Going Once, Going Twice: How to Bid on a First-Class Seat

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Amanda Meeks, who flew to Tanzania in November on Ethiopian Airlines for her honeymoon, was eager to celebrate. When an email came inviting Amanda Meeks to bid for business class seats on the leg between Addis Ababa in Ethiopia and Mount Kilimanjaro, Tanzania, she accepted the offer. She got two seats for the shorter than three-hour flight for $590.

"We felt like we were splurging," Ms. Meeks, a St. Louis-based travel blogger, said. She paid $910 per person for her round trip economy ticket from Chicago. The price for business class can go up to five times as much. It was very much the "It's our honeymoon. We only do this one, why not?" mindset.

Analysts believe that the why-nots of economy fliers could generate millions of dollars for participating airlines who offer automated auctions for premium seats on planes. This practice is growing among foreign carriers that have little domestic pickup. It allows economy fliers to upgrade at a reduced rate and improve what might be a sleepless, cramped long-haul flight.

Ken Harris, founder and chief executive officer of Plusgrade (a technology company that was founded in 2009 and currently works with approximately 125 travel companies, including Qantas and Japan Airlines) to conduct upgrade auctions.

Plusgrade, which generated $3.5 Billion in revenue last year, is a business that has been booming since the lockdown. This is because fliers are looking to pamper themselves and there are more premium seats on offer due to the slowdown in business travel.

Kevin Stamler, founder and chief executive officer of SeatBoost, an auction company that works with three airlines and plans to work with seven more, stated, "Airlines are trying convert leisure customers into high-end leisure customers." It's the cheapest and most cost-effective way to upgrade.

Two separate flights last year on foreign airlines offered me upgrade opportunities. I made both winning and unsuccessful bids which inspired me to investigate the practice. Here's what I found out, and why you might be able to find upgrade auctions on your next train ride, flight, or cruise.

Although participating airlines have the ability to set the terms and the timing of the sales they can, most operate like this: A week before departure, passengers receive an email letting them know that there is an upgrade opportunity. Upgrades are often to business class, but premium economy may also be available. This is a higher level of economy that offers more legroom and better food and drink service.

The email will usually specify a minimum bid which is the threshold to participate, but sometimes it may suggest a higher bid. Bids are based on the number of passengers included in the reservation. For example, $300 for a couple travelling together would equal $600. In the event of a bid winning, the bidding passengers will provide a credit card to pay the payment.

Auctions are usually blind so fliers will be notified within days or hours.

It is not clear how prices are determined. Austrian Airlines offered me a minimum price of 400 euros, which was about $400 for business class travel from Vienna to Chicago. My first economy ticket cost me about $1,200 roundtrip; my business class ticket was almost four times as expensive.

My bid was accepted. I was able to get a lie-flat and better food in flight. In addition, I was able to access the airport lounge with more food and drink. And my bag was one of the first to leave the baggage carousel. The 14-hour flight was a pleasant and relaxing experience that saved me from the cramped coach cabin on my flight to Vienna.

On a shorter flight, in October, I bid $200 for an Azores Airlines upgrade. This was when I returned from Ponta Delgada, Azores, to Boston. The suggested starting bid was $250. That campaign ended in my favor.

Plusgrade and SeatBoost both stated that there is no formula for successful bidding. They also noted that auction results are affected by the flight dynamics, which includes how full a plane can be.

SeatBoost works with Lufthansa and Avianca, and TAP Air Portugal. Auctions are held within three hours of a flight via the company's app. This shows competitors and ranks them. Bidders have the ability to raise their offer, just like in a live auction. Auctions usually end just minutes before the plane board.

"We're democratizing this upgrade process," said Mr. Stamler.

It is subjective to decide whether upgrading is worth it. Although the results of auctions vary, they tend to show 20-30 percent savings on the cost of an upgrade.

Julia Gifford paid $300 for a fall flight between Toronto and Warsaw. This was just over the minimum price for an outbound trip in premium economy with LOT Polish Airlines. The original round-trip economy airfare was approximately $800.

Ms. Gifford is a Toronto native and lives in Riga, Latvia where she manages a content marketing agency and public relations agency. She was very pleased with the service, food and atmosphere of the flight attendants. It was worth it.

Although airline prices can be unpredictable, if you look at current routes, you will see that the difference between standard economy and premium economy fares is more than $300. Recent prices show that a $300 upgrade bid will save you between 7 and 30 percent on the original booking price.

Shamarel O.E. said, "I would definitely recommend it for people who want to fly business but aren't sure if they're worth it." Odusanya, a Dubai-based psychologist, won a business upgrade for the same price as she paid for her economy ticket (995 Emirati Dirhams, roughly $270), on Etihad Airways' flight from Dubai to Tel Aviv. She also avoided paying a large fee for an additional checked bag, since it was included with her upgrade ticket. I found the calm and tranquility of the lounge to be very relaxing after a stressful flight.

Other offers for upgrades may be made by the airlines directly to travelers, sometimes right after booking a flight or at the airport check-in counter.

Auctions are controlled by consumers who set their own threshold.

Henry Harteveldt (a travel industry analyst) said that "it's a win for the airline as well as the traveler." He recently won an upgrade auction for business class for $100 to a flight from Vienna, Warsaw. This brought the total ticket cost to $350. It was a third lower than the $525 for business class when he booked economy. "Airlines are generating incremental revenue and getting paid for premium products. Because the passenger feels that they are paying an affordable price and is within their means, they win.

Upgrade services make money on the assumption that once they have to travel, they are more flexible with their budgets.

Mr. Stamler stated that people are very price sensitive when they book. But your buying behavior changes when you travel.

It's more common to upgrade your carrier with cash or loyalty points if it is based in the United States. There are few auctions. Hawaiian Airlines is an exception, as it operates long-haul flights between the mainland and the islands.

Spirit Airlines uses Plusgrade to sell its Big Front Seats (larger seats at the front rows) through a program called SeatBid. The website allows you to submit a bid and be notified about its acceptance within 48 hours. Some airlines offer "Instant level-up" at a discount in order to instantly secure an upgrade, similar to eBay's option to "Buy It Now".

The three major legacy airlines, American, Delta, and United, don't participate at all in premium-class auctions. Frequent fliers who have been upgraded by airlines to higher status as a reward for loyalty often fill empty seats in planes' forward cabins.

"The U.S. airlines can't meet demand for upgrades that were promised to elite loyalty members," Mr. Harteveldt stated, adding that the airlines have been successful pricing their premium and economy cabins so that customers are upgrading at the booking stage.

The popularity of upgrade auctions has spread to other travel businesses, particularly cruising.

Plusgrade started working with Norwegian Cruise Line back in 2016. In 2016, Plusgrade began working with Norwegian Cruise Line. Princess announced in September its partnership with Plusgrade to offer cabin upgrade options.

Passengers have the option to upgrade to any of the many cabins on a cruise vessel. This includes deluxe suites and balcony cabins. According to Mr. Harris, Plusgrade's chief executive, cruise upgrades are very popular due to the length of the trip.

Don Terris, a Toronto-based travel agent, won a bid of $1,500 over his basic fare for a stay in a Grand Suite aboard a Royal Caribbean Ship. He said that this saved him more than $5,000 than booking the suite directly.

Amtrak started bidding on its premium seats in trains with Plusgrade in 2021. The company plans to continue this practice for future train services across Europe.

While there are many websites offering hotel booking discounts worldwide, very few offer upgrade auctions. Analysts believe that entry-level hotel rooms do not offer the same level of service as economy class seats on an airline.

"Airlines have done an amazing job of making flying hell at 30,000 feet above earth," Mr. Harteveldt stated. "Auctions work because you start with the fact economy class is a suck and travelers will look at all possible options to escape it."

Elaine Glusac is the Frugal Traveler columnist. Follow her on Instagram @URL