The Business Behind Bidding For Seat Upgrades

Advertisement:

In the age where airlines are always trying to get one more dollar from your flight booking, there is another source of revenue. Many airlines will now allow you to bid for an upgrade to your ticket for less than the cost of the next travel class. While some airlines operate a bidding system, others will attempt to sell fixed price upgrades. Qantas passengers have reportedly secured a business class upgrade for as little as £190 from London to Dubai.

Why Offer Upgrades?

There can be a range of reasons why an airline would offer upgrades. Occasionally a flight is overbooked. If economy is full and seats are available in premium or business, it is customary for airlines to upgrade a few people. Traditionally they had to bear the full cost of this. If the airline offers a few passengers the chance to upgrade at a small cost, then they achieve the same result. In fact, they even make a little money off of it. An example of this is the London to Los Angeles flight with British Airways. In January 2017 I was flying this route, and was offered the option of upgrading from economy to premium economy for £240 when I checked in. I didn’t take it at the time, and flew in economy. However, with premium economy selling for up to £2600 this would’ve been a bargain.

BA App upgrade
British Airways offers a fixed price upgrade to Premium Economy. Image: BA App

Bidding for Upgrades

In addition to fixed price upgrades, a number of companies across the travel industry will now allow passengers to bid for an upgrade with the highest bidders being successful. This is seen in aviation and rail. UK rail customers can bag a first class upgrade for a marginal price. In contrast, the minimum bid for an airline upgrade is usually around $100.

Norwegian is one of the airlines which operates upgrade bidding. The airline launched the initiative in May 2017. Norwegian expanded on this concept while leasing the HiFly A380. At the time the airline was charging up to $400 for premium passengers to upgrade to a suite.

bid for an upgrade
Norwegian offer the ability to bid on seat upgrades. Photo: Norwegian

Now let’s head back to the earlier LA flight. Tickets for standard are currently available for £175 with Norwegian. Let’s say you bid £200 for an upgrade and were successful. You would then have a premium ticket for £375. The cheapest premium ticket on sale for the same date is £595. Bidding for flights does however carry a risk that you will spend the whole flight in economy.

Not Too Attractive

When offering these upgrades, airlines have to be careful with factors such as how many they allow. In the case of BA, these upgrades are offered to passengers who hadn’t booked business. Perhaps to give them a taste of a higher cabin so they come back for more, or perhaps as a treat for customer loyalty.

Advertisement:
BA Club World
Imagine flying in a business seat for marginally more than an economy seat. Photo: British Airways

The important thing is that they don’t want to lose passengers from a higher tier. If passengers could rely on the upgrades system, then there is a chance that they would stop paying for the higher class, and try their luck. This would mean that the airline would end up losing money from upgrades, rather than making more. In fact, earlier this week we reported that Emirates CEO Tim Clark admitted that he didn’t want to make the carrier’s new premium economy product “too good” for just this reason.

Would you bid for an upgrade? Let us know below!

Advertisement: