Skip to main content
Part of complete coverage on

Place your bids for Business Class: Airline upgrades now up for auction

By Daisy Carrington, for CNN
updated 11:35 PM EDT, Tue September 3, 2013
How much would you pay for the lie-flat bed and quilted duvet?
How much would you pay for the lie-flat bed and quilted duvet?
STORY HIGHLIGHTS
  • Many airlines offer passenger chance to 'blind bid' for an upgrade
  • Iberia is the latest airline to offer customers the chance via an online auction.
  • Plusgrade, the company that developed the software, has already signed on a dozen carriers.

(CNN) -- Flying economy getting you down?

The good news is that getting bumped up to Business Class just got more affordable. Last month, Iberia became the latest carrier to roll out an online auction scheme that allows customers to bid for seating upgrades.

"Everyone knows that if no one is sitting in seat 2a when the plane takes off from London to New York, it's a loss for the airline. But everyone in economy wants that seat," explains Ken Harris, the founder and CEO of Plusgrade, the software company that developed the system. "The idea was to help correct that, and do it intelligently."

The setup works differently for each airline, depending on their specifications. Some carriers offer upgrades to First Class as well.

Who is allowed to participate in the bidding process also varies. Often, the selection process is determined by the route and the number of leftover premium seats. On occasion, a customer's frequent flyer status might also come into play.

Auctioning off flight upgrades

Furthermore, bidding is blind; customers enter how much they're willing to pay, and if that number exceeds other bids (and the airlines keep that information top secret), they win. The cost of an upgrade is extremely variable, depending on the airline, season and route.

Carriers are shy to reveal how much is necessary in securing a winning bid, though it's fair to say the price is less than a full-fare, Business Class ticket.

The idea that you can simply smile at a ticket agent and get gifted a free upgrade is a romantic notion that simply doesn't happen.
Ken Harris, Plusgrade

The concept has gained traction with the airline community. A dozen carriers have already introduced upgrade auctions to their websites with the help of Plusgrade and he expects to double that number before the year is out.

Still, one can't help but wonder if the airlines risk eating into their premium revenues.

Jamie Baker, an airline analyst at JP Morgan, says it's a possibility.

Read more: Baggage drop goes DIY

"If airlines make it too easy to pay for an upgrade, it might dilute what the traveler would initially be willing to pay for that ticket," he notes. "As a result, airlines tend to control the capacity of award seats. There's a certain amount of experimentation in the process that is required."

Harris, however, seems confident the bidding system will not impact premium-seating sales.

"There's no guarantee that simply because you've requested an upgrade, you'll receive it," he says.

"If you want to sit in Business Class and your budget allows you to do so, you should buy that seat. It's the only guarantee you won't be sitting in the back of the plane on your next trip across the ocean."

This service is for the passenger that just wants to treat himself for a little extra, and can live with the uncertainty.
Stephanie Kunath, Austrian Airlines

Austrian Airlines has one of the more democratic approaches to the process. Everyone, regardless of frequent flyer status, can bid on an upgrade, assuming any are available on the flight in question.

The airline isn't worried about hurting their profits, because they view the full-fare seats and auction upgrades as two different products, even though passengers who win an upgrade receive the exact same benefits as someone who paid up front, including access to premium lounges and extra baggage allowances.

Read more: Your own private luxury jet

"This product is for a completely different type of group," explains Stephanie Kunath, Austrian's director of revenue management and business development.

"It's not for the business traveler who really wants to fly Business Class and needs a 100% guarantee that he can. It's for the passenger that just wants to treat himself for a little extra, and can live with the uncertainty."

While bidding for seats might not hurt an airline's bottom line, the advent of these auctions will likely eat away at the number of free upgrades awarded passengers.

"It probably will erode the complimentary upgrade process to a certain degree, and airlines do run the risk of offending their elite traveler, who has become accustomed to complimentary upgrades," says Baker.

Harris, however, argues that free bump-ups are the stuff of fantasy.

"Free upgrades are really only given by necessity in operational situations or given to frequent flyers," he says. "The idea that you can simply smile at a ticket agent and get gifted a free upgrade is a romantic notion. It simply doesn't happen."

ADVERTISEMENT
Part of complete coverage on
updated 2:35 PM EDT, Wed July 30, 2014
Takeoff on one of Airbus' new A350WXB test planes is a strangely quiet experience.
updated 8:34 PM EDT, Tue July 29, 2014
What do you pack when you travel? Take a look inside other people's luggage.
updated 11:39 PM EDT, Wed July 16, 2014
Few airline routes are as cutthroat as the one between London and New York.
updated 11:15 AM EDT, Tue July 15, 2014
If it ain't broke, don't fix it, the old adage goes; Airbus unveils revamped A330 airliner.
updated 10:48 PM EDT, Mon July 7, 2014
Show us how you travel with twitpics and instagram via #howipack
updated 5:23 AM EDT, Mon July 7, 2014
Could airlines drop fossil fuel in favor of cooking oil?
updated 5:40 AM EDT, Tue July 1, 2014
How do you kill time during flight delays?
updated 4:00 AM EDT, Tue June 24, 2014
Fancy stripping off before a flight and getting sweaty with fellow passengers? Head to Helsinki.
updated 10:55 PM EDT, Wed June 18, 2014
The skies are under threat. Not from terrorists or hardened criminals, but from everyday passengers who seem to go a little loco.
updated 11:34 PM EDT, Tue June 17, 2014
A German entrepreneur claims to have found a way to buy 1 million air miles for as little as $6,500.
updated 10:13 PM EDT, Wed June 11, 2014
These days, no fashion house portfolio is complete without a hotel -- or at the very least, a luxuriously designed suite.
updated 6:39 AM EDT, Thu June 5, 2014
Is sky the limit for green aviation? Take our quiz and find out.
updated 11:19 PM EDT, Sun May 25, 2014
Some collect spoons from their travel, others collect a whole lot more.
updated 11:07 AM EDT, Wed May 7, 2014
There is no shortage of adjectives one can apply to airline seats; no wonder that many carriers are looking to make a change.
updated 1:58 AM EDT, Mon May 5, 2014
Etihad Airways has unveiled new cabins that are more like suites complete with butler and chef.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT