The Start of the End for Last Minute Business / First Awards?

Steve, founder of iFLYflat, who I met at FTU this weekend (and who flew in from Sydney for the seminars), shares an interesting article from The Independent on upgrade auctions.

Online upgrade auctions that allow travellers with cheap tickets to make blind bids for unfilled business class seats are on the rise, as airlines across the world catch on to the innovative new way of making extra cash. Last week Austrian Airlines became the latest carrier to start taking bids-for-beds, following in the footsteps of Air New Zealand, El Al of Israel, Etihad of Abu Dhabi and Virgin Atlantic. In future, passengers buying cheap tickets for long-haul flights via Vienna are invited to bid for an upgrade to the business class cabin, which boasts  2 metre-long flat beds. If successful, they also get fast-track security, access to business lounges and improved catering.

As someone who frequently takes advantage of last minute premium class awards and systemwide upgrades, the potential for upgrade auctions to spread throughout the industry has me concerned. While prices aren’t disclosed, winners seem willing to bid decent amounts for these seats, which still come at huge savings to their outright purchase prices. That’s what creates the scare factor for me. Airlines will surely be able to reap a greater profit by auctioning off their remaining first and business class seats rather than providing them as last minute award tickets or complimentary upgrades.  What do you think? Are the major US carriers next? Delta has had a bidding system in place for bumps for about two years now.  Could Austrian Airlines parent company Deutsche Lufthansa AG be testing out the process with Austrian before rolling it out to other subsidiary carriers?

Check out the full article here for details on exactly how the upgrade auctions work.

Comments

  1. Would be a shift for the US carriers. If upgrade instruments go for UA or others and it becomes a bidding auction then there is no value in flying these carriers over another. If both SQ and UA are doing then I select SQ to fly as would rather bid on the chance of an SQ upgrade. It might be rather freeing for people like me not to be tied to UA but to play the field like a teenager again 🙂

  2. I agree with Levy’s point. If US carriers do go this route, then there’s no reason for me to be loyal to one airline since I already know I wouldn’t be on the complimentary upgrade list.

  3. I would argue that this will be limited in scope. Airlines will not want to train customers to buy economy and then bank on a cheap day of departure upgrade. I think they would still prefer a or allow mileage travelers as these currencies are harder to access and therefore don’t not pose the same margin risk as converting a paid business class traveler to a economy customer hoping for a cheap upgrade.

  4. The premium cabin monetization approach that sells upgrades in this way basically undermines the point of being the highest tier elite with US loyalty programs and undercuts the benefit of customer loyalty yet again.

    Expect systemwide and regional upgrades to become less and less valuable as they become more and more restricted and/or increasingly compete with the premium cabin monetization approach to upgrades.

    …. and those “unlimited” complimentary upgrades and X00 mile-“sticker” upgrades are going to be much tougher to get. I actually expect AA to kill off the 500-mile sticker upgrades at some point when the combination with US is completed.

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