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TPG reader Andre sent me a message on Facebook to ask about the value of upgrade awards:

“I’m looking to fly Transatlantic in business class on a Star Alliance airline (I have both United and Aeroplan miles). Will I get better value by paying for the entire flight with miles, or by purchasing an economy ticket and using miles to upgrade?”

My favorite way to redeem points and miles is for first- and business-class flights, not only because I appreciate the premium experience, but also because I find they offer the best value. For example, last summer I used 62,500 points to book a first-class flight to Madrid on Lufthansa that would have cost more than $12,000 normally. That’s a return of more than 18 cents per point, and while not every redemption is quite so lucrative, those awards are hard to beat.

Many airlines also let you use points and miles to upgrade a paid fare rather than book a seat outright. While it’s good to have more opportunities to sit up front, upgrade awards tend to offer less value. For starters, you often have to purchase an unrestricted, full-fare ticket, or cough up a pricey cash copay in addition to your miles. Furthermore, those awards tend to be more difficult to book, as you have to find specific upgrade availability that doesn’t always show up online.

As an example, consider a United MileagePlus award from Newark to Paris in February of 2016. There’s a fair amount of Saver level availability, so you’d need 57,500 miles each way to fly business class on United’s own metal or 70,000 miles on a Star Alliance partner, plus up to $200 in taxes and fees. Paid round-trip fares are hovering around $1,800, so you’d be getting a decent return of around 1.4 cents per mile.

The lowest economy fares (in the “L” fare class) are going for just less than $900. An upgrade award would be 20,000 miles each way, but you’d also be charged a $550 copay each way, which makes the whole exercise pointless. In this case, you’d actually end up spending more to buy an economy ticket and upgrade than you would to just buy a business-class ticket in the first place. Plus, you’d burn 40,000 miles in the process. Clearly, that’s not a good value.

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Premium flight awards tend to offer better value than buying an economy ticket and using miles to upgrade.

That said, upgrade awards can sometimes be worthwhile, especially when fares are low or surcharges for regular awards are particularly high. If you can buy a cheap ticket, or if you’re short on miles and don’t mind the cash outlay, an upgrade award is worth looking into.

Just be sure to calculate the return you’re getting for each point or mile once you’ve confirmed availability; if you’re getting substantially less than what I’ve listed in my monthly valuations, then you’re probably better off booking a full award or buying the ticket outright.

For more info about booking and maximizing upgrade awards, check out these posts:

If you have any other questions, please tweet me @thepointsguy, message me on Facebook or send me an email at info@thepointsguy.com.

Chase Sapphire Preferred® Card

Even after the introduction of the Chase Sapphire Reserve, the Chase Sapphire Preferred is still a fantastic choice if you want to avoid the Reserve’s $450 annual fee, earn 2x on all travel & dining and earn a 50,000 point sign up bonus.

Apply Now
More Things to Know
  • Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $625 toward travel when you redeem through Chase Ultimate Rewards®
  • Named Best Credit Card for Flexible Travel Redemption - Kiplinger's Personal Finance, July 2016
  • 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
  • Earn 5,000 bonus points after you add the first authorized user and make a purchase in the first 3 months from account opening
  • No foreign transaction fees
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 50,000 points are worth $625 toward travel
  • No blackout dates or travel restrictions - as long as there's a seat on the flight, you can book it through Chase Ultimate Rewards
Intro APR
N/A
Regular APR
16.49% - 23.49% Variable
Annual Fee
Introductory Annual Fee of $0 the first year, then $95
Balance Transfer
5.00%
Recommended Credit
Excellent Credit

Editorial Disclaimer: Opinions expressed here are author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.