a row of seats in an airplane

Even for those spending five or six digit sums with airlines around the world, only an upgrade or two per year can be guaranteed with elite frequent flyer status. Most international airlines, like those found in Europe, Asia, Middle East and the Pacific don’t offer regular complimentary upgrades on any flights, and instead only offer one, or at most a couple upgrade vouchers a year for top tier flyers to cash in.

For those in the lower tiers, its simply the use of nicer check in desks, and perhaps an airport lounge.

Countering that – most US airlines, like Delta, American and United, offer unlimited complimentary upgrades on domestic flights, and frequent flyers find themselves traveling up front in “first class”, even when they just pay for economy, more often than others.

That may sound a lot better, but with unprecedented service cuts, perhaps the upgrades are too sweet to last, or not sweet enough to be worth it…

an airplane on the runwayAmerican Cuts First Class Service

American Airlines just announced further cuts to first class service, leaving many, even on flights around 5 hours with nothing more to show for their first class ticket than a “cheese” board, with some fruit. It hardly sounds very “first classy”.

But then again, how many people are actually paying for it?

Airlines are haemorrhaging money at unprecedented rates due the decimation of travel through covid-19, and with that comes empty planes, particularly in first class where business travelers have largely been told to stay home and mute themselves on Zoom meetings at all the wrong times.

Even infrequently frequent flyers are thus enjoying complimentary upgrades practically every time they take to the skies, filling first class cabins with economy class tickets. Them’s the rules of those lucrative frequent flyer programs, and right now elite status has never meant more to those who enjoy a complimentary upgrade.

But what does it mean for airlines trying to increase service levels? For now: increasing losses, and for some, but not all airlines – more cuts. People rarely traveled in first class for the food, but when you take something away, people notice, particularly if the prices don’t drop along with the losses.

It’s hard to be surprised by service cuts when the service is being enjoyed almost exclusively by those who did not pay for it, but that doesn’t mean the cuts should be happening.

Airlines are at a crossroads where diminishing first class service to levels found presently could make it so unattractive that no one will ever buy it again. Airlines typically make the greatest margin on seats up front, so that could become quite a problem. Even then, it doesn’t change the simple fact that the majority of flyers enjoying first class at the moment bought economy tickets.

Before you shed a tear for airlines and excuse their service cuts, just don’t.

a row of seats in an airplaneThe loyalty programs which earn flyers the perks of unlimited complimentary first class domestic upgrades are worth more than the airlines themselves, many to the tune of 3X. In other words, American, Delta, United, JetBlue, Southwest and others are extracting billions from travelers via the loyalty programs, whether they’d like to admit it or not.

United, for example, was recently valued around $7 billion, while its loyalty program was in the $20 billion vicinity. Those flyers may not be “paying” for the first class upgrades on the day, but chances are that something in their consumer behavior made the airline money on many days when the passenger wasn’t flying at all. Just holding an airline credit card makes airlines and their associated loyalty programs billions annually.

So where’s it all going wrong? Contrast the present, to last year. Last year, planes were so full, even the invitation only, elite-elite frequent flyers often needed to pay up for first class, if they wanted to sit there. Planes were full, and airlines were selling cheap upgrades in an attempt to make loyalty worth less, and each flight worth more.

Even cheap upgrades went some of the distance to covering costs, whereas unlimited complimentary upgrades don’t go nearly as far.

a box with food in itVery few complimentary upgrades were making the rounds, thanks to full planes, and it was therefore easy for airlines to ramp up the perks, and make first class great again to entice the extra spending. At the very least, it was competitive enough to be worth buying, particularly on longer flights. If business was paying, why not?

But now business travel is all but dead, most flights are at a fraction of their capacity, and after decades of growing demand for the seats up front pushing more cushy seats onto planes, there are even more of those going empty. The very perks which were designed to encourage high spending loyal flyers seem to be the very cause for the demise of domestic first class we’ve seen for years.

Are complimentary first class domestic upgrades killing US airlines? Who knows, but they’re definitely killing any resemblance to “first class” as it was once regarded.

European airlines may not even offer a better seat than economy, but there’s still champagne and multi course meals, even on the shortest flights, and yes – even during covid-19. Another key factor? Business or “first class” in Europe brings lounge access along with it, which helps to justify perks to businesses and leisure travelers seeking extra comforts. In the US, it does not, nor does elite status for most.

In covid-19 times, a guaranteed blocked middle seat and a lounge to tuck into is arguably more attractive as a selling point than ever. The food and drinks may not move the needle much, but they create the feeling of a first class experience, and brand perception isn’t for nothing.

People in Europe and the rest of the world are buying business class as a way to ensure greater social distancing during covid-19, but in the US there’s no need. The elite frequent flyers can get it for free…

Gilbert Ott

Gilbert Ott is an ever curious traveler and one of the world's leading travel experts. His adventures take him all over the globe, often spanning over 200,000 miles a year and his travel exploits are regularly...

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  1. From my understanding, this is a greater issue at AA than UA and DL. AA tends to price their premium cabin at a higher price point than competitors. As a result less seats are sold allowing for better upgrade potential for their FF’s. This is in contrast to UA and DL that price their premium seats slightly lower and sell more premium seats with the trade off being less upgrades for its FF’s. If accurate, then this could be yet another reason why AA lags it’s competitors financially….they are actually selling less premium seats.

  2. I disagree. US based airlines have massacred the value of their frequent flier programs more times than I’d like to recall. If the airlines remove first class upgrades as well, they’re removing even the illusion that they care in the least about actively engaged customers.
    On the freeloader front that you mention, I think you’re looking at things from the wrong end of the telescope. In order for airlines to attract the high dollar revenue from business travelers, it is absolutely imperative that the airlines put at least the same effort into making domestic first class as good as possible, and I think the airlines would be well served to make it better than previously. Making your product worse is unlikely to induce customers to return; making it vastly better will stand a much better chance. If many of the people flying up front for a while are upgraded, well that just makes it more likely that they’ll get hooked on your amazing product and become fervently loyal customers. If anything, now, while planes are not packed anyway, is the time to get people in the habit of choosing your company.
    Airlines are in a tough spot. I recognize that. I just think that them eating their seed corn is a terrible idea that will turn an awful year or two into a really bad decade.

  3. In AAs case I’m guessing their obsession with Spirit/Frontier is killing them more than a few free upgrades. Selling Economy Basic seats for midcon flights (like DFW-FLL) for $26 O/W and Transcons (like MIA-LAX) $41 R/T can hardly be profitable. Even before the pandemic I’ve found the spread between Economy Basic and Main cabin seats fairly eye watering in some markets (sometimes more than $400 difference for a 90 min flight) that you can’t logically justify the higher cost or even use miles.

    Let’s also remember that this same airline continues to densify it’s fleet and operates 737-800s with five fewer seats than southwest has, up from 150 seats a few years ago. AA also collects more additional ancillary fees for seat assignments and checked baggage than Southwest.

  4. Stop being so entitled if you want something pay for it. I go to starbucks everday, I don’t order a tall and then expect a venti. If i want a venti I order it and pay for it. I get so tired of people complaining that they can’t get upgrades, if it means that much to you pay the difference out of your pocket. Everyone wants a Merceds for a Ford price tag.

  5. Delta said the opposite last year, on one of their earnings calls… Delta was finding that more passengers were opting to upgrade with cash or miles, and they were selling more first class than ever before.

    Business travel is different in Europe, and people generally fly much less, and if they do companies will often spring for premium seats. Most places I’ve worked in the US only allow us to fly economy, so the airlines offer upgrades as a thank you for our business. Rather than letting a seat fly empty, why not upgrade the business traveller who chooses to be loyal, and flies a couple times per month.

    Still, flying DL our of BOS as often as I do (well… Did, before COVID), half the time first class was sold out and there were no upgrades anyways

  6. @Eric,

    As a long time flyer on AA and DL (3 million miles each and lifetime status) I agree w you about AA pricing their first class product hiring which leads to more upgrades. Another thing (and many very top tier flyers, which I’m not anymore since I’m retired and fall back on my lifetime Platinum (AA) and Gold (DL) status) is AA doesn’t offer upgrades for lower prices like some other airlines. In my opinion, while there is value in offering a few upgrades to ensure frequent flyers feel valued, if the airline maybe reserved 6 (out of 16 on an A321) for upgrades and then starting “selling” the remaining ones a week before the flight at $50-$100 each (like some airlines at least used to offer at check in) more revenue could be generated. I would gladly pay $100 each way for an upgrade CLT-PHX (for example) instead of the $500-$600 premium for first over coach.

    IMHO, it is all about yield management and the airlines have to do a much better job of extracting as much revenue as possible instead of continuing to give away their “premium” product.

  7. In general (excluding a few of the transcon flights) first class tends to be a slightly larger seat, a meal and free drinks. When I get upgraded – which used to be quite often prior to not flying at all since March – it is not a huge benefit. And certainly as is quite often the case, if first class is sold out, it is not a major issue to travel in economy – at least for flights up to 4 or 5 hours.

    Scoring an international business class upgrade with lie-flat seats IS a big deal – but alas (or wisely from an airline perspective) these are extremely difficult to find. So the airlines must be really making their money on the sale of those seats…

  8. You forgot to balance out the bigger picture. Historically, these upgrades were originally designed to provide wiggle room for overselling economy class seats. So, perhaps by eliminating auto upgrades, the model should be pushing top tier elite fliers only when the economy seats are oversold. Remove the confirmed upgrades and don’t even bother using it as a selling point of the FF program. The flip side of this argument will then result in plenty of non-rev passengers upfront.

    My favorite program was NWA’s WorldPerks. On international flights, they will push up top tier elite members to international biz/regional first class to make space for non-rev passengers. It’s an unspoken gate agent rule. These days Delta just puts their employees directly upfront if there’s space.

  9. No top service in First. I never ever will fly. Put the AA CEOS salary to Zero..and and all inkompetent Top managers..then there is enough money for Top service for First Class passengers..and we will fly again…

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