People who you know are traveling a lot, and who you know are spending a premium to stay loyal to a single airline and reach elite status, also seem like the sort of people who are more likely to be willing to spend a premium to guaranty a seat up in business or first class.

From my fare searches and reading on the topic, it seems like discount domestic first class seats are 3x to 5x the price of the cheapest discount domestic economy ticket you can buy. For a person with no elite status, it makes sense that you would try to price it this high. The 1st class seat takes up twice the floorspace in the plane, there's a higher level of service in the cabin, plus it comes with extras: 1st class check-in, included checked bags, priority baggage, priority security, priority boarding, lounge access, etc.

But for a United 1K (or equivalent elite level), they already get all those extras regardless of what ticket they're flying on, PLUS they have an ~80% chance of getting a free upgrade to 1st, PLUS they can put in for a companion to be upgraded with them.

So how often does it make sense for a 1K to pay 3x to 5x as much for his guaranteed 1st class ticket when he has a great chance of being upgraded anyway, and gets a lot of the benefits of a 1st class ticket even if he isn't upgraded?

Wouldn't airlines be able to increase their overall revenue if they gave their highest elite frequent flyers enough of a discount on 1st class to make it worth their while? Considering that many of these people are the rare sort who would be willing to pay a premium for premium seats anyway?

Given that you pretty much never see customer-specific pricing from airlines, I wonder if perhaps there isn't some sort of law that forbids this? Certainly airlines are subject to all sorts of unique regulations, perhaps "preferential pricing" is a no-no.

Large volume travellers, typically corporate accounts, can and do negotiate discounts based on dollar volume of travel. It doesn't matter whether an individual pax is GS or no status, it matters how much the company spends on the carrier per year. These discounts can also include no change / refund fees allowing the pax to purchase deeply discounted tix and travel as though at full Y/B allowing almost certain upgrade.

Welcome to FT!

A 1K does not get free lounge access on a domestic flight. When I was a 1K last year, I was never willing to pay for F seats. I am not sure where you come up " ..an ~80% chance of getting a free upgrade to 1st". Where did you get these numbers? Your chances of being upgraded depend on your fare class, routing, time of check in, etc.

I know last year, on elite heavy routes, I did not receive UDU ~80% of the time. YMMV.

All true but you get discounted lounge membership and my 80% number was just a relatively conservative one that I'd seen as an average overall for a "typical" mix of business and personal flying for a 1K or equivalent frequent flyer. Obviously if you are flying to a business-centric destination during typical business flying times from a hub, you will have less of a chance, but my understanding is that overall 80% is a decent estimate, especially after you include any confirmed upgrades that you may earn. Some people's flying habits might give them a higher or lower average.

I was aware of that (and am also aware that it is practically impossible to learn the details of these sorts of corporate arrangements) but why not extend it to the small businessmen considering that small business is the majority of the economy and that there are many elite lawyers, fund managers, consultants, etc, who operate out of smaller firms but would be just as interested in confirming their first class seat if the pricing made more sense.

Pleas see below as to volume discounts. Other financial benefits based solely on status include fee elimination / discount for bags, E-Plus seating, RCC and the like.

They've got the solo flyer over a barrel. No need to offer him a discount. But the large business can take $5-10 Million in business to another carrier overnight. Same thing the solo faces in office rent, catering, car service, hotels or anything else related to business. On the flip side, the solo has much lower overhead and pockets his entire profit. So perhaps he can pay the expensive F fare and still make more money than the corporate employee !

United elites don't have an 80% chance of getting into first, that's way too high of a figure. The main benefit of a first class ticket is you get a first class seat. Most of the rest can either be purchased for a fee way less than first class costs, or people have for their status. I don't think anybody is paying thousands of dollars more for a first class seat just to save the $50 fee to check a bag.

Do you really disagree with my general premise?

Flying on any advertised fare, as a top level elite, considering that on some trips you will be able to plan ahead, some trips you will be connecting, some trips will be last minute and you'll be forced to buy full fare, and considering your confirmed upgrade vouchers and SWUs, you have a decent enough chance of getting into first class overall. I don't know what the exact percent chance is and I think that it would vary a lot depending on the person's travel habits, but for the average 1K with the average 1K flying habits, I think it would be high overall.

Also to your exact point, I was just looking at my current United flight reservation and they were offering to upgrade my award ticket to first with all the benefits for $150 each way.

I'm not saying that airlines should extend these benefits to elites for charity, I'm saying that I believe that airlines could make more money overall if they did because it is extremely rare that the airline sells out their first class cabin, it usually ends up giving away many (most?) of the seats as free upgrades, and to a person who already has a good-to-great chance of getting that aforementioned free upgrade, paying 4 times as much for a 1st class seat, the same price that someone who rarely flies would pay makes zero sense.

And if there is a good reason why airlines wouldnt make more by selling discount first class seats to top level frequent flyers, please post it. I haven't seen it so far.

I disagree with your general premise which hinges upon the fact that elites would be more willing than others to pay extra for a first class seat. Thousands of posts on these forums prove otherwise for FTers who are interested in getting the most for the least, generally speaking.

Next, as you so astutely point out above, United is already offering discounted first class seats, case in point, your offer to upgrade for $150 to first.

As to why airlines wouldn't make more by offering discount first class seats to elites - because they would make more by offering discount first class seats to just about anyone (not just elites) and have apparently begun doing so based on upgrades for cash offers posted in this forum.

Yup. I don't believe you understand how many elites are out there or what their motivation is when they choose to be an elite.

Isn't the motivation to be an elite that you are going to spend more and connect more in order to be loyal, but that you'll get some added services and for higher level elites, a good chance of upgrading? What am I missing?

and @Diplomatico, I don't think its a stretch to say that the self-selection of elites who frequent FlyterTalk are more budget conscious people. A lot of the appeal of this site is the news of fare sales, great mileage run opportunities, and other opportunities to save money or get a higher return on your reward miles.

I agree.

Don't forget, a good number of elites are traveling on business, and their firms may specifically not allow business class travel domestically, so they rely on upgrades that, if they didn't get, or could use due to discounted business class tickets, may well jump ship to another airline, as their 1k would be devalued.