Skift Take

Targeted bidding on flight upgrades is a smart way for airlines to engage customers and offer value without inundating flyers with additional fees and packages. But it also adds a level of uncertainty that travelers may find off-putting.

Have you ever wondered why you can’t pay a reduced rate for the empty business class seats on your flight? New technology is bringing bidding on flight upgrades to flyers, but has yet to crack into the mainstream.

Amadeus partnered with Plusgrade earlier this month with the goal of providing its airline partners with more ways for flyers to spend money on upgrades.

Plusgrade essentially lets flyers bid in a digital auction on flight upgrades and amenities during the days before their flight. For Amadeus, the partnership is aimed at both meeting the needs of flyers and providing a new twist on generating ancillary revenue for airlines.

“We see the trend coming from both angles,” said Robert Booth, head of product marketing for airline merchandising solutions at Amadeus IT Group. “Airlines are looking at ways to unlock new revenue from their customer base and really upsell to the customer without upsetting them. So this type of option for bidding is a great way to do that.”

Plusgrade’s tech integrates a meter to show flyers when they’re in the ballpark of a winning bid, to prevent a race to the bottom in pricing. Flyers are notified 24 to 72 hours before their flight if they’ve placed a successful bid.

Booth doesn’t envision the technology being used to cater to the most cost-conscious flyers; instead, he sees a sweet spot for value-conscious flyers who object to paying full price for an upgrade.

“Airlines are looking to differentiate their offerings and compete with low-cost carriers,” said Booth. “There has been a real appetite for airlines to engage in new ways to merchandise their options like bidding. We’ve been getting more and more requests to have this sort of capability. It’s all plus, there’s no down on this because you’re targeting a new set of passengers who never would have booked the business to begin with.”

The service also lets airlines sell so-called ‘neighbor-free seats,’ or seats without an adjacent occupied seat.

“Everyone wants to skate toward value-added ancillary revenue,” said Ken Harris, CEO of Plusgrade. “We can deliver experiences to passengers that they’re excited about that also benefit the airlines too.”

While Plusgrade has partnered with many global carriers including Lufthansa and LAN, it has found it harder to crack the North American market.

Virgin America uses Plusgrade to invite flyers on select routes via email to bid on upgrades. Virgin America wouldn’t specify on the success of the program, but told Skift that it is pleased with take-up rates so far.

The airline also uses SeatBoost on a trial basis on Las Vegas departures and its San Francisco to Las Vegas route. It closely monitors its pricing on flights using the bidding services to ensure that sales to loyalty members and business travelers aren’t cannibalized by lower-paying flyers.

“We closely monitor seat inventory to make sure that we protect the perks our most loyal guests receive for both upgrade programs,” a representative told Skift. “We always hold seats for our Elevate members who may also be looking for an upgrade.”


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Tags: fees, merchandising, plusgrade, virgin america

Photo credit: A Virgin America flight in 2010. Thomas Hawk / Flickr

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