Bid for an upgrade to fly business class

Scoring a last-minute upgrade used to be a perk reserved for frequent fliers. Now, what was a benefit for loyal customers is open to everyone for cash.

More than 70 airlines have partnered with Optiontown and Plusgrade, online auction services which give customers a chance to bid for upgrades to business-class seats.

Since launching its upgrade programme with Virgin Atlantic, Air New Zealand and TAP Portugal five years ago, Plusgrade has partnered with more than 45 airlines around the world.

Airlines such as Etihad, Cathay Pacific and Qantas have cottoned on to the opportunity to increase their bottom line and another 12 will implement the programme early this year.

How the upgrades are offered varies by airline. Some may prioritise frequent fliers, others may prioritise passengers travelling alone.

Eligible economy-class ticket holders are notified of the opportunity to bid for a business-class seat via an e-mail with a link to the airline's website, where they can place their bid.

The airline will often state the minimum bid required and provide a gauge of whether the customer's bid is strong. If successful, customers are notified of their upgrade anytime from 72 to four hours before their flight.

Bids can vary from $100 to more than $1,000 for upgrades to business-class seats which are, on average, three to five times more expensive than economy-class seats.

Though the availability and cost of the upgrade vary between airlines, by route and time of the year, customers stand to secure themselves a premium seat for 40 to 75 per cent off the regular fare, complete with lounge access and onboard amenities, says Mr Anuj Goel, vice-president of sales and marketing for Optiontown, a Boston-based travel service provider which also supplies bid-to-upgrade programmes to close to 30 international airlines, including Air Asia, British Airways and Scandinavian Airlines.

Mr Ken Harris, chief executive officer of Plusgrade, which is based in Montreal, says the system is a win-win for airlines and travellers.

He says: "If a flight leaves from Singapore to Sydney and no one is sitting in seat 2A, it's a lost opportunity for the airline. But since 100 per cent of the people sitting in the economy cabin would love the opportunity to fly in a premium cabin, our role is to help connect the two by maximising the value of the airline's perishable inventory and making their passengers much, much happier.

"Everybody loves an upgrade, especially one at a price point that is within reach."

Rather than a one-size-fits-all approach to the upgrade programme, both Optiontown and Plusgrade provide customisable services to meet the needs of each airline.

Optiontown offers a dynamic pricing option, for example, in which customers do not get to choose the price they will pay for an upgrade.

Instead, they will be quoted the cost of an upgrade depending on their itinerary, and the price will change based on different parameters from week to week.

Just like the cost of a ticket, the price for an upgrade could cost $150 one day but $200 a week later. Once the customer selects his upgrade cost, the price will be locked in.

Lufthansa accepts bids to upgrade to its new premium economy class, but not to business class. Passengers with successful bids will still enjoy up to 50 per cent more space, a larger 11- or 12-inch monitor, a power outlet and double the baggage allowance of their economy-class ticket.

Some airlines also offer the chance to buy or bid on an Empty Seat Option. For 10 per cent or less of the standard ticket price, the option allows travellers to "reserve" their neighbouring seats, giving themselves more room during the flight.

It is an ideal solution for low-cost carriers without business class, such as Tigerair. The airline offers a Room For Me upgrade, where passengers can bid to be seated next to an empty middle seat. The option is currently available on 10 routes, including those to Bali, Bangalore, Hong Kong and Manila.

So far, airlines and passengers interviewed say they are happy with the results, particularly over long-haul flights.

Frequent fliers such as Singapore permanent resident Samuel Henderson, 33, a senior director of a software company here, says he welcomes the bid-to-upgrade option.

"I like to fly business class whenever possible, but sometimes it's too expensive. The bid to upgrade is a good option because it allows travellers to upgrade for slightly less if business class isn't overbooked," he says.

He has won upgrades on Air New Zealand, Sri Lankan Airlines and Scoot, bidding anywhere from $100 to $1,500. Though he does not expect or rely on the upgrade, he says he will bid if the option is there.

Another frequent flier, banker Stefan Kuhn, 38, cautions that airlines must be careful not to alienate their regular business- class customers.

A Priority Passenger Service Club member who flies about 200,000 miles every year, he says he does not mind that airlines find ways to fill their seats as long as the bids for an upgrade do not cannibalise upgrades for miles.

"When oil was at US$130 (S$183) a barrel and jet fuel was about one-third of the cost of an airline ticket, airlines had to be creative and be open to new sources of revenue.

That has changed dramatically now that fuel is below US$30 a barrel and airlines don't have to push for that revenue as hard anymore.

"Still, most airlines would rather take the cash from the bids, giving them priority over upgrades for miles, so frequent flyers who earn a lot of miles and are willing to 'pay' for upgrades with miles are cut off, which is a blow to loyal customers," he says.

Virgin Atlantic says it has not received any complaints about the programme, and adds that upgrades through bids and upgrades through miles complement each other.

Qantas is careful to prioritise its frequent fliers.

The Qantas Bid Now Upgrades programme is almost exclusively offered to frequent fliers, who can bid for upgrades using cash or a combination of miles points and cash.

Mr Justin Hyams, executive manager of Qantas Loyalty Operations, says the Bid Now Upgrades will be allocated only after all of the points-only Classic Upgrade Rewards have been processed and confirmed.

Mr Kuhn says while the programme is good news for economy-class passengers, as more business class seats are filled by bidding customers, it means the era of free upgrade for frequent fliers may be over.

This article was first published on Jan 7, 2016.
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