I had a rather lengthy conversation with Gary Leff regarding his post on the $1700 flight deal over this weekend, my gentle commentary brought out some very good opinions in favor of buying the deal, along with some very strange people in opposition to my perspective, or perhaps just my existence…but anyway, yes I can see the market for this.
One comment that I think raised a very valid point was that you could earn lifetime Star Alliance Gold from this UA First Class flight- which I thought was worth exploring. Actually, that ties into an entire quite valid line of thinking in that the $1700 doesn’t just get you a fancypants flight, but also does kick back miles (at an accelerated rate) and works towards Elite Status. Despite the flight being on United, you can often credit miles to other Star Alliance partners. Note that this is dependent on fare class rules, and not all flights are eligible for this, others are eligible but at discounted rates. I mention this so that you check carefully before attempting at home.
The reader here suggested that the fare would work for such status, and I presume he means to credit to Aegean airlines, who people believe offer lifetime Star Alliance Gold. The rules of Aegean state once you reach their Gold level you retain it by simply crediting a flight to them every 36 months thereafter.
So the question is here
I guess before we can truly answer that question, we should decide what Star Alliance Gold offers:
Star Alliance Gold Benefits
Star Alliance is the overall Partnership alliance that includes members like United, Lufthansa, Singapore etc. Each member airline has their own Elite status system, that has corresponding Star Alliance levels. However, being a top tier Star Alliance Elite does not match you into the top tiers of the individual airlines, it does offer the following:
How much would I value that for a year?
Well… not a lot to be honest with you. There are tangible benefits here for sure, but they are all for Economy class trips only – the things you see here aren’t necessary when flying on Business Class. For me the big three are priority access, lounge access and extra baggage:
Now, I do certainly fly in Economy on occasion. When I do it is typically domestically in the US where I use BA Avios – one of the very best domestic airmile currencies out there due to the distance based awards. I use BA Avios on either US Air or AA, and when doing so I tend to get priority access on my boarding pass.It’s a glitch. It may have already stopped… whatever, I can handle a line.
Domestic lounges are crap, I don’t pay money for them. I’ll take them if they are free, but I am happier buying a real pint at the concourse bar than getting a complimentary Coors lite. International lounges can be decent, though again I wouldn’t rate the ones I have seen highly. I mainly fly AA and UA Business class and they aren’t too exciting. The benefit for lounge access aren’t awful:
Rules for Star Alliance Gold Members flying on any class of ticket internationally
Customers have access to any Star Alliance member carriers’ owned lounges with the Star Alliance Gold logo at the entrance.
- Customer must present proof of Star Alliance Gold level status via a valid frequent flyer program Star Alliance Gold level card or other valid indication of Star Alliance Gold level status
- Customer must also present a boarding pass for travel on a Star Alliance flight departing from the local airport
- Customer is entitled to one guest
- United Star Alliance Gold customers may only access the United Clubs within the U.S. when travelling in conjunction with a Star Alliance international flight.
Also – the terms state that if you are flying a paid First Class ticket (we know what I think about that!) you are allowed to access other airlines First Class lounges, with a few exceptions – more info here. For me, the lounge access isn’t worth much at all. I still hold the Amex Platinum and therefore have access to some lounges, and more when traveling internationally through the priority pass network. They aren’t perfect, but they do the job.
As a Gold Status holder you can choose not to travel light. We allow an additional 20 kg (44 pounds) where the weight concept applies, or one additional piece of luggage where the piece concept applies.
Not going to need this domestically. Doubt I would need it Internationally. I pack light, though we will see if I keep whistling that tune when I am traveling as a parent…
So I personally would value these perks at zero. But I can certainly accept that to some people they might have a high value, because they are tangible benefits, and for certain flyers they could be great to have. Let’s pluck a nice conservative price out of the air- $200 per year?
So if it is $200 for a year, how much for a lifetime?
Time for the trusty HP10b2+ Calculator, and a quick glance at the actuarial life expectancy tables for good looking guys with beards. After cross referencing these with 23 and Me I have estimated that I should live until the age of around 149 years old. However, I will be a brain in a jar for the final 40 years. Let’s say I have another 35 years of regular flying ahead of me.
35* $200= $7,000 in payments. However, the present value of 35 serial payments of $200 is actually less, let’s assume we could earn 8% interest. A capital investment today of just $2331 would kick off sufficient payments over time to cover that $200 per year.
The Problem with the deal
So, you think you have a great deal because the value of lifetime gold is at least $2331, and you are getting that as just part of your flight – remember you are also earning airmiles to fly again in the future that have value. The problem has several facets:
- You just changed your airmiles from UA miles to Aegean miles -meaning you now have to earn more Aegean miles in order to get enough to redeem. If you do, there are some sweet spots on the Aegean chart – such as North America to Europe for 90,000 in business (on Star Alliance Partners) which is a competitive rate.
- You just gave real money for an unreal commodity. If you value the Star Alliance Gold at $400 from the $1700 that is $400 of real, american money that you just gave for ‘lifetime’ Gold.
- What happens if the day after you do this Aegean decides that their rules are daft (heck they are daft) and you no longer keep Gold for flying once every 36 months? Your lifetime just became a lot shorter. Can you get a refund? Hell no, you just gave up real money, for an unreal thing, because there are no guarantees on this deal.
- What happens if this occurs the day after you pay and you say ‘heck, at least I got a year of Gold!’ well.. all that glitters is not Gold. And unlike the precious metal Star Alliance Gold is whatever they want it to be. So they can change the value of the gold by saying ‘we are enhancing the program, no more lounge access unless you are on a Business Class ticket’.
The reality is this. Cash is king. You spend your cash on these luxuries and you don’t have the guarantees that you think are there. You are at the mercy of the airlines and the alliances. These groups will constantly devalue their offering as time goes on, so locking in something now for a price comes with considerable risks.
So, a great point was raised, the ticket to Korea is worth more than the experience, but how much more is not so easy to quantify…