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Airline passengers often end up at odds over many aspects of the in-flight experience — a reclining seat in the knees, groups of travelers asking others to switch rows, and overhead cabin battles, among them. Now on many international air carrier flights there is a more civilized way to compete with fellow passengers: a seat upgrade auction.
How it works is fairly simple: a week or so before a flight, passengers receive an email letting them know about potentially available seat upgrades. If they want to participate, they provide their credit card details and enter a bid. If they have the winning bid, their card is charged and their seat is upgraded, often at a steep discount when compared to what the upgraded seat would have cost at the original time of purchase.
While the concept has caught on around the globe, the U.S. airlines are for the most part an exception. Spirit Airlines offers upgrades to its Big Front Seat (which is just what it sounds like: a bigger seat near the front of the aircraft) through its SeatBid program. But no other major U.S. carriers offer upgrade auction programs.
Major U.S. carriers are at least likely to be weighing the costs and benefits of the practice, says Zack Griff, senior aviation writer for travel site The Points Guy, since upgrades are built into the business model already. But the auction model specifically raises significant tensions with the way upgrades are offered today.
“Most major U.S. airlines offer a few ways to upgrade your flight experience, whether you’re looking for extra-legroom, premium economy or business-class seats. Traditionally, that includes three methods: you can redeem miles, cash in on your elite status perks, or simply buy an upgrade like you would a regular ticket,” Griff said.
The auction model is different because it offers often steep discounts, and underlying this approach is a truth about supply and demand economics: distressed inventory still available close to flight dates.
“In recent years,” Griff says, “the concept of selling distressed inventory — seats that will otherwise go unsold — at a blind auction has risen in popularity.”
Companies such as PlusGrade, which describes itself as being in the “ancillary revenue solutions” niche, have sold the technology to many carriers to make this offering available on many flights operated by international carriers.
Picture yourself a week before your flight: you receive an email inviting you to place a bid online to participate in an auction for seat upgrades. No calling an airline, no high upfront cost. You choose your own price, a meter lets you know how likely the bid is to win, and you leave it at that. Maybe you get the seat, maybe you don’t, but you’re in the game and you haven’t laid out anything up front. From the airline’s perspective, there will be a highest bidder, and those who don’t win the auction are no worse off than before.
But everyone doesn’t win, especially when it comes to the way U.S. airlines reward passengers today. Consider the dutiful flier who has collected and protected their points and elite status, partly in hopes of receiving free upgrades. That person may be quietly holding their elite card, running a thumb over its edge and feeling a bit under appreciated. Airlines don’t want to alienate this person.
The larger U.S. airlines, such as American, Delta and United, haven’t yet offered these types of auctions on a widespread basis, likely because they are keeping their premium-cabin inventory for upgrades via miles, frequent flyer perks, or last-minute buy-ups, Griff said. “These airlines advertise upgrades as a key perk of their frequent flyer programs. If they keep selling the last few premium seats for additional ancillary revenue, frequent travelers may defect to other airlines,” he said.
American declined to comment; the rest of the U.S. carriers did not respond to requests for comment.
The upgrade model in the U.S. could change, but that’s not likely to happen quickly.
Airlines are not known for being especially tech savvy — AirPod integration, for example, might be a major breakthrough — but unloading higher-cost seats is going to be increasingly important, according to Griff, who says the traditional way of dealing in upgrades may not be optimal from a bottom-line perspective.
While in the short-term the flights mostly likely to be associated with upgrade demand — longer, international flights — are those highest in demand with American travelers, there is another side to the new reality that will last potentially longer: a sharp decline in business travel that is likely to level off but unlikely to return to pre-Covid levels.
Scott Keyes of Going (formerly Scott’s Cheap Flights), an online platform that connects travelers with affordable airfare options, sees both the challenges and potential in such programs. “Auctioning off unsold premium seats is, without question, a major trend across the industry. More and more airlines have been adopting upgrade auctions for otherwise-unsold premium economy, business, and first class seats.”
For airlines, Keyes says the rationale is simple: upgrade auctions generate significantly more revenue for airlines than handing out upgrades for free.
The travelers who win these seats also do well in the process, since they often receive a discount as steep as 70%-plus on a front-of-the-plane seat, Keyes said. But that also leaves a loser who wasn’t even in the competition. “Travelers with elite status who, a decade ago, may have been able to count on getting upgraded to those otherwise-empty seats,” Keyes said.
A key to the potential evolution in the way upgrades are offered may be in his phrasing: “a decade ago.”
“Now those seats are sold instead of given away for free,” Keyes said. “Many travelers chase elite status with the expectation — fair or not — of getting rewarded for their loyalty with future free upgrades.”
If more airlines adopt auction practices, this perk of elite status may fade, though it would undoubtedly be replaced by other perks: for instance, posh private airport lounges.
Given the reality of upgrades within the airline industry, and the changing landscape of business travel, it would not be surprising to see an increase in upgrade auctions on the part of domestic carriers in the future, likely met by some new ways to maintain customer loyalty from frequent fliers.
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