What is Airline Elite Status Really Worth?

Today is the first of a two part post on Airline Elite programs. Today’s post is more theoretical, tomorrow’s will be much more practical.

My Uncle Sam taught me a lot in life–one of the earliest lessons I remember is when I was young and collected Baseball cards.  I would show him my cards, telling him “This card is worth $5, this one is worth $11.”  He let me go on and on, showing him all my best rookie cards, and highest priced gems.  Then calmly he picked up a $5 card, and asked me “How do you know it is worth $5?”  The smart 7 year old in me said “Because this magazine here says that is what it is worth.”  He then told me a piece of advice that has stuck with me for my entire life:

• “Something is only worth as much as someone is willing to pay for it.”

What he meant was the cards have a resale price which is what they’re worth to someone who is willing to actually buy then.  Economic theory says that the value can be different for two different individuals.  Someone who needed a card to complete a set might be willing to pay a little more than someone who’s just collecting the one card for the fun of it. 

Milenomics views airline status very much like this. Do you need status?  If so you’re probably willing to pay more for it, through higher fares, mileage runs, routing flights with stops for extra miles, etc.  If you don’t have much use for elite status you probably wouldn’t pay for it even if you could outright buy it.

Well it turns out you can buy Elite Status in a few of the major programs.  I’ll step that back a bit–you can’t [yet] just park a sum of money down with all the airlines and get top tier, or even mid tier status.  Things seem to be moving in that direction. Both United and Delta are moving towards calculating the amount of money you spend with them in addition to the miles you fly in order to determine your status level.  This has been controversial at best–and has some flyers turned off of both programs.

Today Milenomics covers some lesser known ways to receive elite status and perks–and in doing so tries to put a floor on the price of those status levels.

Airline Elite Status Can be Bought and Sold.

To be clear–top tier status is almost always not for sale.  But most programs have a round-about way of buying status.  Two of the four major US carriers have a way of gifting mid-tier status from a top tier elite.  A savvy Milenomics follower who wanted to keep Delta Gold Medallion for example, could use these techniques to avoid the MQD requirements next year, and hold status in the program. 

• US: US sells status, Plain and simple. You can buy up to any level, even top tier. The most cost effective way to do so is fly one flight with US airways, then buy up from there.  As long as the flight costs less than $1000 you’re saving money. Using this strategy gold would cost you the one flight, plus $1,499, Platinum the flight + $2,499, and Chairman’s the flight + $2999.

• AA: AA offers a choice of elite gifts at certain thresholds flown. At 125,000 flown miles you can choose between 30,000 AA miles, or Gifting AA Gold to someone. At 150,000 you can either receive 40,000 AA Miles or Gift Platinum to someone.  The key is to trade someone for these gifts.  I’m sure it is against the rules, but it happens and can be done.  AA has you choose between 30,000 AA miles, and gifting Gold.  So the gift of Gold is likely worth somewhat more than 30,000 AA miles to someone who’s going to trade the status to someone.  I’ve seen the going rate be somewhere in the neighborhood of 40,000 UR points for AA Gold.  Neither of these are particularly cost effective. AA Gold ≈ $720, AA platinum ≈ $900.

• UA: United used to offer gifting of status, but stopped a few years back.  The closest they offer is the E+ subscription combined with a MP Explorer card which would offer you free bags.  This would be roughly equal to Premier Silver.  Cost is $499 per year for the E+ subscription and the credit card is somewhere between free and $95 a year.
• The E+ subscription used to be a terrible deal, because anyone who flew enough to need it would likely become silver pretty quickly and Silver elites can pick E+ for free as well (albeit at T-24).  I tend to think it is still not worth the $499 they’re pricing it at, but if you flew a lot of shorter flights, on sub 10CPM tickets you might not hit Silver until after 25 (or more) flights.  If sitting in an E+ seat for all of those flights has a value to you this might entice you. UA “Cheater” Silver ≈ $595.

• DL: Gift of Gold is a choice benefit of Delta DM’s. For a Delta flyer who sometimes flies DL trading for gold is THE easiest and cheapest way to keep getting Mid level elite benefits.  With DL’s new MQD requirements this is even more important. The going rate for a gift of DL GM is only 20-30,000 Miles in a mainline program (think UR).  If you think about that versus spending $5,000 on tickets with the new MQD requirement it really is crazy cheap.  Buddying up with someone who year after year can gift you status is the easiest way to ensure a good supply of this. Delta Gold Medallion ≈ $350.

What About Top-Tier Status?

Except for US, these tricks don’t get you to top tier status.  However do you need top tier status?  What is the “killer app” you’re after? With AA it is likely SWU, which are upgrade certificates that can be used to turn a paid coach fare into a business class fare on international routes.  SWU’s can be bought and sold as well.

An AA SWU is going for between 15,000 and 20,000 UR/MR or equivalent miles. Yes, you will need to know someone who has these to trade, but trading for these items is the cheapest way to instantly receive SWUs.  If all you’re after are the SWU’s you might not even need to mess with status, trading for them them outright might be all you need.

The above ideas aren’t for everyone. What these ideas do is put a floor on the price of Elite status.  If you’re spending more than these amounts and you only make it to these levels you might want to seriously consider some of these.   They also don’t get you closer to the next level of status, because mileage requirements and $ Requirements (DL, US) are at $0 even though you might have Gold status.  If you’re just starting out with an airline and think you can hit these levels, then these tips give  you a “quick-start” to elite status.  If you are expecting to reach higher levels with the airline you need to know that you’ll be spending just as much to hit those levels. You can judge if that is worth your money to start out at these levels.

Milenomics advocates none of these techniques (except buying SWU’s).  The money spent to buy these status levels could be spent on buying other things.  To someone who agreed with that thinking these aren’t worth the amounts listed above.  All of this factors into the above discussion of how value is relative and why today’s post is highly theoretical.

This is a good time to take an inventory of your flights this past year.  What stuck out as being great, what terrible?  Would status have made a difference? If you hold status, did it save the day in certain occasions?  Do you have a ton of Miles sitting in an account waiting to be used?  All of this will add up to how important airline status is to you

Don’t forget to come back tomorrow, when we learn how Milenomics will start teaching us to be our own elite program.

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