Will The Free Upgrade Become Extinct — and Is That a Bad Thing?

Austrian Airlines is the latest airline to offer auctions for upgrades to seats in its business class cabin, shown here in a Boeing 767-400 aircraft which operated as flight 87 from Vienna to New York on April 16, 2013. Photograph by FlyerTalk member yoonny. Click on the photograph for a trip report written by yoonny.

One of the most important perks of elite status in a frequent flier loyalty program is that free upgrade from the economy class cabin to a premium class cabin, which in some cases has become more elusive…

…but are free upgrades an endangered benefit which may eventually become a thing of the past — doomed to be replaced by upgrade auctions via the Internet?

Over the past couple of years, a variety of commercial airlines have switched either partially or completely to an upgrade auction model:

 

…and FlyerTalk members have been tracking successful bids as well as unsuccessful bids in the auctions for upgrades, such as on Air New Zealand, as commercial airlines are loathe to voluntarily reveal the precise prices one can expect to bid for a successful upgrade.

A company based in New York called Plusgrade offers an option for air carriers worldwide designed to increase revenue by offering upgrades to customers by asking them what price they are willing to pay to be upgraded on a flight in advance of the flight rather than pay for an upgrade at the last minute for a set price, as is the practice of some airlines. The upgrade auction is offered as an invitation to the passenger purchases the ticket via the Internet…

…and on some airlines, you are out of luck if you purchased an airline ticket which was heavily discounted.

If a bid is successful, the passenger will usually be notified a minimum of three days in advance and have their credit cards charged accordingly; while unsuccessful bidders are simply that — unsuccessful, with no change in their class of service or their finances.

No commercial airline based in North America has offered upgrades for auction — but that is apparently set to change this year, as it has been announced that one airline yet to be identified has supposedly signed up with Plusgrade. FlyerTalk members are guessing as to which airline based in North America will the one named to offer upgrade auctions.

FlyerTalk member StayingHomeIsBetter wonders if Delta Air Lines may follow suit. Delta Air Lines offers free unlimited upgrades to SkyMiles frequent flier loyalty program members at all levels of Medallion elite status on most flights within North America, the Caribbean and northern South America. However — unless you are lucky enough to earn an operational upgrade — seats in its premium class cabin remain empty on international flights unless passengers pay outright for them, redeem SkyMiles frequent flier loyalty program miles for award tickets, or upgrade to them if they have the proper upgrade instrument and have already purchased an economy class ticket in one of the two most expensive fare classes.

In the case of Delta Air Lines, auctions for upgrades might be a positive benefit for passengers on international flights — but Medallion elite members might balk at having those free unlimited upgrades greatly reduced if the concept was introduced to domestic flights. Some FlyerTalk members might argue that such a development may be good, as it would increase the exclusivity of the premium class cabin on domestic flights and thus result in a better experience.

While some FlyerTalk members may dread the concept of the upgrade auction — believing that it reduces or even eliminates the free upgrade to which they may be potentially entitled as elite members of frequent flier loyalty programs — the author of the Very Good Points weblog is actually excited.

Excited?!?

“Personally, it’s great for someone like me who has status with an airline like US Airways but flies Star Alliance partners regularly“, she writes. “I never get upgraded overseas and this would allow me to bid for upgrades. I’m all for it and it might change the way I fly. Heck, it will change the way I fly.”

That seems to make sense. After all, why should an airline depart with a potentially valuable yet perishable item left unused, such as a lie-flat seat in the premium class cabin — especially on a transoceanic flight? Why not earn some extra revenue and simultaneously have a happier passenger as a result?

Nor1 — a “cousin” to Plusgrade which offers various upgrades at set rates for hotel rooms immediately after the customer books his or her hotel room reservation — has existed for several years to the chagrin of FlyerTalk members who believe that certain upgrade opportunities have either been reduced or eliminated. My experience with Nor1 is simply that it offers upgrade opportunities of which I might not otherwise take advantage — such as an upgrade to a suite in the Hilton HHonors frequent guest loyalty program, which is typically not offered to elite members. Otherwise, Nor1 usually offers me the upgrade for which I would have qualified anyway at no cost…

…and although I have never paid for a Nor1 upgrade, there are those who do, earning the hotel property additional revenue it might not otherwise realize — and is that a bad thing?

I have always opined that I have no problem with commercial airlines, lodging companies and rental car companies creating new streams of revenue — such as baggage delivery service by American Airlines or premium meals offered by US Airways — as long as there is little to no averse impact on the benefits of their customers who are elite members of their frequent travel loyalty programs. In fact, I encourage creative and innovative ideas which result in win-win scenarios for travel companies and their customers.

What are your thoughts on the upgrade auction technology powered by Plusgrade?

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Comments (Showing 9 of 9)

  • sky303 at 9:25am May 06, 2013

    Photo caption note: Austrian does not operate B747s. Image is of a 777-200.

  • diburning at 9:27am May 06, 2013

    Eliminating CPUs would send a lot of the people to the LCCs.

  • Brian Cohen at 9:33am May 06, 2013

    Actually, the aircraft was a Boeing 767-400, according to the trip report.
    I have corrected the error.
    Thank you, sky303.

  • DL2SXM at 10:35am May 06, 2013

    Here in lies the problem: Lets use Delta Air Lines as my example, and lets use JFK to NRT non stop for the flight criteria.

    Pass A buys a business class ticket and spends $5519 for a Z fare ticket. This pass doesn’t have to worry about upgrade inventory as he/she is booked directly into the business class cabin. However, outside of a fortune 500 company, and millionares, who is spending that sort of cash on J ticckets?

    Pass B wants to buy a Y or B fare ticket and use miles or SWU’s to upgrade but realizes its cheaper to buy the Z ticket. So, pass B is sort of in limbo right now.

    Pass C buys the lowest coach ticket, a V fare, at $1500.00 which is what most people will do. because M doesn’t give you the bonus MQM’s anymore, is it really worth it to spend $5,038 for the same ticket on the same route in an M fare? Hardly. Spend the extra $500 and buy the Z ticket.

    So now, armed with my V fare and being a Diamond Medallion, will Delta allow me to bid in order to get into the Business elite cabin? Or, will they say screw you and your Diamond status?

    Pass D: we have a non elite on a Q fare who spend $2500 on their ticket, they wiill get the bid opportunity? Will this essentially come down to what is best for DL’s coffiers? Will status still pay a role? Soon, it simply won’t pay to be elite with anyone airline.

    To bring this all home, all Delta has to do to fill these precious business class seats is lower the Y,B,M fares to something that blue collar workers, like me, would actually bite at in the first place. If pass A is paying $5500.00, then would it be that unreasonable to offer an M fare for $3500-ish? Being that you don’t get the bonus MQM anymore for the M fare, this would be acceptable. If pass D, who bought a Q fare for $2500.00 bids $1,000.00 with no status, and pass C, who id Diamond, bids $2,000.00, then who gets the upgrade? At the end of the day, we are both willing to give DL the same amount of money.

    Also, wasn’t it Delta that said they would prefer to maintain the economic entegrity of the business elite cabin then offer seats at a much lower cost?

    Bottom line is this. If Delta will afford me the opportunity to fly in there J cabin on JFK to NRT by purchasing a sLUT ticket for $1500.00 and then bidding another $2,000 to upgrade, I would do it in a heart beat. Unfortunately, Delta could substanstially simplify things by aligning there fare classes in a way that make more sense.

  • sky303 at 7:06pm May 06, 2013

    Austrian does not fly 767-400s. They fly 767-300s, but they do not have the 777 interior. Austrian also exclusively operates this route with a 777.

  • CanOnlyTakeSoMuch at 6:38am May 07, 2013

    I think miles should be used to get discounted first class tickets not free upgrades… or take away free upgrades and go back to the golden days where first classed consisted of non-rev employees and ACTUAL full fare first class passengers… so all of these diamond blah blah status members can learn to appreciate their 200 dollar ticket & FREE upgrade and act like a well mannered person in First Class.

  • SQUALO at 8:39am May 07, 2013

    Most of the people don’t know the value of a Business / First-Class-Ticket and are not aware that it is not only a seat that an airline company is selling, it is far more than that. (added value it is, not only a seat, but many people simply don’t get it!)

    I think the only way of demonstrating and promoting a business & first-class seat to flying frequents would be “here you go, try it, take a seat and experience it”.

    In the end, it is the question that drives me all the times: why do we earn money if we don’t know how to spend it? 🙂

    Austrian Airlines doesn’t even have First Class, so why actually flying with them in the first place? Upgrade from Economy to Business Class? … and that’s all?

  • wfmk at 9:56am May 07, 2013

    42 flights in economy with Etihad so far this year.

    0 free upgrades to reward my loyalty.

    Apart from lounge access I see absolutely no point whatsoever in being a Etihad Gold member.

  • SQUALO at 10:25am May 07, 2013

    Ladies & Gentlemen.

    I don’t consider the above mentioned photos as business class seat, you could call it “Premium Economy”.

    We have a company account with Emirates and personally I got more than 15 upgrades on Emirates Airlines, we have around 150 flights since February 2010.

    Even on Business Class, this is the seat (not even considering First Class).

    A real bed…
    [IMG]http://i43.tinypic.com/35aljs1.jpg[/IMG]

    On-Board Business Class Lounge
    [IMG]http://i41.tinypic.com/3532gpl.jpg[/IMG]

    Veuve Cliquot 2003 on Business Class
    [IMG]http://i42.tinypic.com/2zrjew9.jpg[/IMG]

    Mini-Bar in every business class seat
    [IMG]http://i42.tinypic.com/95xv0m.jpg[/IMG]

    Business Seat
    [IMG]http://i41.tinypic.com/28o3u1.jpg[/IMG]

    Business Seat
    [IMG]http://i41.tinypic.com/2zsyb0p.jpg[/IMG]

    … I guess everybody wants that controler…. 🙂 … more than 1400 on demand movies / music albmums / tv channels etc etc etc on demand…

    [IMG]http://i41.tinypic.com/33c9kc8.jpg[/IMG]

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