So I finally upgraded to rank 3. In the glacier area you can buy VF plans with I, II, and III after the name of the fighter. I bought VF29(japanese text) II and III then went back to the ship. In the upgrade menu I selected the VF-29 and hit the triangle button. Aisha does a special attack of some kind then all of a sudden the VF is ready to upgrade. you get your upgrade limit upgraded each time you do this. With the III upgrade the limit goes to 9999999 (not sure of the number of nines). maybe people knew this but I thought I'd write it just in case.