How Much Extra Are You Willing To Pay For First Class?

The US legacy airlines seem to be doing everything in their power to destroy the value of being loyal frequent flyers. They’d rather always give consumers exactly what they pay for with each transaction, without much consideration for the overall business customers provide to the airlines. I’m not saying that’s necessarily a bad long term strategy, but the speed at which these changes are occurring is insane.

Just looking at Executive Platinum status with American this year. For my favorite redemption preferences miles are worth ~30% less than they were last year, my favorite Executive Platinum perk (eight systemwide upgrades) got cut in half, and the average person is probably earning about half as many redeemable miles as they used to, thanks to American’s new revenue based frequent flyer program. How much more value can you take out of a program in a single year?

While that’s bad for frequent flyers in theory, there’s a silver lining. Airlines want to sell first & business class seats rather than upgrading people to them, and as a result we’re seeing a trend of much lower paid premium cabin fares than before.

Would I rather get a free upgrade than pay for first class? Of course. But there’s also something to be said for paying a reasonable premium for first class so you don’t have to sweat out the upgrade and can fly whichever airline has the most convenient schedule for you.

With that in mind, I’ve found myself increasingly paying for first & business class, even on revenue tickets. I’ve booked a couple of paid business class tickets on British Airways between the US and Europe for ~$1,100, which is basically business class at economy pricing. Those were no brainers, given that the ticket cost was roughly the same as the carrier imposed surcharges would have been on a British Airways business class award ticket.

British-Airways-Business-Class-777 - 3

However, even domestically I’ve found myself paying for first class a good amount of the time lately, even when I’m otherwise eligible for an upgrade. That’s not because I want to throw money out the window, but rather because I think it makes sense in many cases.

Given that I’m increasingly doing this, I’ve tried to crunch the numbers on how much of a premium I’m willing to pay for first class, though it’s not quite as straightforward as that.

How do I decide whether to pay for first class?

For me, being in economy vs. domestic first class is the difference between being able to work efficiently and barely being able to work. Domestic first class may not be glamorous, but at least I can get work done in comfort. If I have personal space, I work as efficiently on a plane as on the ground.

I simply can’t do that in economy. Even with a privacy screen on my laptop, the person seated next to me is usually looking at my screen, and I’m having to position my arms in such a way that it’s extremely uncomfortable to work.

With that in mind, the real deciding factor for me is what my upgrade odds would otherwise look like. Back in the day I’d almost always clear my upgrades as an Executive Platinum member, while nowadays I feel like I have to select my flights very carefully if I have any chance of clearing. I avoid transcons, because if I instead route through Dallas I’ll at least “only” be in economy for a few hours at a time.

But if you’re flying from Los Angeles to New York on a Thursday, for example, it probably doesn’t matter what you book, you’re likely to end up in economy. There’s also something to be said for the peace of mind of knowing you’ll be in first class. If I’m traveling during “business hours,” I have to plan differently if I’ll be in economy vs. first class, since my productivity varies substantially.

Delta-First-Class

How much of a premium am I willing to pay for first class?

I conservatively value being in first class over economy at $40 per hour or 500 miles. In reality it’s probably a bit more than that, and there are a lot of variables, though that’s a starting point. So then I have to factor in:

  • What are my odds of clearing the upgrade? It’s worth paying the $40 per hour premium if I have no shot at an upgrade otherwise, while if the upgrade is near guaranteed, I shouldn’t be willing to pay that much of a premium.
  • How many miles am I earning incrementally for first class over economy class, which could help offset the cost?

Let me give a real life example. Take the below trip between Los Angeles and Tampa, which is pretty average nowadays for my trips between the two cities. Economy is $339, while first class is $588, meaning first class is $249 more expensive.

American-Fare

Now, for the marginal $249 I’m paying, I’d earn 11 miles per dollar spent, which I value at ~1.5 cents each, plus three points per dollar spent on my credit card for the incremental amount. So that’s in excess of a 20% return on that marginal spend. That’s a further $50+ discount, and doesn’t factor in the bonus elite qualifying miles I’d be earning.

So the price difference is ~$200. In looking at the flights, I don’t think I’d otherwise have a good shot at the transcon upgrade, which is for a roughly five hour flight. I might otherwise clear the Charlotte to Tampa upgrade. So when crunching the numbers, I’m coming out more or less even.

Bottom line

Everyone values first class differently, so there’s no consistent formula for calculating how much of a premium it’s worth paying, especially given how many variables there are.

Personally I value first class at ~$40 per hour over economy, and that’s largely because I can work productively in first class, while I can’t in economy. That doesn’t even account for such things as generally being comfortable, getting a meal and free drinks, earning bonus elite qualifying miles, etc.

When deciding what to book, I also factor in my upgrade chances, as well as the miles I’m earning for the difference in fare, since I view that as a discount.

Long term the good news is that I think this will drive me to simply not be loyal to an airline anymore. If first class is available for a reasonable premium, then there’s less of a reason to be loyal, in my opinion.

Have you found yourself paying for first class? What’s your threshold for when it’s worthwhile?

Comments

  1. I also factor food and beverages for a long haul domestic flight. If I know I can easily spend $50+ in food and drink, I deduct that from the upgrade cost to 1st as well. Your $40 an hour is probably pretty close as well.

  2. $1,100 for economy is extortionate. But for business class not bad, then again it was BA’s business class which I find laughable.

  3. I pay the premiums if reasonable and traveling alone, but I would just take the Delta nonstop on that route. I hate connecting.

  4. I never pay for domestic business/first class anymore unless the flight is empty and the airline is offering a dirt cheap upgrade.

  5. LAX to CTL is the worst AA transcon imo. They only serve a snack!!! A snack on US Airways metal!!! Run away.

  6. I did this same exercise a while back and concluded that $40-50 per hour was a reasonable rule of thumb to use when deciding whether to pay for upgrade or not. I also agree that as benefits have been eroded, the desire to be loyal to a particular airline is not necessary. Same thing with hotels. My beloved Hyatt is making it harder and harder to use C&Ps, suite upgrades, and free night redemptions. I have found myself staying at other brands more and more frequently. Eroding benefits will certainly lead to less loyalty throughout the industry, I imagine.

  7. For a lot of us who are too wide for economy, purchasing first class is automatic because it doesn’t cost any more than purchasing two economy seats. So to answer the question of how much extra I’m willing to pay for first class, the answer is “a little more than the cost of two economy seats” (because of the added perks, convenience with tight layovers, etc).

  8. Flew from BOS to ATL and ATL to PHX on Delta last week. About 4 days out I paid $60 to upgrade from comfort plus to first class, for about $8.50 per hour. Not bad for two meals and several drinks. Great deal, but they really must hate elites…

  9. I’ve paid for tickets instead of using miles for domestic flights. A good example is Alaska where I book in Y on a flight showing plenty of open F seats, and on a flight time/routing that I know has a historically low load. Then at 24 hours before departure check in online and there’s a good chance that I’ll be offered an upgrade to F for cash: $50 for less than 1,000 miles and $100 higher, etc. I’m willing to pay their upgrade price. While the UU fare doesn’t get you access to their lounge and doesn’t accumulate full miles flown, it’s still worth it. One thing I’ve gotten at the airport check-in is TSA Pre-Check on the boarding pass!

  10. I wouldn’t pay that much for an non lie-flat AA transcon, and I don’t fly in coach. I would find a better option. You couldn’t find a 25,000 mile one-way F sAAver award or a paid Delta ticket?

  11. I find I can do work fine in the extra legroom economy seats which usually run about $100 on a transcon if you don’t have status. I would always take a non-stop over a connection. Even if you can work better on the plane in FC, the non-stop gives you 3 extra hours on the ground. I bet you can accomplish more in those three hours than in 7 hours of FC.

  12. I’m in the same ballpark of 40-50 bucks/500 miles. This is also watch a sticker/e500 cost.

    I have been surprised that DL usually has the most reasonable F fares. UA usually ends up in the middle and AA is absurdly higher. As an EXP this is good when I am on a coach fare as I have found there are lots of empty seats since the prices are not competitive. As an occasionally F purchaser it’s annoying to have to look elsewhere for competitively priced fares.

  13. The calculus has definitely changed. All my travel is to the EU from the West Coast. Now I purchase discounted international business class (with F on Transcon legs) for a little more than twice what regular economy cost in past years. I’m paying more but getting a lot more in return. The recent changes allow me to earn more EQM and RDM with the class of service bonus and finally being able to make EXP in the process. In the past International J was unaffordable at nearly four times the cost of the economy fare. I’m also earning more RDM now so it’s win-win for me.

  14. Nice analysis for domestic. Would like to see an article for those of us who have to take a 8-11 hour red eye international flight before to get to thr US

  15. The short answer is: a couple of hundred dollars more. I recently bought a $1600 RT La Compagnie fare to London, when the cheapest nonstop economy was $1400. When fares (to anywhere) are in the $600-$1200 range in economy I’m willing to pay $200-$300 more for first or business class, and if they’re $1200+, I’ll pay $300-$400 more. When they’rein the $300-400 range, I’m typically less willing to spends that much more for premium cabin – maybe $100 more, but that’s rarely on offer.

  16. I’ve found myself paying for it more and more because it makes such a difference in my productivity. It seems like the fares have been really close these days, too. I also just paid for business on a CMH-JFK-CAN-PVG-SEA-DFW booking because I didn’t want to risk an upgrade not clearing on the longest legs. I’m still waiting on AA to clear a DFW-LHR upgrade for November even though C is wide open… and LHR-DFW has already cleared.

  17. I don’t know what community college you went to but you should go back or try something else. Amazing how you can define valuations on perceptions and imaginary things like points and miles instead of real and tangible things like actual money. Airlines are finally catching up to the whole stupid game they played for years to “lure” customers in and are finally realizing they are just stupid games that became too complicated giving them nothing in return. I honestly don’t know how your generation will survive…

  18. I’m shocked by how many people don’t even consider the option. I paid ~$100 more for first on AA PDX–>BOS last year vs cheapest economy fare on Delta. I expected to be siting with several people traveling for the meeting but they all booked the cheapest option! They didn’t even consider clicking th “first class” option on the search.

    I decided last year that it’s always worth it almost regardless of cost even though my company doesn’t pay for it. I get that my dual high-income no kids situation makes it easier but If I’ve got a day trip then some extra shuteye on the way there makes me much more effective and the space back means I know I’ll be able to get my email cleared before landing. If it’s transcon then saving myself the contortions needed to fit my 6’5″ frame into economy is a no-brainier.

  19. I don’t think about it. I don’t do any calculations. I just do it.

    Delta has great domestic first class fares. $525 round trip between DCA and Little Rock is exceptionally reasonable. Last year I booked a first class, round trip from DCA to LAS for $598.

    I have certainly noticed some of the medallions getting all snarky about their upgrades disappearing. They’re basically acting like whiny brats; wanting my great first class fares to be sacrificed so that they can get their precious free upgrades back.

    I’m a platinum medallion and am just tickled with Delta’s decision to make domestic first class so affordable.

  20. Will probably pay for first class fares in 2017 to get to $12,000 spend where it makes sense. it sure relieves the stress for EXP upgrades at the gate for popular AA business routes.

  21. In your example, the first posted fare is one way – LAX-CLT-TPA at $339/588.

    The $243 fare is LAX-MSY-MIA-TPA, but its First is $742. In these case, you are likely OK with the $243 and some upgrades. Of course 2 connections but more EQM.

    But in the first example, if you are not EXP, the upgrade cost for a PLT/GOLD is 5+2 or 7 500 mile segments. At $40 each that is $280 for the upgrade, and you likely won’t clear anyway. So for the first fare, the $249 difference is cheaper, so no reason to be loyal as a PLT/GOLD. I think the segment upgrade costs is causing people at lower tiers to just pay the difference.

    But I think a big reason for First filling up is that more and more people are using 15K miles + $75 out of “A” bucket class. “A” bucket is very available on AA domestic flights – likely too much.

  22. DL seems to be the price leader on the routes I mostly fly and I’ve found that First Class is usually about $200 or so more than Economy Comfort+. And if it’s a fare class than earns 100% EQMs on Alaska then I’ll take it! When their partnership ends I’ll probably feel differently, though.

  23. I’m not sure I understand the anti-elites strategy most airlines are onto these days but I must admit the trend of reasonably priced premium cabin is working very well for me. What I value most is being assured of a seat in first / business class and not waiting till the last minute to find out.

  24. It’s because you don’t fly United. I find good award availability on last minute domestic UA J and can easily redeem either 17k M&M or 20k KrisFlyer miles. If not, I can always get E+ seating at 24 hr check-in. Paying cash for the forward cabin is for suckers.

  25. Given that my travel is pretty much 100% personal, the ability to work isn’t a factor for me, but I also think ~$40-50/hr for the upgrade is reasonable. For me, since I’m trying to maximize vacation time when flying, it’s the meal service that adds value. No, the meal itself isn’t worth $40 an hour. But if that mediocre meal on-board means I don’t have to get to the airport an extra half hour early to get a crappy sandwich there, not have to cook or stop and pick up something on the way home at 8 pm, etc., that has value to me above and beyond just the incremental value of the food.

  26. I’m willing to pay just about double up to a certain amount, and frankly the lower overall F/J fares have meant I have been booking a lot more paid tickets, which is what the airlines want of course. Recent trip to Cancun for myself and my boyfriend was about $980 coach and $1390 for Business, nonstop on UA. He’s not a good flier to begin with and doesn’t like proximity to people and I knew we would need to check bags which would add $50-75 each way… No brainier. UA wanted something like $250 for E+ bundled with bags, not a big jump for a big seat after that, and he gets the aisle he wants and I get the window. Service and food was not memorable but decent on both legs too.

    Coming up in October it’s the same story… LAX-JFK and YUL-PHL-SFO on AA was only $200 more each way than economy for J on the A321T and F on the ex-US A321 PHL-SFO. THANK YOU JETBLUE MINT for making the big carriers lower their J prices!

  27. For me it depends on the airplane. United economy plus first row in regional jets have more legroom than domestic first. If I see that seat open, I buy the economy ticket then upgrade to that seat for 50 bucks. This assumes that flight time is less than 3.5 hours. Food is terrible in regional jets anyway.

    If it is not a regional jet, then domestic first makes sense.

  28. The value proposition for professional bloggers is different than for the rest of us. They should be able to deduct the ticket price and upgrade charges as business expenses. They will be willing to incur upgrade fees gladly.

  29. While I understand this is your greatest factor, and everyone is different, I wonder what others value the most and how that effects the added value. For instance your doppelganger, who additionally appreciates having a cocktail on board may be willing to spend $X (say $10) more. Sadly, that difference becomes the value of loyalty regardless of status. Ultimately, I wonder which mix of added benefits result in the “winning combination”.

  30. Lucky, do you still value American AAdvantage at 1.5 cents per miles now? Because with all the devaluations, I’d say they’re hardly worth what they were. I’d value them at max 1.1 cents per miles (or better said, I can’t value them at the same amount as KrisFlyer miles)

  31. Ben,.
    Now you are getting it, loyalty is not what it used to be. We tried for years. We travel so much we are Platinum Starwood, Lifetime Platinum Marriott, Diamond Hilton (8 years). Airlines we had several but its all fading now, as you said looking for the best options with other airlines.

    We are not sure what the companies are going to do. Loyalty programs must have made sense to them before, but now we are not sure what they are thinking.

    Marriott taking over Starwood, we think to expect the worse, because Marriott doesn’t get it and now they will have slightly short of a monopoly. Expect the worse.

    What Delta did recently was a very poor example of treating the customer well. Imagine if J&J did that after the Tylenol poison (case study in mgt business programs), they wouldn’t be selling Tylenol in 1st world countries anymore.

    What gives? Will there be more new companies starting up with better benefits? How about a Uber airline?

  32. I won’t pay over 150 bucks each way for biz or first class. For economy I won’t pay over 10 bucks. But I use miles for everything since that’s why I got into this game.

  33. I might pay a very small upcharge for F on a domestic like $50 if its not a trancon. Anything short of a trancon flight F just isnt necessary. On a transcon id consider a $150 markup up for f or j. Maybe $200 due to my height. Really F is nevee necessary especially on domestics if there is a J class. All you need is the legroom and space. Who cares about the food just eat at your destination.

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