Pick your upgrade poison, frequent fliers: higher fares or co-pays?

by Janice Hough on October 30, 2009

business

One of the most sought after benefits for frequent fliers is not free tickets, but the chance to escape the cattle car in the back, and sit up in business or first class with an upgrade.

But as most frequent fliers also know, those upgrades are not always easy to come by. Sometimes an airline will only release a few seats, other times passengers with higher elite status get all the upgrades. And sometimes an inexpensive fare is simply not upgradable.

Delta is one of the worst offenders on the non-upgradable fares. Sometimes, in fact, the only fares that are eligible for upgrades cost as much as the lowest discounted first or business class fare.

United Airlines and American Airlines, however, use different strategies. United limits mileage upgrades to a mid-level super-saver fare, which usually eliminates the lowest sale fare. The lowest upgradable fare, for example, from San Francisco to London in November of this year is $1,102 total. And requires 60,000 miles roundtrip. While the lowest sale fare is $775.

In United’s case, there is also the unusual corollary that some consolidator fares are eligible, if they are booked in an “H” or higher class of service. (Also, some special upgrades given to their highest level fliers are less restrictive, but that’s a whole different post.)

American on the other hand, allows mileage upgrades with most fare types, with the little caveat of a “co-pay.” Simply put, a co-pay is an additional charge that must be paid along with miles to upgrade any discount fare.

In a recent example, my clients who were flying from San Francisco to Rio de Janiero on American had enough miles to upgrade, and we found a fare for $1,002. To confirm the upgrade, however, however, required not only 50,000 miles roundtrip, but $350 per person each way, $700 roundtrip. Bringing the total ticket price to $1,702.

The lowest business-class fare in this case was around $4,000, so the clients decided to do it. But spending almost as much as the ticket cost for the upgrade did leave a slightly bitter taste.

The advantage of a co-pay, as American will tell you, is that passengers only pay when the upgrade is confirmed. So you don’t have the also bitter result of having paid for an upgradable fare, and then ending up sitting in coach.

Besides the fact that the co-pay can make a ticket really expensive, there are a couple other disadvantages. First, for anyone getting reimbursed for a trip, there are two separate charges, which may pose a problem with accounting departments. (And for most people, spending their miles is one thing, spending their money is another.)

The other issue is from a corporate travel department or agency perspective. Many large companies and agencies still do get some discount or commission on many international tickets. But only on the base fare. Not on surcharges, taxes, or things like co-pays. So that additional charge goes directly into the airline’s pocket.

As of January 2010, United is switching over to a co-pay model, with more of a sliding scale than the American program. They have already postponed this change once. But barring any further postponement, travelers on any sort of real discount fare, unless they are in the highest elite level, will have to start ponying up money as well as miles to get out of coach.

How about you? Do you prefer the all-mileage upgrade or the co-pay model. Not that airlines always listen to travelers. But we know for a fact that many of their executives do read this blog. (Mostly because they complain if we get anything wrong.)

(Photo by estzer/creative commons/flickr.)

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  • Chris

    Absolutely would prefer all mile upgrades. Just this past week had the experience of having to buy a higher fare that was upgradeable (spending and extra $300), being put on the upgrade waiting list (with 10 empty business seats when I bought my tickets) and never clearing…so I paid extra to sit in the back.

  • http://www.altourleisure.com Deb

    I am a travel agent and you can take it from me when I tell you that many of my clients will not pay all that extra money to upgrade. This change will make a lot of people unhappy and probably cause many people to fly with another carrier. Since AA started to charge extra for upgrades along with miles we have seen a decrease on that airline on certain routes where people would most likely have upgraded. If someone is reading this from UA, I would think long and hard before making this change in January of next year……

  • Frank

    But as most frequent fliers also know, those upgrades are not always easy to come by. Sometimes an airline will only release a few seats, other times passengers with higher elite status get all the upgrades. And sometimes an inexpensive fare is simply not upgradable.
    =================================================

    From someone who flies FREE, I have a question. What decides the factor of who gets the empty seat?
    Status level, Fare paid or number on the upgrade list?

  • http://leftcoastsportsbabe.com Janice Hough

    I know the United program best and it is first and foremost about status, then it is time on the waitlist and fare. Check in time doesnt hurt too when it gets down to the last few seats. A global services member who jumps on the list at the last minute trumps all lower status, then 1ks, then executive premiers, premiers, and regular people. Not quite sure where airline employees stand in all this. If it’s revenue standby, then that trumps the mileage upgrades. (ie, someone who wants to pay for business gets it before even the highest mileage award person.)

  • Tim

    Frank – to me, I do not care how they do it, just as long as they come up with some easy-to-understand rules. If it was up to me, I would say it should be by status and then when they got on the upgrade list.

    I do not think we should pay anything when cashing in miles for free tickets or for upgrades. What bothers me is that airlines like American (and soon United?) do not realize that they made quite a bit of money off the person who has enough miles to upgrade–even with their profit margin being small on each flight/credit card purchase the flier made to get the miles accumulated. To gouge someone who already has shown their loyalty and their money is obscene.

  • John M

    The determining factors vary from airline to airline however the following things tend to factor into who gets upgraded and who doesn’t.

    1. Status, those with higher status get upgraded first, when all other factors are equal.
    2. Fare paid, those that pay more get upgraded more frequently.
    3. How far in advance did the upgrade request happen.
    4. How nice you are, mean people don’t get upgraded as frequently! Just kidding.

  • Kathleen

    I’m a United Premier Exec closing in on Million-mile status, and my husband is a 1K Million-miler. I would MUCH prefer paying for upgrades with miles. I feel egregiously ripped off when I pay extra for an “upgradable” fare and end up in Economy anyway, as happened this summer. I am looking at other frequent flyer programs and am just about ready to switch from United. Are you listening, UAL?

  • Frank

    John M October 30, 2009 at 5:28 pm
    4. How nice you are, mean people don’t get upgraded as frequently! Just kidding.
    ==================================================

    You know, I’m not sure you should be kidding. Once, I watched a blonde with BIG BOOBS get escorted into first class by a flirtatious Gate agent, exchanging phone numbers.

    Makes you go, hmm.

  • Scott

    Unfortunately, as it seems so often here, the discussion — and even the base question — miss a good part of the mark.

    (Precursor — my expertise is also with United.)

    Most of the premise and discussion is being centered around upgrades on INTERNATIONAL flights. Domestic flights are much more lenient with the upgrade program — you can upgrade on almost any purchased fare with miles. United is also about to go to some ridiculous “unlimited” upgrade system for domestic flights. (While it will work for some, it is still going to leave others miffed (ha!) at not getting them.)

    Current policy does not allow mileage upgrades on lower international fares. Period. The airline is going to allow customers on lower fares to add a co-pay to use miles to upgrade FROM A PREVIOUSLY NON-UPGRADEABLE FARE. Now, you cannot upgrade. Soon, you will be able to….if you want. It is all about the value you put on spending the money. So there is something that did not exist before that people are already complaining about.

    Even now, on certain designated flights, United allows people to purchase an upgrade (no miles) from any fare (again, when available). People complain about the price the company sets, which when added to the ticket price, is still THOUSANDS OF DOLLARS LESS than purchasing a Business Class ticket. This goes back to the entitlement principle, that people believe they should be given things regardless. Folks, this is a business.

    In fact, as Janice mentioned, the most elite fliers are given another way to upgrade with electronic certificates. Now, certainly these are “earned” by achieving the status, but they are FREE. Yet many still beg for “free” upgrades without using the certificates. People are rarely satisfied with what they get, they always want more.

    Airlines in general are making mistakes in giving more opportunities to upgrade, rather than less. They decrease the number of seats available, people complain about not being able to upgrade, and then they make upgrading easier. It cheapens the value of the seats in the cabin and makes even the elite fliers more upset when they don’t get upgraded. Upgrades should only be allowed when people are contributing to the bottom line of the business. (And no, flying 100,000 miles on International K and L fares doesn’t quite meet that definition.)

  • MollyNYC

    I’m an AA flyer for years and have Gold status, which is their first tier elite.
    Yes, of course I prefered the “miles only” upgrade, or a reasonable fee….say $100 – $200. I think that the $350. EACH way, PLUS 25,000 miles EACH way is awful. $700. + 50,000 of my hard earned miles is a big price to pay.
    That said, I would not want to pay more for my ticket and have an “upgradeable” fare and then be stuck in a coach seat.
    Since I’m only a first tier elite, my upgrade percentage on my international flights is about 75%. It’s be furious that I paid a couple of hundred dollars more to be the the gamble, and then not get the seat.

    Sadly, if the airlines didn’t make flying in coach such a miserable experience, we wouldn’t need all this fussing. Biz and First should of course be a much more luxury product, but coach shouldn’t be such a dreaded experience.

    Also, as another person pointed out, this is for international flights. Domestic flights are handled differently and the upgrades are easier and cheaper.

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  • Bill

    I don’t care what they do as long as I can get an affordable upgrade. I want on the nice seats. I will pay something, just not absurd amounts.

  • rosanne skopp

    No one mentioned Continental where my husband and I have Platinum Elite status Cost for upgrades on our oft used route EWR to TLV usually cost $1000 rt. This is just crazy and we often look for cheaper alternatives like taking a break in Europe and breaking up the trip. Sitting in Economy for 12 hrs on the really horrid 777 is unendurable.But spending an extra $2000 for the comfort seems too hedonistic .

  • Steven

    US Airways has, by far, the BEST upgrade program for a major airline, but it does favor those of us who are very frequent flyers. Upgrades are automatic, on almost any fare (except mileage tickes, where you can pay more miles for first-class), on a space available basis by status. You can add a spouse or companion free upgrade as well, and that will happen automatically if they are on the same reservation with you. If not, you have to call in and ask for them to be upgraded.

    It’s the KEY reason I stay with US Airways… if they ever change this policy I’m looking elsewhere.

  • Bob F-Miami

    End of November I am flying from Miami to Bangkok (MIA-DFW-NRT-BKK) via American Airlines & JAL for a one week trip – I paid $5,200 for BIZ and was able to use 1 *VIP* upgrade into 1st on the DFW-NRT potion because that flight basis was “upgradable”. I could not upgrade into 1st on the NRT to DFW potion because the fare basis was too low. However, AA just changed their rules, and I immediately upgraded into 1st with 25,000 miles and $350. it was a no-brainer, it’s an almost 12 hour flight! Bliss!

  • John

    As someone who gets on a plane 40+ weeks a year, I always book an exit row, or in the case of UAL, economy plus seating. That way I’m comfortable regardless and the upgrade is a bonus.

    I must admit however than as someone who averages 250K a year, loyalty should count for much more than it does. Business travelers seem to be penalized more and more these days yet they represent the largest portion of revenue to the carriers. Something is wrong with this picture!

  • Jason

    I’ve never really had a problem using upgrades on United and I have used them both domestically and internationally.

    One of the best parts of the UA-LH agreement is that I can use the System Wide upgrades on Lufthansa which I fly back from Europe quite a bit.

    Overall I am happy but I am not prepared to pay for the upgrades.

  • Jim

    I agree with Tim that airlines seem not to realize that their frequent fliers’ loyalty that produces enough miles for an upgrade or a ticket is important. As a past gold member of Alaska Airlines, now MVP, I saw upgrade availability slide from easy and ‘unlimited’ to practically never. I am a cheap traveler, planning ahead and grabbing bargain fares. It now costs a whole lot more, especially at the first level, to even be eligible for an upgrade. Loyalty isn’t rewarded even though I have paid more to fly on Alaska rather than the same route on Southwest.

  • Steve

    Here is an idea. The airline should only charge you a higher upgradeable fair when they actually deliver the upgrade. I recently made United 1 K and got the 6 system wide upgrades. I took the bait and paid the extra $400 for the upgradeable ticket. Then get no upgrade. I feel like I was baited into it and then ripped off. I could spend an extra $3000 a year trying to get these 6 one way upgrades. I am an angry customer now. United would have been better off not giving me these 6 upgrades. I am not going to spend the extra $400 again and may switch airlines.

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