We recently booked International travel and decided to put the flight on to ‘Standby for Upgrade’ using miles. Firstly, I didn’t know that this could be done, so maybe it is new to some of you too, secondly, I learned some more from the process. You just have to call up AA and ask them to add you to the list. You do need sufficient miles in your account to do this, and the class of service of your original ticket dictates the cost of your upgrade. For us, we paid $350 for RT tickets, and putting us in the bottom tier. An upgrade on this ticket would cost 25,000 miles and $350 each way.
A lesson in liability and risk management
One of the first things I took from the process is that it really shows you liability and what is ‘at risk’. AAdvantage only allows you to join the standby list if you have the miles in your account, and they want you to register a credit card. Whenever the seats open up, your card on file is charged, and your miles are debited. I think there is a priority order to this based not just on time joining the waitlist, but also status, but I don’t really understand/care about the finer details.. we either get the automatic upgrade, or we don’t.
As an aside, I’ve also recently put bids in to upgrade my NCL cruise so what this means, is that any moment, I may wake up to perhaps $3,000 in credit card charges, and also lose 150K AAdvantage miles. This impacts our travel plans.
This is an interesting angle when it comes to considering my travel budget, because while I haven’t spent this money, I’ve agreed to spend it, it is akin to Options Trading in the financial world, and I’ve put money into play. If I were to throw caution to the wind and book the $5,200 upgrade on Crystal Cruises, I might find that all my bids are also called, and my weekly expense goes from $0 to $8,200.
This becomes a float issue. While you could rightly apply a discount value to the money ‘at risk’ because the standby flights and NCL bids are not guaranteed to be exercised, they could be, and if so, what would the impact be? On the one hand, I’d have a pretty awesome travel itinerary, but on the other, is there enough readily available money to cover all this, or has the unpredictable nature of the bidding/standby expenses fooled me into overspending?
The interesting part is that these liabilities change with time. Just like with financial Options, the further away from the exercise date, the higher the value of the time premium. Since I’m taking the at risk side, it means the closer I get to the day of exercise, the lower the risk of the upgrade occurring. While that component of the equation does change, the impact of risk remains the same, so it is important to not discount the value too much, and have some sort of float access available to cover a ‘black swan event’ where everything triggers when least expected.
The value of upgrading with risk
The value here is that we’ve booked our flights/cruises already, so at the very least, the travel component of the transaction is covered. The comfort component is the part at risk. To do this, we’ve got to be OK with both events. One one side this means being OK with coach (and the psychological effect that we think we are saving money) or on the other side, that we’re flying Business (and while it might cost a bit more money than pure points, we deserve it!) good times!
In terms of value, I’d generally lean towards full points award travel where possible, but in this case there simply weren’t any award seats available for the trip in business, so our decision was to spend 60K each in coach (plus fees), or to spend $350 each in vouchers that we’ve earned over the years from the Amex Platinum.
All in, if all upgrades trigger, $1050 plus 50,000 miles isn’t great for RT, but it’s palatable when 1/3 of that is vouchers, and when we’ve managed to lock in travel already. Also, it is possible that neither, or just one leg triggers.