Airlines continually refine their frequent flier programs and retool how they merchandise their products in order to squeeze every last dollar out of air travel consumers.
One of the more beloved benefits of reaching elite status with a frequent flier program is the chance to score an upgrade to a higher cabin of service, completely free. True, upgrades have long been the holy grail of travelers, both frequent and infrequent.
But the beloved benefit may be going away, or at least becoming much harder to get, as airlines continually refine their frequent flier programs and retool how they merchandise their products in order to squeeze every last dollar out of air travel consumers. Internet discussion boards and frequent flier blogs are full of messages from travelers looking for hacks or loopholes to exploit, and many travelers post to express frustration that the upgrades they once enjoyed regularly are becoming scarcer with each passing year.
But why is that? Buckle up and find out.
The Evolution of First Class
When first and coach classes began to be offered on the same aircraft during the 1950s, there wasn’t a marked difference in fares—first class would often be offered at a slight premium over the also pretty high coach fare. Fares were set by government regulators, so there was no competition on price—only on service.
After deregulation in 1978, airlines were free to set pricing however they liked, and they began using computer reservations systems, which up until then had primarily been used to catalog a limited number of fares and keep track of reservations, to manage seat inventory in more sophisticated ways. Instead of having one fare for coach and one fare for first class, airlines could sell more seats by discounting some coach seats they felt wouldn’t sell at the highest “standard” coach fares. By discounting seats that would have otherwise gone empty, they could fill more seats and operate more consistently profitably.
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The early systems depended on a fare hierarchy—rudimentary by today’s standards. “Standard” first class and coach fares without restrictions from before deregulation remained, but much of the market moved toward discounted, nonrefundable fares. The gulf between the lowest available fare and the first-class fare also widened, because airlines still sold first class at a premium over their highest coach fares.
Shopping for a transcontinental flight in the 1960s, you might see a one-way coach fare from around $1,500, and a first-class fare for just a bit more, say $1,700. By the 1990s, those fares remained, but a slew of discount coach fares also entered the market, allowing travelers to cross the continent for as little as $99. It’s easier to get consumers to buy a first-class fare when the difference is $200 for a six-hour flight, but it’s a harder sell when the price is over ten times higher than the lowest coach fare.
By then, first class became the provenance of the small slice of travelers who were already purchasing unrestricted standard fares: business travelers, celebrities, or other travelers who needed schedule flexibility, but because of the availability of much, much lower coach fares, first-class cabins largely sat empty.
Airlines found that they could make up some revenue difference by giving the empty first-class seats away to their most frequent fliers as a perk. When the programs were created in the early 1980s, they were designed to offer free tickets to passengers in exchange for allowing the airlines to track their purchase habits. Airlines quickly realized that it profitable to keep passengers returning with the promise of free tickets, but they also found that frequent travelers would spend more money—even when a competitor was cheaper—in pursuit of so-called “elite status” based on annual flights, which airlines quickly made a requirement to earn upgrades.
Re-monetizing
Airline revenue managers certainly didn’t like having an entire cabin on the aircraft that brought in little revenue, largely being operated as a free perk for frequent fliers. But, by the early 2000s, inventory systems had gotten more complex, and airlines had figured out ways to offer first-class seats at a discount. One of the early innovations was the “Instant Upgrade” fare, which higher-but-still-discounted coach fare that was coded to accommodate the buyer into a first-class seat if one was available. By bringing first-class fares down, airlines could once again count first-class as a revenue center.
That’s left frequent fliers out in the cold. Where only a fraction of first-class seats were sold three decades ago, now more than 70% of seats are being paid for, with more purchase options available for travelers wanting to upgrade. Passengers can now purchase lower first-class fares managed in a similar manner to other fares, or they can purchase upgrades on the specific portions of their itinerary as a seat fee on many airlines.
What to Do
So how can passengers interested in a first-class seat go about getting one, now that the era of free first-class upgrades recedes in the rearview? First, be sure to check first-class fares whenever purchasing. Depending on demand forecasts, the fares may not be significantly more than coach fares. It’s also helpful to set a Google Flights alert for the first-class fare on your flight, even after you’ve bought a coach ticket. Most airlines have done away with change fees, so when first-class fares go down, you should be able to exchange your ticket for a first-class one by simply paying the fare difference.
Many airlines also offer first-class upgrades for a fee until they sell out or the flight departs. Keep an eye on your reservation because these upgrade fees can also fluctuate. Just periodically check to see if the upgrade has floated down into the range of your budget.
Or, you can wait it out and see if your frequent flier upgrade clears, but with more ways than ever to buy first class at a discount, free frequent flier upgrades may soon fly the way of the dodo.
