Thursday, January 8, 2009

Question: Why don't airlines auction upgrades?

On my flight out to London I inquired (the day of) about upgrading on Virgin Atlantic to Premier Economy. I was quoted $300 so I put my name on the waiting list. The flight was completely booked so I flew next to 3 screaming babies. Awesome.

On my flight back from London I again inquired (the day of) about upgrading and was quoted £380 ($580). This time the flight was half full and both First Class and Premium Economy were absolute ghost towns. The $580 made no sense to me in the context of lower demand and it was higher than my willingness to pay, so again it was a no go.

So now my question: why on earth don't airlines allow interested customers to bid on available seat upgrades? 

  • More revenue from the same flight, those seats are going to go empty. 
  • Thrilled customers who get upgrades they weren't expecting for a price they're happy to pay.
  • Less exclusivity, prices on some seats may be sold cheaply. 
  • Variable costs servicing fancier seats may be higher than add'l revenue gained. 
  • Fewer people may book early relying on playing the upgrade game at the airport.
Proposed Mechanism: 
  • Arrive at airport to check in
  • Say you're interested in upgrades
  • Enter a willingness to pay
  • Find out at the gate whether you have an accepted bid
  • Get your upgrade
So am I missing something? Why hasn't anyone tried something beyond just flat (but obviously inconsistent) pricing for upgrades?