Here’s Why I Don’t Want American Airlines to Offer Unlimited Complimentary Upgrades to Elites

With the merger between US Airways and American Airlines, the two carriers are in the midst of working through their differences and figuring out the policies and procedures that will prevail when the two airlines actually combine into one.

We don’t know for sure when that will happen. I’m still betting it’s about two months into 2015, but there’s real risk that if the airlines aren’t ready that there will be an operational disaster — Delta and Northwest’s combination wasn’t smooth but it was much better than US Airways/America West (everyone was told to check-in online when the airlines combined, but even the website and kiosks didn’t work). And both were better than the disaster of United-Continental with missing reservations, missing miles, and hours-long telephone hold times.

Nonetheless, one of the major issues to be determined of interest to elite frequent flyers is how domestic upgrades will work.

(International upgrades is another important issue, and I don’t think American will become less generous than United or a newly-invigorated Delta there, although specifics very much to be determined).

How Domestic Upgrades Work at Each Airline Now

Seats that the airlines don’t expect to be sold are released as upgrades to elite frequent flyers.

Those seats which aren’t taken by any elite, or at least aren’t expected to be taken by an elite, are made available as a buy up offer to non-elites for cash. This is done at check-in generally.

The major difference between the two airlines is that US Airways offers ‘unlimited complimentary upgrades’ to all of its elites. If an elite member qualifies for an upgrade, they get it, free.

At American, Executive Platinum members get unlimited complimentary upgrades.

But lower tier elites – Golds and Platinums – have to pay for their upgrades with 500 mile e-certificates.

Those e-certificates are earned at a rate of 2000 miles (four 500 mile certificates) per 10,000 miles flown. Additional certificates beyond the free earned ones can be purchased.

Executive Platinums do not get free upgrades for their companions. If an Executive Platinum upgrades a companion, they have to support that upgrade with a 500 mile upgrade certificate. And they do not earn those from their flying, so they have to buy them (unless they have any accrued from when they were a lower-tier elite).

Why Might the Combined Airline Go With the American Paid Domestic Upgrade Model?

To be sure, I do not think that the airline will adopt this model.

But the argument is that they simply raise a material amount of revenue through the sale of upgrades, and they’ll be loathe to walk away from revenue.

This is doubly so after the merger, US Airways management is careful and doesn’t like spending money that they cannot show a clear connection to increased revenue from. Giving up this revenue stream would be anathema to them.

Why I Believe the Combined Airline Will Go With the US Airways Complimentary Upgrade Model

US Airways accountants may look at the revenue and want to hold onto it, but US Airways accountants have for years signed off on the unlimited complimentary upgrade system.

While American executives remain in charge of the mileage program, when placing bets on what the airline will do next it’s a reasonable (better than 50-50) choice to go with the US Airways method.

Taking away unlimited complimentary upgrades from US Airways elites would be a big blow, at least psychologically. Being asked to pay for something they used to get stings.

In addition, United and Delta offer unlimited complimentary upgrades (American’s method used to be the norm but is ‘so 1990s’). So adding a cost to elite frequent flyers that competitors don’t charge could be the push that sends some out the door.

Plus I suspect that revenue from sticker sales may have been on the decline over the past year anyway. Cabins are full up front and even Executive Platinums anecdotally are having a harder time with upgrades as American has made moves to better monetize the cabin through cheaper first class fares.

Because it’s “what US Airways does,” because their elites have capitalized that benefit, and because it’s the industry standard I’d bet that the combined airline will go with unlimited complimentary upgrades.

Why I Don’t Want to See Unlimited Complimentary Upgrades at American

The sale of stickers, combined with upgrade co-pays that do not exempt elite frequent flyers even domestically, mean that American earns a revenue premium on their first class cabin entirely apart from corporate sales and instant upgrade fares.

When Alaska Airlines considered eliminating its first class cabin, they were potentially willing to risk elites flocking away if they couldn’t find ways to better monetize those seats. They implemented fare restrictions on mileage upgrades among other changes to justify the cabin.

A more profitable first class cabin also supports a better first class product. I like American’s domestic first class far more than US Airways’. A snack basket is not a meal. I like hot towels and mints. And flight attendants who hang your coats (although I do wish they were more consistent with predeparture beverages).

Not that I like everything American has ever served in first class, of course!

    American Airlines First Class Cheeseburger

Although I am a sucker for their ice cream sundae!

    American Airlines First Class Ice Cream Sundae

What’s more, I believe mid-tier and entry-level elites are better off without unlimited complimentary upgrades.

When every passenger gets free upgrades, every passenger is requesting them every time (almost).

That means elites who want to upgrade have to compete against every other elite every time.

In contrast, when elites are rationing their upgrades and have to pick and choose when to request them, they are competing against other elites doing the same thing. You don’t request upgrades every time, you don’t compete against every elite when you do, and when you choose to request the upgrade you have a better chance of getting it.

Unlimited complimentary upgrades reduce upgrade percentages for those bottom and mid-tier elites.

I like a system where we request an upgrade when we care most and have a better chance of getting the upgrade when we actually want it. Upgrade stickers serve to ration upgrades to customers who care about them most on a given flight.

I also worry that if revenue is given up in the domestic upgrade program, that revenue needs to come from somewhere.

I believe American will go with complimentary unlimited domestic upgrades for all elites. I think that on the whole that will be popular, but that it won’t be a good thing for those who get the upgrade (likely degraded product over time), for Golds and Platinums (who will see their upgrade percentage go down), and for elite members as a whole (who may see less investment elsewhere in the program to compensate).


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 InsideFlyer.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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Comments

  1. Complete agree with you, and I’m an EXP that will be likely be Platinum next year. Had 3 flights in F this week and each time I had an empty seat next to me. That means if a Platinum/Gold wanted the upgrade, they’d get it (and have pretty decent service compared to UA). When I was PLT/GLD, I always got an upgrade when I wanted one (well, except JFK-LAX, but that’s somewhat understandable).

  2. When has the psychological effect of paying for something that used to be free been seriously considered by the airlines? Bag charges, early boarding fees, meals….the list goes on and on. And now they’re swimming in cash because of it. Elite upgrades would just be another cash cow for the bean counters.

  3. I’m US Gold. Flew ORD-BUF on Monday on AA and was surprised to see my name on the board at the gate with 4 others under “Upgrade Requests”, although I hadn’t requested an upgrade. Still, it wasn’t until boarding was about to begin that a checkmark finally appeared next to my name as well, indicating my upgrade had cleared. F was full.

  4. Yes. You have struck upon a truth:

    “When everybody is special, no one is special.”

    This is why I believe that many FF programs should make it more difficult to become a high level elite – there is a real distinction in level of benefits.

    And if they would eliminate the preferences for CC bump-up (such as DL giving AMEX Platinum Reserve holders priority on upgrades), that would also be an improvement.

  5. There is another argument that you’re leaving off as to why the sticker-upgrade system is better, even for high-level elites. On United as a 1K, if I buy a last minute ticket (even say, under 48-72 hours), because EVERYONE has been on the upgrade list, there are often very few seats left. So I’m now competing directly with other 1Ks for fewer seats, because some of them are already filled with Golds and Platinums who upgraded. Same is true when I SDC onto a flight under 24 hours.

    In general, complimentary upgrades fill the F cabin sooner ime. Many elites would prefer if they would hold back more upgrades for these cases (unless of course we’re booked well in advance, in that case upgrade me at the window please! 🙂

  6. Why not allowing unlimited complimentary upgrades but put those who use upgrade instruments at higher priority. So if you really want the upgrade, pay for it

  7. @Jim – Interesting. They had been running some tests of cross-upgrades for elites. Wondering if that was one of them, and whether it was also testing unlimited for all elites.

  8. You have to look at this from the airlines perspective. The thing is when you’re not sure your upgrade will clear at all, as is currently the case with United, you are in theory more likely to pay for the upgrade ahead of time.

  9. Ambivalent about this. Currently PLT and had a mainline sticker upgrade actually clear at 72 hours sharp for the first time EVER today (DCA-DFW). That’s new to me, and if they actually processed PLT upgrades at 72 hours that would be a useful add. In the past, I’ve never seen one happen until T-4 or so.

    That said, I also fly a good bit of oddball routes and oddball times that are less business-heavy, so I feel like I’d have a decent chance of some free upgrades going through. So I see pros and cons.

  10. That said, as a mostly-leisure traveler, I’m fine with any move that democratizes the F cabin and makes it more accessible to me when I really want it. Whether that is sticker upgrades, buy-ups, auctioning, or cheaper F revenue fares to begin with, I’d rather just be able to spend a little extra for those times I want it than to have to play a bunch of games and end up losing out to the traveling salesmen every time anyhow. Probably not popular with the business set, but it’s how I feel.

  11. I think the difference between the two airlines was the fact that US only served meals on longer flight, so the cost of upgrading lower level elites didn’t cost US that much, but did bring a satisfied flyer. When I left UA and went to US, I did the elite challenge, knowing I would make CP, I bought Silver for $200, and in that 90 days made CP. I was upgraded 3 times as silver, 3 times as gold, many more times as PLT and my upgrade rate as CP has been 98%.

    I was happy with the in-flight service on US, granted there were certain flights that I think should have had a meal, the 5pm departure on the STL-PHX was one of them.. But today that flight now has a dinner served. But I bought my meal on board until now. The elite challenge that US has generates a great deal of income for them. Parker came from AA, and knew/knows AA FF program, and kept the unlimited upgrades. I think you need to throw bones at all elite once in a while to make them stay.

  12. I completely support the auto upgrade for EXP, and purchaseodel
    fo PLT and Gold. I have over 60 upgrade certificates that I have saved and only use for flights I reat want and those that are bored with a purpose of stratigicY flying odd ball routes to increase the likelihood of getting my upgrade. This model works best in myomd giving all a better chance to get a quality upgrade on the flights they want most.

  13. Please point out if my thinking is flawed, but, at least if you’re PLT on AA, I don’t think going to unlimited upgrade eligibility for elites will change anything (except you’ll no longer need to have a bank of 500 mile upgrades). This is because all PLTs are already trumped by all EXPs and this will not change. It’s not beyond the realm of possibility to imagine that going to “unlimited” upgrades would actually save money for the airline as allocating the upgrades may require much less monetary effort.

  14. I agree with Gary, but for better or worse, I’ll be loosing my status after this year (really diminished spending)so I’ll loose out on those flights to Iowa or Miami, otherwise I’ll be flying with miles upfront 🙂

  15. I think it’s a fallacy that unlimited free upgrades means “Golds and Platinums … will see their upgrade percentage go down”.

    Whichever method they decide, the number of elites won’t change and the number of seats available for upgrades won’t change. So *on average* the upgrade success won’t change either.

    What unlimited free upgrades mean is that the upgrades will tilt in favor of PLTs over GLDs, and tilt even further in favor of whoever is on the top of the tiebreak system (whether US’s most miles in the last year, or AA’s earliest request). The 80K PLT who books far in advance only gets 20% upgrades now (unless willing to pay for extra), but will do much better under a free system. The 20K GLDs like me (lifetime status) would likely do worse.

  16. Let me get this straight, on an AA flight, the first class seat will go empty, but (and the program I am familiar with) if there is an empty first class seat US will bump any elite to first class.
    So, 2 days before departure US will move silver preferred who are taking up emergency row seats and choice seats to first, thereby US will have more ‘fee’ seats available for customers checking in and US will have more open seats for paying standby customers, but in the AA model 2 days before departure AA is at the mercy of their elites’ earned or paid for certificate upgrades?
    It seems to me that the US model could be revenue driven in a fee crazed model.

  17. Both my wife and I are lifetime AA Gold, and agree 100% with Gary. Here’s hoping they stick with the AA model.

    And if they go with the USAir model, what happens to all those 500 mi upgrades we’ve accumulated? It would suck if they just cash them out for 500 AAdvantage miles each (or something like that).

  18. I’m not in need of too many domestic tickets (of any sort) these days, but back in the day when I was a Plat on NW, my thought was: I’d be willing to pay for domestic F if domestic F were worth paying for. And as a 6’1″ dude, I actually do want domestic F on long enough flights.

    If that means fewer freebie upgrades, then so be it. It’s one of the reasons I focus on international travel — those premium cabins are worth jumping through hoops for.

  19. I totally agree with Gary: when all elites are auto-upgraded, only the top tier elites get upgraded. For mid-level elites, this translates into far fewer upgrades. At least, this is my experience at United.

  20. Gary: I am US Silver, DCA based, but have upgrade percentages greater than 50%, and that’s flying peak days Friday/Sunday, including tomorrow all the way to Mexico. On US, “everyone” is eligible but still I maintain very high upgrade percentages, so I can’t see it being all bad.

  21. Jumping back in here, I agree with the position being articulated by a number of posters – this only matters for mid-level and low-level elites. Highest-tier elites will eat up whatever there is to eat up and then whatever is left will be that.

    I will offer one observation – I have flown 8 US airways legs in the last week and in all but one of those (where I was upgraded to F after being VDBed), I was literally the ONLY person who boarded when they called the elite group right after First – including Dividend Miles mid-tier and low-tier elites and all AA elites. This is curious to me, because it seems like in such an elite-heavy market as DCA (and flying through other US hubs) there should be more US elites. It implied to me that they were already on the plane – in F – and thus seemed to be enjoying a pretty good upgrade percentage. It also seemed to imply that there haven’t been that many AA fliers crossing over to US. I realize that 8 isn’t a huge sample size but I just found this interesting.

  22. Better yet, why not get rid of free upgrade for anyone?
    Those that want to fly in the front should pay for it like foreign airlines do.

  23. I think the US model is better as it is simpler.
    I also think DCA is not that elite heavy at US (most Govt Y fares went to CO or UA now esp for intl routes)
    AA may add quite a few elites at DCA, but that is not their main base either.
    .
    If AA really wanted to monetize the F class cabin, they could “sticker” anyone and all, i.e.,
    allow miles upgrades first
    then VIPs,
    then Stickers (let all earn it and or pay for it)
    and
    lastly free elite upgrades
    AND do not forget
    then buy ups at the gate for anyone

  24. I think they will stick with the AA model. It’s worked for many years, even though the competition has has free complimentary upgrades. There’s a reason they haven’t changed it already — it obviously works, and does not appear to drive the elites away to another airline. It’s likely because other factors are in play. I think the revenue will trump other factors.

  25. I’m a Delta Platinum (gifted Silver to my wife). I’m flying, a lot, on my own dime, so I schedule my flights to avoid the “business heavy” routes. As such I get upgrade 70%+ of the time, and even my wife has been upgraded close to 50% of the times she’s flown.

    So I’d say the AA model sucks for people like us. 20% upgrades? That’s pathetic level. I got better than that when I was Silver.

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