Qantas Introduces Bid Now Upgrades — Good Idea?

Qantas’ Frequent Flyer program is one of the least lucrative out there, in my opinion. Usually I don’t even bother mentioning when they change their program, since even a positive change will only move the program from terrible to horrible. šŸ˜‰

Qantas-747-Business-Class-03

That being said, Qantas is introducing an innovative upgrade option, and I’m curious to hear what you guys think about it. I’m not sure whether I like it or not, but it’s certainly interesting.

It’s common for airlines to want to generate as much incremental revenue as possible, especially given how “perishable” goods in the airline industry are. One of the ways they’ve been doing that is by selling last minute cash upgrades. Different airlines have different ways of doing it — some only sell them at the airport, some at online check-in, some invite select passengers by email, or some let you bid on upgrades in advance. But those last minute upgrades are almost always for cash.

Qantas is introducing new “Bid Now” Upgrades, described as follows:

We’ve launched another way to upgrade. It’s called Bid Now Upgrades and it simply gives you another opportunity to choose the way you fly.

Bid Now Upgrades is available by invitation only for selected Qantas flights. If you receive a Bid Now Upgrade invitation, you have the opportunity to make an upgrade offer to a more premium cabin using a combination of Qantas Points and money if you are a Qantas Frequent Flyer, or money only if you are not a Qantas Frequent Flyer.

And here’s the process explained in an infographic:

Qantas-Bid-Now-Upgrades

What makes this interesting is that Qantas already lets you use miles to upgrade, but is now letting you basically “name your own price.” These cash & miles upgrades will clear after Classic Upgrade Rewards, so there shouldn’t be an impact on those types of upgrades. At least that’s what they say as of now, though we’ve frequently seen situations where airlines eventually prioritize cash upgrades over mileage-supported upgrades.

Anyway, this certainly has the potential to set an interesting precedent. Obviously we don’t know the formula Qantas is using here in terms of what cost they’re willing to upgrade at, but it does make you wonder how much they’re valuing their own miles at. In other words, would they rather accept an upgrade offer of 10,000 miles plus $200, or an upgrade offer of 20,000 miles plus $100.

Basically they’re letting each consumer individually decide how much they value cash vs. miles, which is part of what makes this so interesting.

Qantas-747-Business-Class-04

It’s ironic that airlines are offering more ways to upgrade with cash last minute as they continue to hold back more and more upgrade space until shortly before departure. It’s one thing if they were clearing upgrades in advance, but that’s pretty rare nowadays, and instead, you often only clear at the gate.

What do you think of Qantas’ Bid Now Upgrades scheme, and would you like to see other airlines adopt it?

Comments

  1. Not totally related to this topic but found interesting that last Friday when I went to check in online for my Delta flight from MSP-JFK-MXP (booked on Economy Plus) the app asked me if I wanted to upgrade both legs (not the return flight) to Business Elite for $750. I declined since I had a good chance to be upgraded for free on the MSP-JFK flight and I didn’t think it was worth paying to upgrade a less than 8 hour flight from my bulkhead Economy Plus seat to a business class seat on an old 767 Delta uses on that flight. It was the first time I was offered to pay for an upgrade on an international flight so not sure if this is new or has been going on for a while.

  2. “Itā€™s ironic that airlines are offering m0re ways to upgrade with cash last minute”

    *more

  3. Sort of on topic. Has anyone else noticed that the USAirways upgrade systems seems to be working differently these days? I used to always get an e-mail 3 days out but now, sometimes I do, sometimes I don’t, sometimes it comes a little over 24 hours before departure.

  4. As others have noted, several carriers have already been doing this – so I’m not surprised. It’s about incremental revenue optimization. Conversely, and sort of off topic but yet on a related tangent, I was booked on Delta in F recently for a homebound domestic revenue flight that was apparently oversold. When I went to the website to check-in and get my boarding pass, I was greeted with a pop-up that advised me that the flight was oversold sold, and offered me the opportunity to “bid” what amount of compensation I would like to receive if I “volunteered” for rebooking. Because the bidding process was blind to bidders, and I really didn’t want to get home significantly later than what I was currently scheduled for, I tendered $10,000 and guaranteed F on the rebooking. Of course, my “bid” was not accepted but I found the concept interesting nonetheless. I rarely fly the Big D so I don’t know if this process is the norm with them or something new. It was my first encounter with it. It also occurred to me that if Delta really wanted to optimize this they should reveal all of the bidding – in Dutch auction fashion. How low would you go??

  5. @John – I too have noticed oddities with the US Air upgrade emails. I’ve seen them send them out a day early… at hours much later in the day than usual… or most recently I got an upgrade without actually ever getting an email. Guessing its related to preparing for an integrated FFP while still running two airlines starting next quarter.

  6. Air New Zealand does this as well, though with a different time frame (3-7 days out, and then standby the day of), which likely does impact priority upgrades.

  7. Hey Ben, I’ve noticed you’ve been increasingly harsh on the Qantas FF program. Nobody can take away from it that it’s famously one of the most lucrative loyalty businesses in the world, but I absolutely agree with you that redemption rates are comparatively expensive.

    However for Australians living in Australia, it is so ridiculously easy to earn QF FF points that it balances out. I think an airline is doing their job if it encourages their home market to use their program, but isn’t silly enough to open it up to Miles&Points junkies from around the world to game the system in order to get cheap flights on partner airlines *cough* Lifemiles *cough*.

    Also, for Qantas Frequent Flyers with Platinum status or above, availability is excellent through their ‘unpublished benefit’ of being able to request a confirmed reward seat over the phone (for yourself and/or family). Generally as long as ‘saver’ fare buckets are still being sold for a flight, they will open these seats as reward seats for you (e.g. I-class for Business). Very valuable and completely undervalued perk for someone like me!

    What puzzles me about the upgrade bidding system is that the First and Business cabins are usually so full these days from either points upgrades, staff travel or overselling economy, that I wonder where these seats available for bidding are coming from? Maybe staff travel in premium classes will finally lose out.

  8. @flying_foxy Part of the reason for Qantas’ success in Australia is that they have successfully hoodwinked many into thinking that their points are “ridiculously easy to earn”. There are other programs in Australia which are just as easy if not easier to earn (such as Virgin Australia and Singapore), with much better redemption rates, and in the case of Virgin, fees and taxes a fraction of the outrageous levels Qantas charges. Agree that they shouldn’t let mileage junkies game the system, but QFF is effectively gaming their own members in comparison to other local options. That’s of course why Qantas often makes more money from the frequent flyer program than they do from their airline operations.

  9. Living in Australia, I actually couldnt believe how amazing other programs like AA are. I have an upcoming flight Y to Europe return with a OneWorld partner airline that gives me 20,000 miles (=33% of a one-way business flight to Europe). Qantas would give me ~10,000 (=8% for a one-way business flight) when credited to them. Not to mention the fuel surcharges on redemption.

    Only real advantage is the change to use Emirates lounges (even when not flying with them) or redeem miles with them (like EK F A380 from SYD to AKL) as well as access to first class lounges when flying discount airline Jetstar.

  10. QFF redemptions are costly compared to Dividend Miles / Aadvantage in Points and surcharges. PER – LHR coach ~130000 plus AUD 910 compared to first on Thai – 150000 and USD 200. Velocity seem to have some good redemption offers and Krisflyer, as you point out.

  11. I’m a huge fan of this kind of upgrade mechanism. Purely because for an infrequent family traveller like me it works really well.

    Each year I take a trip with my wife and 1 now 2 nearly 3 šŸ˜‰ year old to PER from LHR via KUL to see my folks. Travelling with a young child has been a breeze for us but I always use MHupgrade to upgrade us on the KUL-PER sector to Business on both outbound and return.

    Now consider I usually buy the cheapest economy fair going the system allows me to upgrade all 3 of us (that’s 3 seats for the last trip!) for less than Ā£200. The cabin is always less than half full on that sector and it allows us to upgrade with the lowest possible bid. Getting an angled lie flat for a 6 hour flight after sitting in economy for 13 is wonderful.

    A good thing I say
    D

  12. Julie’s noted that Air New Zealand does this – in fact, I thought they were the first airline to auction upgrades. It’s one reason why Qantas have introduced it – many Australians are already used to it from Air NZ. Seems quite a good approach to me. I’ve known a couple of people who won inexpensive upgrades.

  13. @Dan I absolutely understand what you’re saying… but whilst I’m in a minority, as an Amex Centurion cardholder who can easily earn 2 (if not 3 on some spend) QF points per dollar, compared to a US credit card earning AA points, QF points are VERY easy to earn.

    Sure, we can buy AA miles or send them from Amex via SPG, and yes redemption rates are lower per mile/point, but if you are Platinum QF and have a premium Australian CC, booking awards flights on QF metal is brilliant.

    Personally I use CX (also an Amex MR 1:1 transfer partner) to book OneWorld partner airline reward flights as their partner redemption rates are better than QF. But to be honest, loyalty programmes aren’t built around those members who aren’t actively engaged with them (and reaching higher tiers), so I understand why QF (nor any other airline) would really care as much as we’d like about less-frequent flying members and their desire to redeem points in premium cabins.

  14. @flying_foxy That high earn is not limited to QF though. I have an Australian Amex (Platinum Reserve) which earns me up to 3 Membership Rewards per dollar spent, which can be transferred to 9 different airline programs. Just to use the example of a SYD-LAX oneway in Business:

    Qantas – 128000 points, for which you need to spend at least $42,666 on your Amex, plus close to $1,000 in fees and taxes, and a Qantas website which will charge you the business class points but route you via BNE or MEL, with the MEL-LAX or BNE-LAX leg in Economy or Premium Economy

    Velocity – 94,000 points, for which you need to spend at least $31,333 on your Amex (or less with the transfer bonuses Velocity sometimes offers), plus fees and taxes of about $150, and much better availability than Qantas.

    I have status with both, but my engagement with Qantas is plummeting because it is just less brilliant than other options.

  15. The Qantas Frequent Flyer is pretty horrible in comparison to AAdvantage. Redemption is awful on it’s own metal and oneworld partners with the number of miles required are so poor and also the seat availability even for Y. Including the fact that they don’t give us the most direct flight for seat availability redemption which means they want you to spend more points on redemption. E.g. they can offer a direct flight from SYD to SIN but they will display SYD – MEL – SIN so you could spend more points.

    They also don’t have much integration with oneworld partner airlines online to avoid calling their customer service and then charge booking fee for a function they can’t provide for self serve customers.

    I could go on, but this is the extent of my rant about their program.

    There’s also not many other airlines that we can join where we can earn more miles on the ground.

    Hence, we’re stuck with using Qantas Frequent Flyer program and Virgin Australia’s Velocity.

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