by that fifth level of determination. You would get it then before me because you booked first, all other things being equal, which would be pretty rare at that point.

Matt:

I think people still hold on to that fifth thing on the list. Oh, I did it in July. I'm a responsible consumer and purchaser and I got my act together. Or I deserve to be in zone three versus zone 68.

Jeff:

Right, and I mean I think in my case, where you asked me at the top of the show how often I get upgraded and even as an exec platinum, you'd think it'd be all the time I'm way up that list and clearly I'm not, and it's mainly, I would have to assume, because of the amount of credit card spend and thus the loyalty point balance on a rolling 12 month basis, that I can't compete with my businesses out there, small business owners, for example, who will put all of their spend on a card. My personal spend can't compete with that. Okay.

Matt:

So you've made your reservation, you've made your way through this maze to get to the Minotaur and now, okay, great, I've got all those things next on the list. This has to make a difference, right. My check-in time I got to the airport early. Again, I'm a responsible person who has my life together and I'm going to get to the airport two hours and 15 minutes before my flight takes off, and that has to mean something when I am putting it for an upgrade.

Jeff:

Yeah, not really. I mean, check-in time doesn't matter. So, up to four hours before departure, the system will automatically clear, based on the priorities that we just went through. Within four hours, it'll be cleared by the airport staff themselves. That's about it. But check-in time, you're all of it. All my dreams, all my dreams are floating away, matt.

Jeff:

The only thing you can do is spend more money, so we already established that there are really four earnable statuses. You can get gold through 40,000 loyalty points. You can get platinum through 75K, plat Pro 125K. Exec Platinum 200,000 loyalty points required to be at that level. You, at that point, have the highest chance of upgrades. You've emerald status across one world. You get oh and luggage tags. You get luggage tags for that one, matt. And then you also get the other benefits that come with everything above it, with different levels of numbers of checked bags, et cetera. What really starts to matter, though, is as you climb up those tiers, from gold to Exec Platinum and, by the way, we mentioned concierge key only once. We won't focus on it, because you can't get that on your own. It has to be awarded to you by some and I mean this very accurately a very secret formula that ends with somebody at American Airlines weaving a wand and blessing you.

Matt:

Wait, what? First of all, what is the Concierge key?

Jeff:

Concierge key is the highest level of status for American Airlines. You board before group one. Honestly, I'm not even sure what all the benefits are. Plains can get delayed for you. It's that level of status. Okay, you become a god, essentially, yeah, and you have to be blessed god. You cannot earn it through spend or amount of money. C level of a major company who doesn't even fly. American is the only person I know who's Concierge key. They want him on their planes.

Matt:

Okay, so I don't know. Bob Iger is not taking a private plane for some reason. He would get Concierge key.

Jeff:

Yeah, that's a good example. I have no idea if that's true, but that's a perfect example. Okay, they want Bob sitting in the front of their planes and they want everybody who's boarding the plane to see Bob there.

Matt:

Okay, unless everybody in the plane is going to like a sag after a writer strike meeting or something. One thing you always hear with all these programs is multiplier status. What exactly?

Jeff:

is that there is a multiplier based on your status. So if you're a gold, you're going to earn a certain amount of points for your flight. If I'm platinum, then one step ahead of you, I'm going to get about 20% more points for the exact same flight when I go to Plat Pro, exact platinum 120% of what you're earning as a non-status person. So the whole purpose of these things is to get people flying more and more loyally. Of my 72 flights last year, 71 of them were on American. I'm extremely loyal by every perceived metric, even having pretty deep dislike for American Airlines. But I do it because, as exec platinum, the benefits of staying platinum and the bonuses that come with being that platinum member are exceptional. So I'm earning points at two and three and four times faster than the gold sitting next to me.

Matt:

You know what it sounds like. It sounds like everything is tied to your credit card the amount you fly, any kind of other stuff that you try to do to game the system. What they really want you to do is get a nicer credit card.

Jeff:

That's the end. Yeah, that's all they care about. It used to be very simply if you fly a lot, you get taken care of on those planes, and when I was a US Air regular traveler, us Air would put out every month your number of flights flown, miles earned and the number of upgrades and percent of upgrades you received on your flights that you took that month and I thought that was the best thing ever because it would. Every month you got upgraded on eight of 10 and I thought, damn, they love me, they take care of me. And now that metric, that kind of reporting, absolutely wiped off any consumer facing communication from American Airlines, because they don't want to talk about it. All it is is how much money do you put on your credit card, and they don't really want to be that transparent about it.

Matt:

There was a valuation of American Airlines a year ago that put this credit card program as being more valuable than the actual airline.

Jeff:

Right, yeah, all the metal, as they call it, if you took the entire fleet of airplanes themselves. And so what's the value of all the planes, all the equipment? It would seem like a pretty staggering sum, and yet the program is actually worth more, right?

Matt:

We're actually going to post a link in the show notes. That's called a loyalty points calculator tool. If you're interested in any of this I want to dive deeper the more you know style. It's called lpcalculatorcom. We will post that in. It's actually a really nifty little tool. If you're curious about what your long flights get you, because I think the fantasy. Amanda and I are heading out to Alaska in a couple of days and we joined up the Alaska Airlines program, right, but we don't have the credit card and everything is pushing you to get the credit card and I feel like us doing all these miles to Alaska just does not matter unless we get that card. That's right. If the cards are the thing, what cards should you get? Let's run through the cards. This is not an ad, by the way. Kids. Don't try this at home. This is merely an exercise to show you how nutty these card statuses can be.

Jeff:

So your choice of card will depend heavily on how you actually spend and what you want out of the program. So, matt, you and I have the city advantage executive club card for no Show, and part of the reason we chose that is because through other credit cards we have other advantages You've mentioned. You have a Chase, which has great travel benefits. I have an AmEx Platinum personally great travel benefits but you and I did not have Admiral's Club Lounge access through either of those programs and it's very convenient for us, and so we chose the city advantage executive club card and it covers global entry, which we were both due to renew. So perfect choice of card. We only have a few of that One for council members, two for staff members.

Jeff:

Let's go through four more cards. There's the city platinum select. You would choose that card if you spend a lot on dining and gas. So if you're a small business owner and those are things you spend a lot of, your business spend on great card, zero entry fee, 99 bucks a year after that Very good point valuation, and all you need to spend is $3,500. You get it back right away and it's got a great multiplier if you spend on dining and gas. The next one, the city business platinum select card Great if you're buying cable, telecom, car rentals and gas. So different kind of business. You're putting your business expenses on that or your personal expenses on it Great multiplier on that one also.

Jeff:

Then, matt, of course, there's the city no annual fee mile up card. Well, the no annual fees super attractive. It earns two miles at grocery stores. So if you're a normal household in America, that might be a pretty good card for middle class America to get a little extra on American and pay for that vacation. Grocery stores, no annual fees. And then there's, of course, the downgrade card and this is the one that nobody should have, even though it's in my wallet. It's the one they're hawking every time you get on a flight. We just like to tell you about a very special offer that the most annoying moment in travel, that is the 50,000 miles for $99. Cancel the card after the first year card because you get almost nothing after the initial bonus. Sign up, get a bonus, flight attendant gets a bonus. You get some miles, but you really don't earn much by doing much with that card.

Matt:

Let's talk about other premium travel card options. As you mentioned, we have the Chase Sapphire Reserve. We got it mainly so we could get into lounges. I think we did this in one of our travel hacks episodes. That thing comes in so handy when we're bopping around and want to kind of take a break from the main concourse and have a restful area before the flight takes off. We have a long layover. We maybe like a free glass of wine. The Chase gets us into a ton of places and it absolutely pays for itself. The Chase Sapphire is a little pricey, so it's about $550 annual fee. You get $300 instant travel credit. You get the global entry. It gives you really good trip delay, cancellation, baggage coverage. You, however, have something pretty comparable, right?

Jeff:

The MX Platinum card is the one I have chosen and it has a very high annual fee $695. But there's also a very rewarding signup bonus. You can use right away 125,000 points. But it's the perks that really make that one better. I do spend an enormous amount of time on the road. There's an FHR credit. If you're not familiar with Fine Hotels and Resorts, it's the luxury travel program run by American Express, so you get a credit when you go book through them and stay at a luxury hotel. You can also get gift cards. There's an annual membership to Walmart $100 in sacks every six months, $240 in digital entertainment credits. There are Uber credits, which I use quite a bit of personally. It has a partnership with Clear, so if you do your TSA and your global entry on one card, you can get clear through this one.

Jeff:

Priority Pass is a big one. That's a network of lounges around the world I think maybe 800,000 of those in airports. Your membership to that comes through the MX card. So access to MX lounges. Of course, centurion is a big one Delta Club Lounge Access if you're flying on Delta, paying with this MX, you get access to it. So even if you don't have Delta status. If you buy your Delta flight with this card, you get lounge access there. Listen, I can keep going Like there's a partnership with Hertz, et cetera, et cetera, et cetera, et cetera. Yeah, it looks like they packed it with options. It's a very expensive card, for I mean $700. I don't know of a more expensive card, but it's what you want if you're traveling. And there's also travel insurance, which I think is a subject I'm not prepared to talk about, frankly. But American Express is synonymous with taking care of its members.

Matt:

Another one that is a little bit more for the budget conscious is there's a Capital One card it's called, I think, the Venture X, it's what it's called, and that one's about 395 bucks annual fee to start with 75,000. What does it? Is it 75,000K? What does that mean? Is that miles?

Jeff:

Yeah, but it's not necessarily airline miles, it's miles or points on Capital One. So the good and the bad of that card would be that you can use those miles for anything across travel right, a Delta flight, an American flight because you're doing it through Capital One but you'll never get the status right. I mean, I think you and I talked earlier about how do you get upgrades on a plane. Yeah, none of these things like the Sapphire Chase, sapphire AmEx, platinum, venture X from Capital One. None of those are going to help you get status or upgrades on planes and hotels.

Matt:

Which is a shame, right? Because I wonder why. I wonder why Sapphire Reserve and AmEx haven't created a partnership that gets you that higher level. I want to pay into it. I'm going to give you an extra $500 a year. I'm going to give you an extra $1,000 a year and I want you to bump me up three levels, for Alaska Airlines or for United, and how much money is that going to take for me to do it?

Jeff:

And I'm curious why the credit cards haven't gotten into that they absolutely 100% have, just not the ones we're talking about right there. We started off by talking about which American Airlines card to choose, and that was Citi. So everything you just described, that's what Citi does. Citi pretty much bankrolls American Airlines at this point just to get all the credit cards spent from all those American Airlines flyers. It's exactly the way you described it. American Express has a different program and a different approach, same with Capital One.

Jeff:

A couple of things on credit cards to be thought through. First is you can have essentially an unlimited number, so all the different perks that you see in miles. If you've got the time and effort, then you can have multiple cards and it's really lucrative to do so. Using them appropriately is really where it comes down to being an earner. Right, we walked you like you're going to use this one for grocery in miles and this one when you buy a flight. Doing it that way takes some diligence. Also, the turning over of the card is something you're going to want to do because they usually give you the intro offer. That's the whole value.

Jeff:

Right, Do this, spend your first 3,000. The moment you've done that, you've pretty much stopped being the beneficiary and you've started to contribute to why they offered you that in the first place, so you got to be diligent about that. Applying for several cards at the same time can have an impact on your credit score. If you're going to buy a house or a car loan or something in the next 60, 90 days, you probably don't want to be playing this game too aggressively. You can achieve minimum spend by having authorized users also, so I will have a card in AmEx Platinum, for example, for $150,. I think my brother, my sister, my mother, friends I can have up to 10 people get all those benefits that I just talked about. Right, and then all of a sudden that takes your spending up, your miles earned or rising, so there's no end to how far you can take this. Playing the card game is how you get all these travel perks.

Matt:

It's time for the mystery question Greatest slash, most unexpected upgrade you ever got on an airline?

Jeff:

Oh, easy answer. United Flight from Hong Kong to Chicago. I booked the flight 72 hours out in an economy fair, which is the worst flight you could have. I think it's a 14 hour flight. It was just completely intolerable and I was moved not only to the business beyond business, up to the first class cabin. That was also a year that I had flown 300,000 miles on United, so they loved me.

Matt:

When you get up there, do you just feel like you've been brought to Mount Olympus, royalty, yeah and do you also feel you know I belong here. I belong here, I've always belonged here.

Jeff:

You know, Matt, once you've been there, you feel like turning right on a plane is just offensive.

Matt:

There it is folks Voice of the common man, jeff Borman. Jeff, have fun this week at this conference. We're conferencing you to go to again GBTA In Dallas, texas, the Global Business Travel Association, and I will sign off in about 72 hours for Alaska, so I will see you on the other side.