Q. It seems that the major U.S. airlines (Delta, American and Continental) will allow you to use their miles to get “free” business class tickets either on their own international flights or the flights of European partners, but will allow upgrades from coach to business class only on their “own” flights - i.e. flights of the U.S. airline on which you have earned the miles.
This must have something to do with negotiated arrangements between the U.S. airline and the overseas partner. It seems to me that the “partner” airlines would be more willing to give up an upgraded seat which generates some revenue, than a so-called “free” seat, and that correspondingly the U.S. airline would have to “pay” the partner less for the upgraded seat than the “free” seat?
So what I am missing about this picture?
A. Well, each airline still operates as their own business with their own business model so just because they are partners and can offer free seats doesn’t mean they have partnered to offer awards. But, you're in luck. Some airlines are starting to do just that. Delta now offers the opportunity to use miles and/or elite upgrade certificates on partner Air France. US Airways is now offering Star Alliance Upgrade Awards with participating carriers. Since I’m not sure which airline you are trying to upgrade with, here are two of my favorite partner award programs:
Here's a link to US Airways new program FAQs: http://www.usairways.com/en-US/FAQs/star-alliance-upgrade-awards-faqs.html
And a link for SkyTeam's upgrade award program: http://www.skyteam.com/about/miles/index.html
These are a great way to use miles. While they don’t render the same value as redeeming the points for an actual Business Class ticket (where there is rarely any money being spent except on taxes), these are a good deal if you don’t have enough miles for a completely free ticket.