Why Don’t Airlines Offer Free Upgrades When There Are Empty Seats?

Reader John left the following comment on a post the other day about Delta eliminating phone ticketing fees:

“By listening, caring and connecting with our customers, we have their backs every time they fly with us.” Right!

We just came off a Delta AMS-SEA flight. There were 16 empty seats in business. But, of course, since their policy is free upgrades for medallion only on domestic, the seats remained empty. I can not understand the business sense if this. Why not make 16 of your best customers feel appreciated for their loyalty? What would this cost them? Ok, maybe they could make the case that they do not have enough business class meal on board… so move me up and give me the comfort class meal. I would appreciate the nicer seat and feel like they appreciated my loyalty.

Loyalty programs seem to be one way streets.

Why don’t airlines upgrade loyal flyers for free internationally?

It’s an interesting topic to discuss, as there are varying perspectives on this. It’s only fair for me to address this topic, because I did ask a while back whether airline employees should be allowed to fly first & business class for “free” (maybe I wasn’t clear in that post, because I’m actually a big supporter of airline employees getting travel benefits).

John raises a valid point. If a seat would otherwise go out empty, it’s a sunk cost at that point. The airline can’t get any revenue for the seat anymore, so why not generate some goodwill by upgrading someone to that seat?

Back in the day that’s how it worked. Gate agents had a lot more discretion to upgrade passengers. Years ago my dad was a Lufthansa Senator frequent flyer (back before they had their HON Circle status) and flew between New York and Germany at least once a month. His company would pay for business class, and almost without exception he’d get upgraded to first class. They’d take his boarding pass when he arrived at the lounge, and say “let me see if we can get you a better seat today.” Around boarding time he’d almost always be paged, and given a boarding pass for a first class seat.

Nowadays for the most part there are procedures in place, and the only circumstance under which you’ll consistently see free upgrades is when it’s for operational reasons, like a cabin being oversold, and them needing to upgrade people (which is quite common on some routes with a lot of leisure demand but not a lot of premium demand.

American-Economy
American’s 787 economy class

Why don’t airlines provide free upgrades anymore? Simply put, because at some point it dilutes the product.

The slippery slope of free upgrades…

Look at what has happened to domestic first class in the US. Years ago airlines introduced unlimited complimentary upgrades, and over time the product has been diminished to the point that it’s referred to as “upgrade class.” Once an upgrade becomes an entitlement, it’s sort of tough to justify paying for it. After all, who wants to pay for something they can get for free?

Don’t get me wrong, I don’t think consumers are at fault. The airlines created these monsters and expectations, yet don’t take responsibility for what they’ve developed into. As a United executive famously said, there’s a problem with “over entitled elites.”

We’re seeing US airlines slowly counter that trend, and they’re accomplishing that by making upgrades tougher and tougher to get. Airlines are lowering the price of first class and offering more opportunities for passengers to purchase paid upgrades.

For example, in the case of Delta, 31% of passengers paid something for domestic first class in 2011. By 2015 that statistic was up to 57%. By 2018 they hope that it’s 70%.

Delta-First-Class
Delta’s 737 first class

While the goal is of course to maximize revenue, the long term way in which that’s being accomplished is by conditioning people to once again expect to pay for domestic first class, rather than expect an upgrade to it.

That’s what most carriers are trying to avoid internationally, and why they don’t offer free upgrades internationally. Sure, many airlines give out upgrade certificates that can be used internationally, but that’s still a form of payment for the seat.

If complimentary upgrades were given on international flights, I might not even use those upgrade instruments for my own travels anymore. I’d strategically book the flights which have the highest chance of having empty seats in business class, and then I’d hope for (at some point, expect?) an upgrade.

American-Business-Class
American’s 777 business class

Why the international upgrade situation is getting worse, not better

I agree with John’s general sentiment, that Delta doesn’t actually listen to their customers or care about them (instead they know what they can get away with it, and they do it). However, in this case I don’t think the lack of providing free upgrades on international flights is proof of that.

To take it a step further, the international upgrade system we’re seeing right now is probably as good as it’ll be for a long time. With more and more airlines introducing premium economy, you can guess what the implications of that will be in terms of upgrades from economy…

American-Premium-Economy-1
American’s new premium economy

What do you think — should airlines occasionally offer complimentary upgrades to loyal flyers on international flights as a gesture of goodwill, or does the current system work?

Comments

  1. “Who wants to pay for something they can get for free?” Isn’t this a reason why most of us read your blog? To fly in premium cabins for free rather than pay for ’em. 😉
    I think the current system works. Upgrading loyal customers when the economy cabin is oversold is indeed a great gesture of goodwill. I appreciate this the most during the holidays when business travel decreases and leisure travel increases for most routes. When I was EK Gold a few years ago, I always got upgraded to J on JFK-DXB route during the holidays when Y was oversold and I loved it!

  2. They should auction them off. Last minute who is willing to pay the most miles to get the upgraded. Where do you the auction price will settle? More than the normal redemption rate or less than the normal redemption rate?

  3. I disagree with this logic. With load factors at pretty much all time highs, it is rare where a lot of b-class or first class seats are truly empty (and due to consolidations, not enough elites to fill them.) Not only do you buy goodwill, if you’re the airline, you also are buying optionality very cheaply (actually, the the airline is buying the option for free). Your zero cost upgrade can can help turn a marginal customer into a more frequent flier of said airline and or help him or her see the benefits of upgraded seats and purchase one in the future. Basically, the airlines seem to be mis-pricing optionality.

  4. Back in my first (non-elite) year after switching from Delta to US Airways flying TATL, I was consistently offered upgrades to J from discount economy for bargain prices usually within 16 hours or less of departure. I gladly paid and felt like I had stollen the seat! But that was a long time ago and I can’t remember a flight I’ve been on in the past six or seven years since that has gone out with an empty seat in J, much less 16. And I’ve flown in January often.

    Sure, it would be a nice gesture to give away a seat if it would otherwise go out empty, but it’s hard for me to imagine how often this would occur, at least on the routes I fly.

  5. Instead of upgrading elites, perhaps upgrade paying customers who had a high agony count. It’d be great if they’d link your frequent flyer account with how many times they’ve IRROP’d your itineraries.

    Say Delta held you for 14 hours at MSP because you missed your connecting flight after your first one had mechanical issues and had to stand by while all of the silver platinum medallion members took the available seats on the earlier flights. Would’ve been really nice to have been in one of those empty first class seats instead of the last row middle.

  6. Try being a Qantas elite. They don’t even upgrade folks on domestic flights unless economy is oversold. Due to market concentration the ‘elite’ boarding line (OW Emerald/Sapphire only) is usually as long as the normal line. The first ten economy class rows of a 30 row cabin are reserved for OW Emerald only. Business class had four passengers out of a possible 24. This is QF domestic!

  7. CO used to give comp international upgrades to passengers paying the highest fare for their coach ticket. On a UA flight two years ago, IAD-LHR, going to a megado, one of the organizers got a comp upgrade from Y to International F just because he was on a very expensive full Y ticket (with no status). I was in J (on reward) and J was not full.

  8. I wrote the original post that Lucky refers to. I think it is an interesting discussion and I do see the other side, but in the end, it still comes back to customer satisfaction – customer loyalty. An upgrade when they oversold the flight does not impress me – I might enjoy it, but why should I be impressed. An upgrade when they don’t have to, now that would impress me. Lucky continually writes about devaluing miles, but I see the airlines devaluing customers.

  9. With only three major airline left in US there is no much loyalty airlines need anymore. You basically are going to pick an airline based on your home location. With this situation, there is no much intransitive for an airline and they would rather have these seats empty so you might buy it next time rather than give it for free.

  10. My guess would be that they are afraid people won’t pay for business class if they can just buy an economy ticket and upgrade for free. Even if there are empty seats in business class, there are people up there who did pay for it. I’m not so sure they would have paid for it if they could have sat up there anyway by upgrading from economy class.

  11. Upgrades on domestic US flights are the exact reason why I don’t want to pay for first class. I think this is pretty much a US thing though

  12. Perhaps there’s a middle ground that rewards loyalty without diluting the premium product (too much). If a flight’s not oversold, and they don’t need to do op-ups, limit paid upgrade offers to certain pax (elites, full fare, etc.) AND offer them at a reasonable price. IME, the paid upgrade offers I’ve seen have been ridiculous, like $800 for east coast TATL or $400 for a transcon in domestic F. 😮

    In John’s example of AMS-SEA, IMHO $200 is probably high enough that not everyone would pay, but it’s low enough that it’d be a bargain. Since only a few passengers would be offered the discounted rate, it would keep seats empty even if everyone took the deal. Thoughts?

  13. “Why not make 16 of your best customers feel appreciated for their loyalty? What would this cost them?”

    I’ve got to agree with Lucky’s assessment here. The goal with these policies for airlines isn’t getting marginal customers to fly more, it’s making sure what paid business they get in the front cabin stays there. If I have a habit of flying business or first over a period of time, but then realize I can get the same experience with a regular upgrade program, I’d probably take the risk and just book economy. It could be a massive revenue loss. In terms of the airline’s point of view, there aren’t “16 of your best customers” waiting for those seats Their “best customers” are already sitting up there and many of them aren’t costing them a dime in FF benefits.

    While I’d prefer a free upgrade program for my own travel patterns , I can absolutely understand the business sense behind it. . . heck, I’d probably do the same thing.

  14. What is more annoying is not allowing you to use your miles to upgrade to the next class when being told it was full. I was on a recent flight from LAX-HKG, i am diamond plus with that airline, and was holding a biz class seat for my wife and 1st class seat for myself, , i wanted to use my miles to upgrade my wife to 1st but at the check-in counter they said the cabin was full, when the doors were closed, there was 1 seat empty and was not used by the reserve pilot at all, sat empty the entire flight, i asked if the seat was defected, reply was NO, just no one booked it – i was peeved and have written to them, waiting for their reply.

  15. Some foreign carriers have a lottery system for their unsold first class seats via a service called Optiontown. Anecdotally, my friends using it for Aeromexico flights from NYC to MEX have had about at 50% success rate with it….

  16. pretty fascinating this “upgrade if empty seats” thinking is almost entirely a uniquely American phenomenon.

    elsewhere, the thinking goes like this: “freebie and/or expected upgrades diminish the integrity of the premium class product”.

    you can’t argue with this logic if you were to compare, say SQ, EK, JL, OZ, KE, CX, etc. pretty much every large global carrier with actually a nice F class against the big US carriers.

  17. Free upgrades plan makes no sense. People buying cheap coach fares are not where the airline makes its money. They want to provide best service to people paying the high business class fares. Why dilute the experience of your high-revenue passengers, simply to please very low-margin customers who bought a cheap ticket? The airlines already feel that their loyalty programs are not targeting the right customers, because you can earn status by flying a lot while spending not that much — and they want to focus on high-margin customers more. This would move in opposite direction.

    For people who do have coach tickets, the airline would prefer to drive incremental revenue by getting people to pay miles and cash for upgrades. If you’re on a flight with lots of open business class seats (which you can infer from seat map), and you know they’ll upgrade you for free at boarding, people won’t pay. The airline loses out on incremental revenue it could otherwise earn from a coach flier who would be willing to fork over miles or cash to get that upgrade.

    There also is a real cost difference for business class meal, compared to economy. And it’s really not workable for them to withhold the meals from the free upgraders who are sitting in business. People switch seats so FAs would have a hard time keeping track of who was free who wasn’t. And if someone paid $10,000 for their business class seat (as I have done on work travel many times), they might feel that they got ripped off when they ask their seat mate why he’s getting a different meal — and learn that the passenger sitting next to him is getting the same service for less than a tenth of the cost. Many high-revenue business travelers don’t know how to get cheap upgrades from coach — and the airlines would prefer that they never find out and instead keep paying big fares. Why would you want all these people eating economy class meals making clear to your paid business class customers that they paid *way* more than they needed to, to sit up front?

    This proposal makes zero business sense. Airlines want to retain customers by giving away some tangential benefits that customers value — but they don’t want to just give away one of the key ways that they drive incremental revenue and get people to pay higher fares.

  18. Does anybody know of a way to be upgraded from Delta Comfort to Business/Delta One on international flights? We have 2 DC tix from AMS to BOS in October (miles for economy seats because Delta One seat were 350,000miles each-no joke and paid the approx. $150 each to upgrade to DC). Thanks in advance for any useful info!

  19. @KW if youre on an award ticket, all you can do is hope DL opens up saver award space on your flights. Then call to pay the difference in miles plus change fees.

  20. I feel like the airlines should instead aggressively sell discounted upgrades for the seats instead. If it’s otherwise going out empty why not try and monetize it? I believe LH has something in place, albeit on a limited set of routes but its there. AF/KL gives upgrade options for intl travel – so why not the US airlines? (or do they already do this? I’ve seen it on domestic AA but not international) Other airlines have a bidding system.

    I’ll gladly pay $300 for a seat in J on a TATL flight.

  21. Like going to a great restaurant, travelling in business or first I expect to pay for it, not only do I expect to pay but I also expect that my fellow travellers have as well.
    Why does there exist any feeling of entitlement to be upgraded? The airlines can only blame themselves for the lack of self confidence in their product and possibly the vast price step up that exist between tourist, business and first classes. If these classes were a little more accessible on price points we would all be more prepared to make a ‘what the hell’ decision to spend more to travel in more comfort. As it stands my flight from London to Melbourne felt like travelling in a reclining coffin, nasty Champagne and very average food.

  22. Fully agree with Lucky. It is quite simple, if you want a product to be special and people to pay big money for it, keep it like that. You have to be careful how you treat your customers. Upgrade someone once, and he will love you. Upgrade him twice, and he will start complaining that the seats could need a refresh, the purser didn’t address him by name and the champagne had the wrong temperature. After three upgrades, he will feel fully entitled and hate the airline if he doesn’t get bumped up next time…

  23. I for one personally think they should give away free upgrades to elites. It is free marketing. Those individuals may just remember that nice surprise and how much they enjoyed the upgrade. Then next time when they purchase that trans-Atlantic flight, might spend the $500 or whatever more it costs to fly in business class.

    For the past 6 years I have been an executive platinum. And because of my experiences flying in J/F and using certificates/miles I have actually splurged and purchased a few business tickets. Years ago, I never would have thought it would be worth it, or I wouldn’t even bother looking for the price difference between economy and business.

  24. The bigger problem is that many times the airlines would rather let J/F seats go empty than releasing low-level award space, even at the last minute.

    I can’t think of any good reason for them to do that.

  25. @William
    As this may dillute the J experience. As someone who personally pays for paid J internationally; I prefer that they didn’t release that many low-level award seats.

  26. I am firm believer that free upgrades should not be given out freely. Once you start doing it, everyone is going to expect it to be done every time, and you diminish the value of business and first class. Who loses? Customers who pay for their ticket, and customers who paid using miles. There will eventually be an overcrowding of business and first, and it will become a mess.

  27. Why would people pay for Business or First if they were almost guaranteed an upgrade?

    The customers who are actually paying for First and Business are more valuable (at least on that flight) than those paying for a lower fare class. Why would the airline want to de-value the product these valuable customers had purchased by giving it away for free to everyone else?

    First class in particular is supposed to be exclusive. There’s nothing exclusive about paying $10k + for a ticket only to have the cabin filled at the last minute by people who have paid significantly less for their ticket. It cheapens the whole experience, the cabin and bathrooms get busier and noisier, and the service quality usually decreases.

    There is a hard cost in giving those seats away… Less people will actually pay for them.

  28. Seriously
    Some people are just plain ungrateful.
    How dare you ask for a free upgrade.
    What do you believe you have that warrants you being upgraded.
    An elite ff card most likely achieved as a result of the company your working for.
    Very few elite flyers on here have achieved that status by self funding travel.
    I for one cannot bare to have upgrades sitting next to me.

  29. It’s interesting to observe this from the UK/Europe, where airlines don’t automatically upgrade elites on shorthaul, which plays a large part in conditioning passengers not to expect the same on longhaul, which in turn should help to protect revenue and ensure certain travellers pay for business class flights rather than go for the cheapest option and rely on status to get into the cabin they want to be in.

    There’s probably a separate discussion around ways in which airlines can/should offer upsells to a premium cabin and with what frequency, and certainly over the past few years BA have become more restrictive in offering these (on certain routes you could be pretty much guaranteed to be offered a low cost upgrade to Club Europe immediately post purchase of an Economy fare, with the result that you wouldn’t ever bother buying the Club fare in the first place).

    Then there also the question of being able to use miles for upgrades, which is even more opaque….

  30. The flyers who want free upgrades are the same people who complain when things don’t go the way they want. They feel entitled rather then what they deserve. When I go to do business with their company, do I get a better product for free because it’s sitting on a shelf? do they offer me a deep discount because I have been in their store a hundred times? People LOVE to complain about the airlines. They have a choice on who they will fly. Let the marketplace decide what the airlines provide not the spoiled, passenger.

  31. Then, okay, no free international. But would be awesome to get easier upgrades certificates. On DL you only get 4 per year, and being DM. Being PM, gets you NOTHING internationally. And come on, JFK-SEA is longer than MIA-PTY. Why don’t they just give more certificates and lower the priority / usage of those? (like you can only give away 2/3 seats per flight, useful for the case the guy mentioned)

  32. I understand and am fine with no international upgrades for elites, but this is a silly argument:
    “An elite ff card most likely achieved as a result of the company your working for.
    Very few elite flyers on here have achieved that status by self funding travel.”

    And how many passengers in the C/F (particularly C) cabins are self funded versus being paid to sit their by the company they work for?

  33. When I’ve flown Malaysia Airlines, they email a ‘bid’ option. I’ve never bothered to use it because my flights with them have been two hours max. I am also Platinum with Qatar Airways so I get to use the first class lounge anyways 😉
    When I fly economy with Qatar Airways, they often email me less than a week before departure with an ‘offer’ to upgrade one way. However, it has NEVER been a deal, I’ve looked at the added price they want and it is the same as if I was going to purchase a business class ticket. I think they would have more takers if they were not trying to squeeze full price.

  34. I’m QR and EK plat and was never offered a free upgrade unless Y (or in some cases J) is oversold. The airlines are just managing our expectations. I don’t feel entitled but rather very grateful to be offered the free upgrade. More importantly for the airline, if I really wanted to fly a specific flight in J or F, I’d pay for it either in cash or miles. However, QR started offering Qcredits to their elites about 2-3 years ago. That’s basically a 1-3 free upgrades (depending on status and flight) per year. This system is nice in offering *free* upgrades which dont feel that way because you are *spend* your own credit, but at the heart of it, it is a free limited upgrade opprotunity. May be US airlines should start learning from QR instead of all this stupid open skies war.

  35. From a European perpective, I really don’t like the way the American carriers handle upgrades… recently, flying AA DFW-MSY after BA First from London, I was all settled for that leg, the door closed, five empty seats up front. Then the crew goes back and gets the five guys I guess with the best status and they, plus their huge carryons, all come and take the empty space. Y was far from full.
    I’d paid something like $5000 for my ticket (I’m BA gold and fund all my travel myself) and it really diminished my experience – less space, slower service, delay whilst they sorted themselves out and my personal resentment. If a cabin is oversold then fine, but this really wasn’t, and if there are airlines out there who won’t do automatic upgrades like this then I may have to switch allegiance.
    Love the blog Ben and team, thank you

  36. I recall that once, many years ago, I was upgraded to business, but told in advance that they had been undercatered and I would still have the economy meals but everything else was OK. I took the upgrade.

  37. Comments here are more fascinating than the article.

    Look, I’m a nobody. I have a little more than 60K lifetimes miles on United (since 2003). I buy economy because that’s all I can afford. I don’t get to fly every week for business – it’s a luxury for me to go somewhere. I just bought my first First Class ticket (one way home from Indianapolis) because I thought “eh, this I can afford.” I’d LOVE to get an upgrade, but it’s not what I paid for, and I never expect it. If an airline has unsold seats in a better class, I’d love to see them offer those upgrades not to the people who feel entitled because of “loyalty” or whatever, but to people who aren’t at all expecting it – active service men and women, a harried single parent, someone on a bereavement flight, someone on their very first flight. Whatever. That to me is the kind of special “magic moment” that will create the sort of “goodwill” businesses love to achieve.

  38. I love this conversation, because I love economics, and airline economics are just weird.

    Unite aggressively prices upgrades when the cabin has unsold seats. I’ve gotten $99 upgrades on 4 hour international flights. Kind of insane, considering domestic upgrades regularly go for more than that, whether in stickers or cash.

    There’s definitely something to be said about being confirmed in a premium cabin on a long flight. It makes my day that much more productive for some reason. I feel like I have to “mentally prepare.”

    Either way, airline do make profit on international premium cabins, and to devalue them is a risky business.

  39. As a regular paid passenger in F and J, I fully understand why empty premium seats are left empty. There is an important degree of exclusivity for those who have paid for the front cabins with either money or points. I resent it when carriers feel that they should then fill up the cabin with upgrades completely destroying the integrity of the product pricing.

    If one wants to fly in the front, simply buy it. One can do so with points, money or securing the airline’s upgrading thresholds, but by simply filling up for “goodwill” quickly loses the “goodwill” of those who have paid for it.

    I no longer fly UA for precisely that reason. Buying a premium seat simply guaranteed it; otherwise there was the unholy scrum at the gate, and worse of all $600 paid upgrades on a SYD LAX flight! And carriers wonder why we jump on mistake fares that are often more than the revenue that they will actually accept for a large seat.

    Integrity of pricing is a very important part of maintaining respect for the product and those who choose to purchase it at an offered price.

  40. Thank goodness my fav carriers, SQ and CX, rather fly with low and empty loads than a full premium cabin.

  41. Recently flew SQ in J and JL in F.

    SQ do not upgrade anyone. Period. The cabin was maybe 20% full (LAX-NRT) and the crew were amazing. Best flight ever.

    On the way back, the JL F cabin was 100% (I’ve flown F many times and it has never been 100% full). I don’t know if JL upgrades or what (they were asking $26k for the seat), but that was a miserable flight service wise. Not enough time to look after all pax so service suffered.

    Load factor makes a huge difference to service levels up front.

  42. I admit I gamed the system for years. Those days are over as the gaps close. I now support no free upgrades. Now, and it appears there are several others who don’t mind paying a fair premium price for the product.

  43. I note that the full-price-payers complain about the hoi poloi feeling “entitled” to upgrades. Their reasoning seems to be that such upgrades dilute the product. But the airlines do not promise that your full fare buys you another full fare passenger (or an empty seat) to sit next to. Why should, say, $10K buy you the privilege of another $10K-payer in the seat next to you? Now who’s acting entitled?

    If your airline “dilutes” their product be giving or selling seats as they see fit, and you don’t like it, take your business elsewhere. Or don’t buy that f ticket in the first place but instead play the upgrade game like the rest of us. Or could it be that part of what you’re paying full fare for is the privilege of not having to play that game? I’ve paid full fare a number of times for precisely this reason.

    The fact is, I don’t know a single FF who feels “entitled” to upgrades. Most of us just play the game and are grateful when It goes our way.

  44. It’s interesting that so many commentators sneer at fliers who show loyalty to a particular airline, especially — heaven forbid — when a company is paying (that’s as much a part of their compensation as your salary is to buy a “self-funded” ticket). I always fly United SOLELY because they offer me frequent flyer benefits. Otherwise I might as well just choose the cheapest carrier on a particular route. That’s the whole point of loyalty programs. A lot of the paid business class customers who are so horrified that an upgrade might sit next to them won’t hesitate to buy a ticket on another airline. I, however, will flay 150k miles and dozens of flights only on United, year after year. So who truly brings more revenue over time?

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