With American Airlines planning to let AAdvantage members pay for upgrades using miles as cash at low value because it’s so hard to use miles for upgrades today, it really underscores how fare airlines have gone in eliminating the upgrade benefit for frequent flyers.
They didn’t used to sell first class at a discount. You either paid up, or the seats went empty – and those empty seats were filled with upgrades for frequent flyers. Ten years ago that meant around half of seats upfront were available as upgrades.
Now, airlines would rather take ‘tens of dollars’ in incremental revenue from a once a year flyer than offer the premium seat as a complimentary upgrade to someone spending tends of thousands of dollars per year on the airline.
Airlines now sell cheap upgrades for those tens of dollars, instead of encouraging long-term loyalty. $40 paid upgrade mean complimentary upgrades aren’t available – which in turn means the most powerful motivator of repeat purchases (status) disappears. $40 revenue can cost the airline thousands in ticket purchases as customers just buy the seat they want – on another airline, whatever is most convenient.
I’ve said forget upgrades, just take the buy ups. American Airlines even now awards miles and status credit on the buy up amount. But I’ll take it a step further and explain how airlines offering these buy ups actually discourages passengers from buying first class outright (and you should consider this as a strategy to buy first class for less).
The elimination of change fees during the pandemic mean that you should consider buying coach instead of first class.
- See if you get a cheap upgrade offer, the famed $40 upgrade
- If you don’t, you can still apply the full value of your ticket towards what you wanted in the first place
- Just cancel and use your credit to buy first class if no upgrade offer is forthcoming
Of course it is possible that the price of first class goes up in the meantime (it can also go down, and since prices of airfare shift all the time, another tactic is to keep monitoring the price of your itinerary after purchase and if fares drop, reissue your ticket for the difference in price and get a credit to use on future travel).
American First Class Meal
Now, sometimes first class is so inexpensive you should just buy it outright. The difference between first and coach can be less than the cost of seat assignments and checked bags on a coach ticket, with those benefits bundled with the first class fare. (Delta may unbundle those things, charging for seat assignments and bags on premium tickets in the future.)
Delta First Class
This doesn’t just work on domestic flights. It also works for international. Coach passengers can sometimes upgrade to business class to Asia on American Airlines for as little as $350. Delta has that beat, offering upgrades on flights from Europe to the West Coast for as little as $299.
The truth is that there are two ways that airline willingness to sell cheap buy ups has a cost to them in revenue. First, it encourages flyers to buy cheap tickets and pay for an upgrade instead of spending more for the seat. Second, it sacrifices long-term customer revenue for a small fee on a single trip. Airlines report this as increased revenue for their premium cabin, but those models don’t fully incorporate revenue losses – and unsurprisingly, you get what you measure.
With AA I sometimes buy First outright when the difference between coach is nominal or monitor the cash upgrade offers and jump when it becomes reasonable. I have no issue with paying for First. I don’t expect a business to give it’s product away for free and whether you like it or not this is a permanent feature.
The days of almost automatic upgrades for AA EXPs are gone.
The upgrade cost on an LAX-TPA United non stop is $1250, the first fare is only $1,105.
But good to check anyway.
The cycle goes: Business travelers get travel perks, causing non-bus travelers to want them too. Non-bus travelers start copying them en masse (see the hotel industry e.g. Hilton Diamond), devaluing the playing field for those who do this professionally. Then the bus. travelers figure out a new avenue while the non-bus travelers fight like pigeons in the street over a crumb of bread.
Same thing is happening now with Airlines. The big 3 upended the game and devalued status so much that there’s no outsized value in having top tier status anymore. When everyone can spend their way to top tier status, then top tier status is meaningless. The non-bus travelers who got suckered into thinking they can spend their way to the top will start realizing this in ~5-10 years and the game will be forced to change again.
I believed they track your habits before offering upgrade deals.
I only fly first. Mainly Delta because I’m a hub captive.
But there were a few times where I had to buy coach and waited to see what the upgrade charge would be.
It was always outrageous. Typically about $150 to $200 per hour of flight.
Most recently it was $850 to upgrade MSP to SFO.
Cheaper to just buy the first ticket outright.
But maybe it’s because they track me and know that I’ll buy first regardless
Maybe as a high status flyer you’re getting offered the upgrades cheaper than others. After all these offers are generally tailored (some complex computer algorithms no doubt that look at previous flying and patterns of buying upgrades etc). They’d probably rather some extra $$ from you (and other top tiers) than offer it you for free. I fly semi regularly but not often enough to get high status. I fly to Europe several times a year, the lowest offer I’ve ever had was $750 to J and more often than not $1000+. I was offered $350 one way from LGA-YHZ which is insane for a crappy E175 with an upgraded snack as the only “food” served on that flight. I think the lowest domestic offer I had was $120. So *you* and other top status members might be getting offered a sweet deal to tempt you to pay up rather than risk a standby list of a dozen eligible for upgrade – but the rest do not necessary get such offers.
Gary, United upgrade fees are non-refundable. No credit if cancelled; not sure if you can change flights. Perhaps mention that more clearly in your post.
Gary, to prove/disprove the computer algorithm theory, do not login to your airline account while in incognito mode and search for the same fares.
Thanks, Gary, great article. I can’t help but think that there’s an opportunity for someone (cough cough) to reverse engineer their upgrade algorithm, figure out in advance which flights have the highest chance of a cheap upgrade offer. Perhaps this is related to the number of open J seats at time of booking + how many days out the flight is. Just a theory, would be super cool to figure out.
It has been several years since AA exPlat status was valuable. I used to spend thousands on coach tickets to get “free” upgrades. I now sped thousands less and pretty well always sit up front. I just buy the tickets I want. No more time chasing status, whoever has the best fare, product and departure schedule wins. I had fun mileage running 20 years ago but now enjoying travel in the new ways.
Sorry, but you didn’t earn or deserve any free upgrade with status. If you want to fly up front, pay up with cash (or miles, which I consider to be revenue since banks purchase points from the airlines). Good on the airlines figuring this out and making the premium cabins more accessible to everyone based directly on market supply and demand.
Careless writing — many orthography errors.
Thank you Dr. McGillicuddy, I looked it up and now have a new word to use – most likely after using some of your original potion…which also makes me feel smarter!!
@Super nailed it. Very little reason to chase ExPlat or 1K (or equivalent on other airlines) anymore. My entire credit card strategy is changing too. Will ditch the high$ AA airline card for this year. Flipping that spend to Capital One Venture X card or another card with cash-back. I simply buy F or use the buy-up strategy, and look for the cheapest price. Will make a connection is the price is right. The value of published top-tier status is pretty much gone. I’m loyal to no one. That being said, I’m self-employed and my airline spend will be $22-30K/yr. You’d think an airline would want my business. But they no longer care. High $ / high mileage flyers with status are more of an aggravation to the airlines nowadays, unless you are AA CK, UA GS, etc.
The days when status meant something are long since gone. Not just for airlines either. Hotel chains destroyed their loyalty programs and left their most loyal customers wanting for more a long time ago. The message is clear, loyalty is meaningless. Shop for the lowest rate regardless of brand and take cheap upgrades when you can find them.
We’re not talking first class here. At best domestic flights in the US offer premium economy
TomR, yours seems a keen observation to me. Given the highly individualized marketing of these offers, it seems improbable that Gary’s thesis would hold water across a broad spectrum of travelers spanning casual and infrequent to professionals who write about the industry and travel constantly or at least routinely.
Nothing really new here. Airlines redefine loyalty annually (or more often). If you know the rules you can follow (and use) them. This article focuses in one feature, upgrades. While admittedly an important one to some, it hardly represents all the benefits. It sure is nice to navigate travel alternatives during a major snow storm as an EXP. Thank you to those who have moved to no status and a Capital One card. You validate me not taking the same path.
Is it possible that American would rather SELL a first class ticket for $50 over coach than GIVE it to a pilot whose contract gives him priority over upgrades? It’s cash in their pocket and good will for an upgrade is out of reach…they gave that away at the bargaining table.
No, I am not sympathetic that they need to rest when flying to their duty station from a home on the opposite coast. Everyone else is having to move back where their office is. Junior pilots and FAs may be sleeping on a chair in the crew lounge but senior captains are way too pampered.