Restricting Upgrades Didn’t Help American Sell More Seats, it Just Angered Customers

At the beginning of the year American stopped offering much confirmed upgrade space in advance, even for domestic flights. Systemwide upgrades have been harder to use since US Airways management took over, but now they’re tough to use even domestically.

The frequent refrain from commenters — and indeed their bet — was that if upgrades were harder to confirm the airline would sell more seats. There are two ways this happens.

  1. If they were giving out too many upgrades, some seats were given away ‘free’ (to customers spending a lot in a year, rather than a given trip) that could be sold on that flight instead.

  2. Customers who can’t get the certainty of an upgrade might buy the seat instead

American Airlines reduced the value of the single biggest perk of top tier elite status by making upgrades harder to get. They frustrate customers trying to use their miles for upgrades. So there’s a cost to the strategy. But if they’re selling more first class seats because of it, they might believe the tradeoff was worthwhile.

Here’s the thing: We now know it wasn’t because fewer confirmed upgrade seats has not turned into more purchases of premium cabin seats.

How do we know this? The President of AAdvantage says so. At American’s media and investor day at the end of September Bridget Blaise-Shamai said that “the number of upgrades redeemed this year has been steady year-over-year” though she reports that they’re just “redeemed closer to travel.”

She means this of course to assure that customers aren’t really worse off. But they are. An upgrade confirmed at booking isn’t the same as a battlefield upgrade sweated out at the airport.

If I really want the upgrade and I can’t confirm it American may think they’re encouraging me to buy the ticket — but if I’m just going to buy the higher class of service (hint: I’m probably not), then why on earth am I likely to buy it from American? My benefits have failed me, and I’m simply likely to buy even a premium cabin ticket on schedule and price.

However the point is this: if American is still redeeming just as many upgrades as before, they’re providing a worse customer experience but the same number of seats are going to upgrades rather than selling more seats. They’re harming the customer experience, reducing the value of AAdvantage miles and elite upgrades without getting a revenue benefit in return. Smart.

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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Comments

  1. Their stated policy on their website says 24 hour advance upgrades for Gold, 48 for Platinum, etc. This is B.S. as upgrades are not granted until you are at the Gate. I consider this to be a bit of a lie since I have not received a 48 hour upgrade notice since the USAirways days. In other words, it is a scam and I’d love to see someone (some group?) take them on.

  2. I will say it’s better today than it was earlier in the year. I remember at the start of the year, they would essentially clear 3, 4, 5, or even 6 people off of the upgrade list at the gate whereas now they are filling the seats with upgrades at the 100, 72, 48, and 24 hour marks (but not always) and usually clearing 0 or 1 upgrades at the point of departure.

    I have even been able to (with relative ease) confirm international SWU’s for travel to and from France in January and April. I had to play with the dates and routing a bit, and the domestic connections have not cleared, yet, but the space is there if you look for it whereas earlier in the year I didn’t see any SWU availability for international flights.

  3. I abandoned ship. I still have Gold status due to circumstances but I am now a free AAgent. AA’s tweak, enhancements and changes to its own loyalty program drove me AAway

  4. This confirms what I’ve thought–that AA is clinging onto wide-open inventory until 3 days or less before departure. While an upgrade is never guaranteed, it was nice to use them on flights where they could either be confirmed at booking (always been rare, but possible) or pretty far in advance (all but eliminated). Gary, do you know if AA offers upgrade “offers” post-booking to non-elites? I know BA and DL offer that via their apps and websites. On one hand, if AA gave me a tempting offer, I might bite and not worry about the stress of using a SWU. On the other hand, if they’re going to start selling cheap upgrades, then what is the value of the SWU to EP customers?

    As a NYC-based customer, I’m a little baffled with what to do with my SWUs. Most of my longhaul flying has shifted to partners on paid J, or upgraded J (either buy up, or miles). I recently tried to use two SWUs on JFK and OGG via LAX, and only one of four segments cleared (JFK-LAX).

  5. Agreed Gary, given a confirmed EXP upgrade with AA vs Virgin out of DFW/DAL, I would go with the confirmed from AA. But if I’m paying for the F ticket, I buy Virgin. Besides, I have Virgin Gold so often I’ll spend $80-110 to buy an upgrade 24 hr before. Also, DAL is much easier for me. So AA has probably lost about $4-5,000 of domestic flights from me to Virgin because of this fact this year. They’re just lucky I have very limited options for international flights out of here.

  6. Also (and unrelated), I’ve recently learned that on the transcon, AA only upgrades J to F for operational reasons. Makes sense, since F is almost always filled with non-rev pax and J sells out. But wouldn’t it make more sense to upgrade paid J into F, and full fare or CK and EP in Y to J, with non-revs in freed up Y seats? If I paid $800 for a last minute one-way ticket to LAX and had to sit in Y, while employees are sitting up in F, I’d be pretty pissed.

  7. No doubt that something regarding upgrades happened halfway through the year. The transcon F cabins are basically full now with passengers.

    I’ll take this a step further that it possibly depresses revenue. If your bucket of last minute premium seat availability is still wide open due to lack of early processed upgrades your pricing models are going to drive prices down. And you open up the market to new entrants (mint) who occupy the area between rational prices and idiot airline exec pricing.

    I think it drives home the point in the world of Low Cost Carriers and WN that if you’re going to maintain a premium cabin environment that you have to address the loyalty value proposition fairly. As you’ve mentioned before the move to revenue based systems is fraught with pitfalls and thus far not a good way to extract extra revenue out of discriminate buyers.

    My guess is one large factor is that the airlines are getting heavy pushback from corporate contracts that their employees aren’t happy with lack of early upgrade availability.

  8. Both you and AA are correct. I have been EXP or equivalent top tier for 25 years, and have not been able to confirm a single SWU at booking in the last 18 months.

    AA is correct in saying that “Customers who can’t get the certainty of an upgrade might buy the seat instead”: I am doing exactly this, buying the seat, but since I am paying for it I am buying quality. And this means booking just about anyone else than AA: my last business trips to Asia were on SQ and HN, and to Europe on SK and LX.

    I learned that avoiding the crAAp experience of J on AA is priceless. The side effect of this is that because none of these airlines were oneworld I will not requalify for EXP, so have no real reason to fly AA or prefer its partners. I have not renewed my Admiral’s Club membership, and my upcoming transcons (in business) are on Delta and jetBlue. I have also discovered that the soft benefits of EXP are not worth much: having a dedicated EXP line is not needed when flying airlines with competent staff, it’s only needed at AA because of the understaffed and dreadfully undertrained regular line.

    AA should have been careful what it wished for. In 12 months I went from going out of my way to fly on AA to spending $0 on it. If it wants my business, AA now needs to win it back, and it first needs to climb out of the low-quality customers-last hole it dug itself in. Given what you post, it doesn’t appear has any interest in doing (all smoke).

    P.S. As my 4 SWUs are going to expire unused, is there any charity I can gift them to instead?

  9. I don’t understand how airlines don’t have at least one rational voice like yourself than can save them from themselves.

  10. “If I really want the upgrade and I can’t confirm it American may think they’re encouraging me to buy the ticket — but if I’m just going to buy the higher class of service (hint: I’m probably not), then why on earth am I likely to buy it from American? My benefits have failed me, and I’m simply likely to buy even a premium cabin ticket on schedule and price.”

    That is exactly right. In my experience, just because a firm pays a lot of experts for revenue management doesn’t necessarily mean they will be successful – they still need to understand exactly how people buy their product, and I’m not convinced that many airlines have a good grasp of this. That a good economy is filling the seats may mean they are just not feeling as much pain from that misunderstanding as they would otherwise.

    But insofar as business travelers are concerned, the main way to make them loyal is to allow at least high-tier travelers an upgrade at booking. I fly a lot on UA (I’m a 1K) and BA, and one reason is that on the international routes I fly, that is sometimes (not always) available. I used to fly more AF when they had better O upgrade space as well (I was Gold). When I can’t upgrade at booking, probably about half the time, I will just buy the cheapest business class that I can find that gets me there reasonably at the same time. I travel a lot for work and will not play the upgrade waitlist lottery. I’m not brand loyal or FFP loyal. Giving me an upgrade for miles or certificates at booking (usually with a hefty co-pay), or you’d better have the cheapest business class. Otherwise, it is unlikely I will be flying your airline. And I think that is how a lot of business travelers approach it.

  11. You can’t “premium-ize” something previously given away for free without first resetting customer expectations. This move to me speaks volumes about the direction of loyalty and status programs – transactional and focused on revenue generated as the determining factor. This is great news for folks already pushing the big numbers around per annum, but bad for everyone else (including me).

    As they continue down this path we as passengers should continually hold their feet to the fire with respect to the end to end experience.

  12. Just flew AA but I paid to upgrade (company will pay for MCE), it’s no wonder there are no upgrades available, my cost to pay to upgrade was $39…silly for me to not pay for that.

  13. “the number of upgrades redeemed this year has been steady year-over-year”

    The above quote from the head of Aadvantage does not appear to be accurate. This is because of the fact that we AA EXPs have been given only four SWUs this year versus eight SWUs in prior years.

    Thus, if our SWU units have been cut in half, how can upgrade redemptions remain steady “year-over-year” unless the statement includes domestic complimentary upgrades in the computation made by AA? If that is the case, the statement is misleading, at best.

    On some of the international flights I took this year, SWUs did not clear until the day of travel even though I purchased tickets at least a couple of months prior to flight time. After the flight departed, I noticed there were many empty business class seats on the flights. That is not a good thing to see as a loyal AA customer nor is it a good thing for AA’s maintaining goodwill.

    After many years of being EP with AA, I am letting my EP status lapse for next year. I thought I would feel bad about losing the status on AA but having status with a company (AA) that treats loyal customers with callous disregard makes it quite easy to abandon AA for other carriers.

  14. Great analysis. Like others, I’m a long-time Exec Plat who’s moving on to greener pastures, buying tickets on a case-by-case basis rather than jumping through hoops to fly American and maintain status. For one thing, I’m simply flying other airlines domestically more, opting for AA only on the rare occasions I can find upgrades at time of ticketing. But more meaningfully for AA’s bottom line, I’ve simply moved on to other airlines for my international business class trips.

    And as a minor benefit of this, I no longer have to waste time trying to calculate whether my miles and spending qualify me for higher status in the ever-deteriorating AAdvantage FF program.

  15. So if I’m understanding this article, AA is playing games with F/J inventory instead of delivering upgrades as previously promised?

    So allegedly, AA is like the Andaz Maui of domestic airlines, but not as successful at this diabolical game as the Andaz Maui is?

    Allegedly.

  16. As an 3 MM AA ExPlat I got complimentary Platinum status on UA and have applied for a match to 1K. Not sure if that will be much of an improvement over AA, though. I have two international trips upcoming over the next 90 days, both in paid business class, and neither will be on AA. Why bother anymore? I’m now going out of my way to avoid AA.

  17. Couldn’t agree more about choosing another carrier of buying up. AA recently lost my trip to SYD to CX because I wasn’t willing to hope my upgrade would clear at the last minute. I spent more money on CX for PE instead, flew further, longer, just to be sure I’d be more comfortable.

  18. @brandote – if any of your SWUs are good till 2019 then hit me up on Twitter @joshzepps. I do need a few.

  19. I was telling someone last night that I almost always got upgraded with the lowest elite status on US Airways at least 24 hours before flights and it was free no matter the distance! Since with AA, I have never gotten upgraded domestically with Gold. And recently returning on international, I didn’t find out until the plane was about to leave the gate that my mileage upgrade came through for business, only because the person above me didn’t want to be separated for the one seat. I kept checking using Expert Flyer and there were at least 3 seats for sale all the way until the day of the flight.

  20. Funny – as an EXP I’ve cleared 3 SWUs or Miles+Money upgrades at booking (months in advance of the flight) this year. And I’ve cleared 12 domestics upgrades at 100 hours in the last month alone.

    Literally no change in my upgrade experience at all this year… YMMV.

  21. I would argue that holding back a few business and first class seats until boarding is a good thing. Why? Last minute bookings, IRROPs, and same day flight change.

    It’s rather annoying to want to buy a ticket in F and find zero availability, or to have an F booking and not be able to change to an earlier flight because every seat has already been given out as an upgrade.

    I’m not saying the policy of zero award availability is good, just that there must be a happy medium that doesn’t zero out all F and J cabins.

  22. Anyone want 48 worthless 500-mile upgrades?
    I have enough anxiety. I don’t need AA to add to it unless they plan to provide Xanax when I’m not upgraded. My personal standard is I refuse to book economy flights lasting more than 1:15.

    I’ve booked AA twice in F in the last month and I hate to think they believe their offer of double miles was the reason. They just happened to have the best combination of price and time….in both cases I even paid $50 more to AA than another AA flight because it shaved 1:45 off my travel time.
    Everyone has their own valuation of their time, but I’m never going to stand by for upgrades. It’s insulting.
    I have to believe first will eventually be 100% revenue because there are a lot of people like me.

    You know, the ones who will pay stupidly pay $2650 for a Dodgers game.

    Last first class I booked was an easy choice as UA was half the price of AA and had a better schedule. The difference between economy on AA and first on UA for a 1000 mile flight was $46.

    Honestly, I don’t think about the miles I get from flying unless it’s a long trip.

    Now, this has reminded me the F seat I paid for on my last AA flight was broken. I’d complain, but my time is worth more to me reading Gary’s blog and the comments.

    That Cirrus Jet is looking better and better

  23. Gary – I keep reading EXPs on AA saying they are moving on to other airlines. It’ll be interesting to see if that pans out in the numbers. Maybe not the first year or so, but if this continues I wonder how they react when EXPs and Plat Pros drop off both in numbers and $$$.

    On a separate note – I’ve been an EXP before and have flown AA for 20+ years. I experienced this similar scenario over the summer. I booked a trip to Europe for leisure six months in advance to take advantage of the low cost and while I knew I couldn’t get it upgraded right away, I kept calling every month to no avail, but approximately 30 days prior suddenly I was able to get the outbound overseas portion upgraded for 25K + small fee (I purchased a deep discount fare offered). At least the overnight flight was in business and we were able to enjoy the Flagship lounge at JFK prior to departure. Another friend just returned from a trip – similar thing happened – about two weeks prior to departure he could use miles to upgrade.

    Having been a former EXP (stopped flying weekly 8 years ago) I think the EXPs have gotten used to getting what they want when they want it. Are you going to take the trip or not? Are you going buy the ticket from AA or someone else? We all have to adjust. I understand if you’re taking a family and you want to plan accordingly, but kids will be fine no matter where they sit. Believe, me on that flight to BCN last summer the teenage daughter in front of us fought with her mother the entire trip. Sometimes kids just need to sit in the back.

  24. What none of the commenters have stated is the devalued experience of AA first/business class. My wife and I recently were in business class JFK to DUB and experienced horrible service. The food was at best mediocre, the premium liquors were gone, the dessert cart was gone, and the flight attendants ignored the passengers once they had completed food/beverage service. My domestic first class experiences have been just as bad. The acquisition of AA by US Air has resulted in the worst of both of its predecessors. And, the mods they’ve made to the AAdvantage program are an insult to those of us who have been loyal to AA for more than 30 years. During that period, I’ve earned 3.5MM AAdvantage miles. But, today I consider myself a free agent liberated from the poor treatment by the new AA. Return the old AA to us..

  25. I moved to PHX from SFO in January of 2016. My biggest regret is moving over from United (where I enjoyed 1K status) to AA via status match. I routinely enjoyed upgrades on United and believe I got 1 or 2 upgrades ALL YEAR from AA out of Sky Harbor.

    Their customer service is arcane and lags behind even United. It’s a cultural thing. US Air lacks the culture to support a global airline.Beginning next year, I’ll just BUY a business or First Class seat if traveling a long distance and not have to rely on their paltry offerings. I’ll go out of my way to avoid AA.

  26. Your comment on providing a worst customer experience is dead on! In today’s competitive environment, the company that realizes this and orients to it, will win. Frustrating your most loyal customers will only work as long as your competition is making the evening news physically abusing customers…..

    Please, let one of the airlines figure out that a positive experience will drive a loyal following.

  27. Yes the American upgrade program leaves a lot to be desired. I booked a flight on 12/21/16, company wanted the charge in 2016, for a flight on 10/30/17. When I looked at the seat map not one first class seat was booked, I advised AA that I wanted to use my System Upgrades, I was told there were no seats available. I did not get upgraded on the outbound flight and on the return I was upgraded at the gate 10 minutes before boarding. I am an Executive Platinum and have been for years. I was told by some of my colleges United and Delta have better programs and are more than willing to accept status you have at AA, may be it is time to look around.

  28. I think the article is referring more to System Wide Upgrades and Points and Cash upgrades for Elites. In the past you could book a ticket and confirm the upgrade at the same time. This past year that has been impossible. All of my system upgrades cleared at the gate this year and the cabin was half empty. I agree that is really bad customer service for someone who flies 100k a year and spent over 12K.

    Because of this change I no longer solely fly American. When flying international I look for the best possible fare in Premium Economy or Business Class. I’m lifetime Platinum but will no longer make an effort to reach Executive Platinum. So far this year I’ve only flown AA 41K. I received a call back in September from American asking why have I cut back flying AA. I told them…. the upgrades… You cut my System Wide Upgrades from 8 to 4, asking me to spend more money and don’t upgrade until you are at the gate…. the changes you have made has made the effort not worth my time or my money to be loyal to American. I now fly base on best flight, cost of cabin.
    I was told changes will come… but until then I am no longer loyal to America.

  29. In February 2017, I made reservations for my wife and myself to fly AA to Paris in October 2017. I asked to use points for an upgrade and transferred 100,000 from my Marriott account to my AA account. AA did not give us the upgrade for neither the NYC to Paris flight #44 on October 4 nor the Paris to NYC flight #45 on October 16. After we returned, I asked AA to return the 100,000 points. They refused and when I asked for a reason, I was told, “We do not do that.” with no further explanation. Since these points have a monetary value, it seems to me that it could be that AA is stealing my points.

  30. Yep, if it is in their policy (which it is) they will almost ALWAYS refer to that to keep your money. Pure profit for these bastards. Mana from heaven as they see it. I would recommend no one EVER move miles over from Marriott or Starwood unless you know in advance you will get the upgrade. I know SPG can transfer almost immediately and if you can get them to hold a res for a day or two you have a shot of getting what you HOPE to get. AA is the absolute worst with respect to upgrades.

  31. Got news for you all. Delta has gone the same route and my international upgrades have become difficult to use or confirm. Seems all of these airline exes go to the same country club and have colluded as to how to screw over their loyal customers. Both Delta and American Express will lose me as a customer in preference of other less expensive airlines.

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