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The in-flight experience often leads to conflict among airline passengers, whether it’s over reclining seats, seat switching requests, or battles for space in the overhead cabin. However, now there is a more civilized way for passengers to compete with each other on many international air carrier flights: a seat upgrade auction.
The process is simple: about a week before the flight, passengers receive an email notifying them about potentially available seat upgrades. If they want to participate, they provide their credit card information and submit a bid. If they have the winning bid, their card is charged and their seat is upgraded, often at a significant discount compared to the original price of the upgraded seat.
This concept has gained popularity worldwide, but major U.S. airlines are mostly an exception. Spirit Airlines offers upgrades to its Big Front Seat through its SeatBid program, but other major U.S. carriers do not have upgrade auction programs.
The U.S. airlines are likely considering the costs and benefits of this practice, as upgrades are already part of their business model. However, the auction model presents challenges and conflicts with the current way upgrades are offered.
Zack Griff, senior aviation writer for travel site The Points Guy, explains, “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.”
The auction model differs by offering steep discounts and capitalizing on distressed inventory that would otherwise go unsold.
Companies like PlusGrade have provided technology to many international carriers to offer seat upgrade auctions on various flights.
Imagine receiving an email a week before your flight, inviting you to bid in an auction for seat upgrades. No need to call the airline or pay a high upfront cost. You can choose your own price, see the likelihood of winning, and enter the bidding process. Whether you win or not, you have participated without any upfront investment. From the airline’s perspective, there will always be a highest bidder, and those who don’t win are not worse off than before.
However, not everyone wins, especially when it comes to how U.S. airlines reward passengers. Frequent travelers who have collected points and achieved elite status may feel underappreciated if auctions become the norm. U.S. airlines such as American, Delta, and United have not widely adopted these auctions to protect the value of their frequent flyer programs, which promote upgrades as a key perk.
The airline upgrade model in the U.S. may change, but it will likely be a gradual process. Airlines are not typically known for being tech-savvy, but selling higher-cost seats is becoming increasingly important for their bottom line.
While longer international flights currently have the highest demand for upgrades, the decline in business travel due to the pandemic is likely to have a lasting impact. Scott Keyes of Going (formerly Scott’s Cheap Flights) sees the challenges and potential in upgrade auctions. He explains, “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, upgrade auctions generate more revenue compared to offering free upgrades. Winners of these auctions also benefit from steep discounts on premium seats. However, travelers with elite status who previously relied on free upgrades may lose out. It is possible that more airlines will adopt auction practices, leading to a decrease in this perk, but they will likely introduce other perks to maintain customer loyalty.
In light of these industry shifts and changes in business travel, it would not be surprising to see domestic carriers in the U.S. increase the use of upgrade auctions in the future while offering new ways to retain frequent fliers’ loyalty.
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