Frequent flyer loyalty is a promise that if you stick with one airline, they’re going to treat you better on your future flights. You ‘build up’ status, and benefit most elite flyers cherish is the upgrade. In the U.S., if the airline doesn’t sell first class seats they say they’ll hand those out to passengers in the order of their status… starting several days prior to departure.

For years this was a consistent benefit that flyers could count on, and it kept them loyal – buying less convenient flight schedules, connections instead of non-stops, and paying more for tickets to stick with their preferred airline. But the upgrade benefit has become a mirage.

Here’s one American Airlines passenger complaining that their status only gets them upgrades “5-10%” of the time, and they’re frustrated because there are of open first class seats for a flight they’re about to board – more empty first class seats than there are elite flyers hoping to upgrade, even – and the airline hasn’t awarded any yet.

Don’t expect the 5 day (or even 1 hour) upgrade anymore
byu/msyavl inamericanairlines

In this specific case what’s going on is that American’s automated system just hasn’t run yet. To support ‘single agent boarding’ (having just one agent instead of two working a flight, including calling boarding and scanning boarding passes; watching for oversized carry-on bags and gate checking bags; and watching for intoxicated passengers) on domestic narrowbody flights that are no more than 80% full, American has automated a lot of tasks that used to be performed by gate agents, like clearing upgrades and standby passengers.

The gate upgrades run just before the start of boarding so when there are four seats available for three passengers one hour before departure, expect all three to be upgraded in… 15 minutes.

However their broader point is correct – here’s a flight that was clearly not going to sell out in first class, and that was true for awhile in all likelihood. But they didn’t process upgrades. Why not? Because they’re trying to merchandise the seats. It’s not just about last minute purchase of first class seats – it’s about selling upgrades to everyone that bought coach. Passengers in back might buy up even at check-in!

I have to go to Lansing, Michigan to speak to a group of legislators there. I’m connecting through Chicago on American, rather than flying non-stop of Delta to Detroit and driving. American will sell me an upgrade on the Chicago – Lansing segment for $43. I can also opt to pay with miles, getting slightly less than 1 cent per mile.

Earlier in the week I believe the other direction I was flying was just $40. It’s gone up to $52. I haven’t bit, though on longer mainline flights I’m often a buyer at this price per hour.

Mostly I’ve been curious to watch how the price bounces around. I don’t recall getting a complimentary upgrade between DC and Dallas in years but I saw an upgrade offer for an upcoming flight at $143. I have just been tracking price, and it’s up over $200 now.

The point, though, is that when an airline is willing to sell an upgrade for $40 to a once a year flyer on a cheap ticket, rather than offering as a complimentary upgrade to a customer spending $30,000 a year on tickets (or putting $200,000 a year on a co-brand credit card – which is higher margin to the airline than the tickets) the value of the status isn’t nearly so great anymore.

Deadheading pilots now also get upgrades ahead of passengers. American copied that from United, whose pilots got the benefit during the pandemic.

Delta says only about 12% of their first class seats go to upgrades, while 15 years ago, 81% of first class seats went to upgrades, awards and employees.

American, Delta and United have all become adept at selling coach passengers upgrades to first class for tens of dollars, sometimes as little as $40. Delta will even sell long haul business class for as little as $299 more than coach.

For the most part, upgrades have been tough to get because (1) premium demand has grown while the supply of premium seats hasn’t kept up, and (2) airlines have shifted their merchandising to take less money for those seats from any willing buyer rather than honor frequent flyer upgrades.

Major U.S. airlines promise unlimited complimentary upgrades into available first class seats for their elite frequent flyers, but it turns out to be a pretty hallow promise. The value of status, then, is better help when flights are cancelled and delayed, and extra legroom coach seats.

Having status is better than not having status, and higher status is better lan lower status, but mid-tier status is probably the sweet spot now since that’s enough for those extra legroom coach seats, free checked bags, and boarding priority to avoid gate checking your carry-on.

At the end of the day, though, airlines have made clear that they’d rather take $43 today than your business over time – and that includes your credit card business that helps to earn that status. I am not sure that’s a great idea. It probably means there aren’t enough first class seats, which is another business judgment the airlines have made. But if that’s where they’ve tilted, it’s time to get the message.