When I became a frequent flyer the first class cabin was mostly upgrades. Airlines sold 10% – 15% of the seats for a lot of money, and made the rest available to frequent flyers. Over the past several years US airlines have monetized the cabin much more aggressively — at United sometimes just for ‘tens of dollars’.
Three years ago Delta said their goal was to sell 70% of first class seats in 2018, leaving very little left for upgrades. That includes upsells for any amount, which they’re trying to do instead of offering the seats to their elite frequent flyers.
During the airline’s earnings call on Thursday CEO Ed Bastian says Delta is now up to monetizing “about 60%” of their first class seats. So they’re behind goal (though they’re apparently ahead of their peers who are likely still in the 40’s).
One way they plan to increase the number of seats they’re upselling to customers, rather than offering as complimentary upgrades, is to offer payment by miles as an alternative to cash. Delta’s President Glen Hauenstein, in his prepared remarks, said to expect Delta to introduce mileage upgrade upsells later this year.
We want all of our customers to be able to purchase Delta product how they want, when they want, and where they want. Premium product revenues grew 19% on a 3% increase in premium seats as upsell revenue continues to be a source of strength. We are excited to rollout additional functionality to allow post purchase mileage upgrades later this year.
These upsells aren’t going to be ‘good deals’. Instead CEO Ed Bastian thinks of miles as worth one cent apiece.
That’s what we’re excited about in the future is the ability to control your travel and upgrade however you want to with whatever currency you want to use. So you want to – if your company buys you a coach ticket and you want to sit in the Premium Select cabin, we’ll have an offer for you that would be 17,000 miles for you or it’s a $170 in cash.
That matches what I said to expect several months ago, “you can expect miles to be worth no more than a penny or so” for mileage upgrades.
Certainly some customers will take them up on the offer, and there will be even fewer premium seats left for complimentary upgrades or confirmed upgrades.
Delta mileage upgrade awards are already crazy expensive. The question is whether post-purchase mileage upgrades will replace Delta’s hidden mileage upgrade award chart — whether mileage upgrades will always be simply priced based on fare.