Airlines auction seat upgrades

Bid on upgrades
Posted at 7:07 AM, Aug 16, 2016

How many times have you been tempted to pony up the extra money at the airport and pay for a business class upgrade? After an exhausting trip, stuck in line behind a group of wailing infants, your tolerance for anything less than first class on the return trip may be spent. If you do not fly enough to receive the occasional free upgrade, be prepared to pay for the privilege.

Bidding on Flight Upgrades

Airlines have recognized the relative inefficiency of current upgrade efforts and are experimenting with a new concept. Instead of simply giving upgrades away as perks or charging upgrade fees whenever possible, over thirty carriers around the world have been experimenting with another free market approach. Passengers can now place bids on upgrades to various classes on select flights, and find out before their flight if they have won. Auctions can cover various levels, from premium economy to the highest business class seats available.

The concept is useful for airlines, especially those who have recently merged and now have a glut of people with various mileage perks fighting for precious few upgrades. Travelers who find themselves constantly shut out of upgrade offers may decide to switch carrier allegiances whenever they can. Carriers are experimenting with the balance between reserving a few upgrades as special rewards, while putting the rest up for auction. If done correctly, they can maximize both revenue and customer service.

International carriers have made the most use of this service so far. On overseas flights, upgrade costs can be prohibitive precisely because they are in high demand. Upgrades may still cost in the $400 to $800 range but may be available for half of what they would cost as a straight upgrade purchase.

Most airlines apply their auctions through a service known as Plusgrade. Airlines that have contracted with Plusgrade will let the service know which flights have upgrades available for auctions. Passengers with tickets booked in advance will receive e-mail notifications that upgrades are available for their flight. They can then enter a bid price along with their payment information and will generally find out within 72 hours of the departure time if their bid was successful.

To avoid being flooded with lowball bids, Plusgrade allows airlines a few choices to regulate bids. They can establish a minimum bid per seat, or set up a "strength meter" that assesses generic strength of the bid without guaranteeing its success. Effectively, these act like sealed bids — you only get one chance to submit your number.

U.S. domestic carriers have generally resisted this practice, although American Airlines and Delta have run a few test auctions. Virgin Airlines is testing an auction effort through the SeatBoost app. The auction takes place at the gate, with bids available in $10, $30, or $50 increments depending on the seat available. A "leader board" at the gate monitors the progress of bids. Currently the service is only available at McCarran International Airport in Las Vegas — but really, where else would you expect it to be?

It seems reasonable that auctions will catch on and become a regular part of the upgrade experience, but the auction process may take different forms at different airlines, airports, and in different countries. Eventually, if it is successful enough, expect a round of legislation to address the topic. Until then, if you are on an eligible flight, why not place your bid? Let somebody else deal with those screaming toddlers in coach.

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