Ebay for Upgrades – an Airline Starts Auctioning Off Upgrade Seats

Upgrades aren’t just for elites anymore (or, on US airlines in premium cabins, for employees). For several years US domestic carriers have offered buyups at the airport. With unlimited complimentary upgrades it might have been rare for a general member to receive a buy up offer, though on some routes they’re quite common such as the US Airways ‘shuttle’ in the Northeast corridor.

United has been perhaps the most aggressive with buyup offers to first class. They offer two kinds of upgrades — offers to allow customers to pay the difference between their fare and a coach fare with confirmed upgrade without paying a change fee, and inexpensive options that are supposed to only be made when all elites on the upgrade list are expected to be cleared.

This latter has become known as “Tens of Dollars” upgrades (TODs) because of how inexpensive they are. Generally elites, who were supposed to be given complimentary upgrades, would not receive the offer… and then at times not clear their upgrade.

The conspiracy theorists believed they weren’t receiving the offer because United didn’t want them to know that the offer was being made at all, that their elite benefits were being sold out from under them so cheaply.

United would say that this was never the intention, that there have been programming glitches and few confirmed instances of this really happening.

But it’s been an ongoing phenomenon for years with Continental, and it ported over to the United side with the merger.

Offering up upgrades to everyone isn’t confined to airlines, Hilton was the first but other chains have adopted “Nor1” (the company that first offered the solution) “eStandby upgrades.” The idea being that if rooms are available on day of arrival, they upgrade will be allocated for a pre-determined fee. It’s a way of extracting incremental revenue from guests willing to pay, instead of seeing the rooms go empty (or instead of allocating them to elite members for free).

There’s plenty of testing to determine the best possible price point to maximize revenue. But we’ve mostly seen travel providers offering upgrades for a specific price. We haven’t seen bidding.

Now, reverse auctions are something that Delta has toyed with for voluntary denied boarding compensation (“how much would it take for us to convince you to take a later flight, since yours is full?”).

But we haven’t seen auctions for upgrades. Until now.

Etihad has launched a new system where passengers will bid for their upgrades in an auction.

With our newly launched online upgrade system, guests holding confirmed tickets on Etihad can now determine the amount they are willing to pay for an upgrade to the next higher cabin…

Guests will be notified on email about potential availability of seats for upgrades, following which they can make their offer. The success of an offer will depend on the amount offered for an upgrade, other competing offers as well as the guest’s status within the Etihad Guest program. As always, the higher the offer, the greater the chances. Guests will be informed by Etihad about the final status of their offer two days prior to departure.

Customers who upgrade this way get a 10% mileage bonus on top of what they’d normally receive for their ticket. The FAQ says that any extra baggage allowance for a higher class of service applies to the upgraded segment only and not to any onward segments, but I’m not sure how this could work if the onward segment is a connection rather than following a stopover.

They’ll provide guidance on whether a bid is high enough to be likely to be successful, but since there’s not yet any historical data it’s not clear just how useful the indicator will be (or like Priceline, the guidance offered should be ignored and just serves to pump up bids).

Several ticket types are ineligible to bid for upgrades: promotional fares, guest seat rewards, award tickets, free tickets, tickets already upgraded using miles, and customers traveling with infants. (I’m curious why this last category would be excluded?)

What’s strange and completely opaque is the method they’ll be using to determine who gets the upgrade, since it’s not strictly “highest bid wins.”

The success of an offer depends on a combination of factors such as the amount offered for the upgrade, competing offers, the original fare at which the ticket has been purchased, your status within Etihad Guest programme and the number of seats available for an upgrade. To improve your chances, enroll into Etihad Guest by clicking here and put forward your best offer.

If I were running the program, I’d probably arrange it as a Vickrey auction.

In any case, I sure hope this ‘innovation’ remains cordoned off in the Middle East…

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Whether or not it was a programming glitch, it is not a conspiracy theory — United has done this to me (elite member) at least twice. To be clear, I’ve put in for an upgrade only to be offered to upgrade for a fee when I checked in. I refused the latter and was not upgraded.

  2. This past Friday, DEN to SFO. I changed to an earlier flight that had 4 seats in F. (Paid $50 same day change fee). I was offered a chance to buy up to F for $399 but declined. Then I checked and found I was #1 on the upgrade list. I watched the upgrade page on the iPhone app and it showed 3, then 2, then 1 F seat available, all while I was #1, then I started getting bumped down the list.

    Sat in E+ (sort of, exit row) and was #6 at boarding.

    Seems the system isn’t quite up to snuff. Perhaps the same day change missed some cut-off time, but it seems fishy to me.

    I’m UA *G

  3. If I had to guess (which I don’t, but I am anyway), in Etihad’s auction system status would break any ties. That way they can say that status goes into the process without actually losing any revenue.

  4. Why shouldn’t airlines monetize upgrades more aggressively? This, frankly, makes more sense than nickeling and dining passengers over bag fees, bulkhead and exit row seats, etc. Give elites a set number of confirmed upgrades. Any unsold (or unconfirmed upgraded) premium seat should be auctioned off.

    There is really no reason not to do this. Most elites are business travelers that are required to fly by their employers. In most instances, their choice of airlines is dependent on their departing airport. Why cater to a passenger that must fly for his or her job? You already have their business.

  5. @Steve Kalman I assumed if they were offering you $399 buyup then it was the difference between your fare and an UP fare. If they were offering that to others as well, which they probably were, some may have taken advantage of it. They’re certainly selling discounted F these days in lieu of complimentary upgrades. And they are even prioritizing ‘paid for’ upgrades with upgrade instruments over complimentary upgrades — a general member requesting an upgrade with miles trumps a 1K on a discount fare. But what you experienced wasn’t the ‘tens of dollars’ buyup necessarily.

  6. Air New Zealand is also in the process of implementing the same scheme – branded as Oneup.

  7. I sat in E+ on a UA CRJ last night after confirming my upgrade FOUR MONTHS AGO! There was no aircraft swap, no schedule change, no broken seat, etc. I was just flat out screwed over. Sometime between printing my boarding passes and boarding the plane (roughly 75 minutes), my seat assignments for the trip were dropped and no seats were open in first on either flight. I was absolutely LIVID. The gate agent at ATL apparently did something to fix the onward flight since I had my old seat back by the time we landed at IAD. I’ll be ringing UA for an explanation and compensation (neither of which I expect will be provided).

  8. I’m flying on Czech air tomorrow. I put the bid in, at auction, for my upgrade last month. Hasn’t been accepted yet. But I will know for sure tomorrow!

  9. I don’t know if it’s because all the other 1K’s have left for AA but my upgrades have started clearing prior to the gate. Double EQM please?

  10. I’m just weary about being number 12 on a 67 person upgrade list for 8 seats…there seems to be hardly a traveller on my flights who is not at least silver…or some equivalent ‘special offer’ group…

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