American Airlines will now try to sell you an upgrade when you’re trying to use a systemwide upgrade to confirm one, according to an internal update shared with View From The Wing.
- People who want to upgrade are actually the best target to sell and upgrade to!
- And it wasn’t really fair that those trying to confirm an upgrade weren’t eligible for cheap upsells. They can make up their mind if they want one.
- But it’s a pretty bad experience to be told “we know you’re waiting on a confirmed upgrade using the instruments you earned with your loyalty, but we’d rather take $299 from someone that’s never flown before for the seat.”
Historically there’s been a tension between making these upgrade offers offering upgrades to elite frequent flyers. United led the way with ‘tens of dollars’ upgrades on domestic flight, but elites weren’t eligible for those. United even pitched non-elites with the number of loyal customers waiting for an upgrade that they could jump over with their $59. Meanwhile, they didn’t want to rub elite noses in those offers, so they wouldn’t get the offer.
- A non-elite might get a $59 upgrade
- While an elite wasn’t allowed to buy it
That’s the worst possible experience! And it loses revenue.
Now, though, we’re in a world where airlines are no longer afraid of the optics. They want the revenue! And customers know that upgrades rarely happen – they’re willing to buy the upgrade when airlines sell them cheap.
The worry for airlines, though, is that customers learn their loyalty doesn’t mean very much.. and this degrades their loyalty, and especially degrades their use of the airline’s co-brand credit card.
Plus, on these merchandised upgrades American Airlines only values the miles at around a penny (sometimes a little more, sometimes a little less). If you’re only getting one cent out of each mile, and you’re earning one mile per dollar on most spend, if you do the math you realize how bad a deal that is even against a no annual fee 2% cash back card which could go twice as far earning you these paid upgrades!
So this change carries some risks as part of the broader move to monetize premium seats for any revenue, prioritizing over customer loyalty, which is a trend across U.S. airlines. Delta will now upsell upgrades for as little as $26. I’ve not personally seen American go below $40. And only about 12% of first class seats on Delta go to upgrades. They’ve gone farther than anyone else.
It’s no coincidence SkyMiles are the least valuable major currency – but Delta has other advantages. American needs to remember that their primary advantage is AAdvantage.
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