Originally Posted by
jsloan
Sure. They often offer discounts for purchases made as upgrades. However, they realize that this is bad from a game theory perspective, as they could train their users not to purchase a premium cabin fare and just wait for a discounted upgrade, so sometimes they will post offers that are higher than the fare difference would be. They’re not really expecting anyone to take those offers, although they will certainly accept the money if someone does. The purpose is to make sure that there’s not a mechanism to buy that is sometimes a discount but no worse than a push.
I understand.
I think there is another reason as well. It's a form of price discrimination to benefit from people who don't buy their own tickets.
Scenario 1:
I buy my own ticket. Lowest economy fare is $250, P-fare in first is $320, and the upgrade offer is $150. After buying the ticket in economy I reissue it in first and pay the $70 fare difference.
Scenario 2:
The company buys the ticket at the lowest economy fare of $250. I do not have the option of re-issuing the ticket in first class (P) as this would involve the corporate travel department. The only option is the $150 upgrade offer.