Why restrict Systemwide Upgrades?

Another thought occurs to me with respect to the restrictions on upgrading inexpensive coach fares. There are three possible explanations for United’s motives, and I haven’t thought them all through yet.

  • Incremental revenue. They force flyers to ‘buy up’ to a higher fare to upgrade. It’s not prohibitively higher (perhaps — and I’m overgeneralizing here — $100 or $200 in the case of an S or T vs. W or V). My uninformed guess is that this could translate into $9 million based on 30,000 1Ks spending an extra $100 on half of their systemwide upgrades. That figure is probably off, but might give a sense to the order of magnitude.

  • Chase off the mileage runners. In spite of the recent proactivity on the part of Mileage Plus, some there still do believe that many of their flyers are getting more value from the program than their revenue is worth. Many of the most attractive fares to purchase solely for the sake of flying for status will be S and T fares. There seems to be a real chafing at mileage runners buying those fares and upgrading at booking so that they can fly across the Pacific in exit row seats in the upper deck of a 747…

  • Force purchases directly from United. Customers won’t always be able to book on the United website to use their Systemwide Upgrades if an S or T fare is available because the website will price the S or T fare. At least the website won’t allow specifying a W fare. This is an anoying feature of the restrictions. At the same time, though, customers won’t be able to use Expedia, Orbitz, etc. So these limited restrictions actually force purchase from United or a travel agent. A shot against the online travel websites?

There may well be a mix of all three explanations going on. Of course restricting upgrades to “H fares and above” accomplished all of these things, too — but those restrictions were more than the market would bear since American Airlines allows international upgrades from any fare. More restrictive rules were just pushing United’s best customers to the competition.

My best guess is that United has come up with a pretty good compromise that achieves its own ends without being so restrictive as to lose business. Time will tell.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community Milepoint.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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