Airlines Find Another Way to Wring Out Extra Revenue: Auctioning Unsold Premium Seats
Photo Credit: Eithad Airways is a major PlusGrade customer. Passengers in business class can bid up to Etihad's first class, pictured here. Etihad Airways
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Remember when airlines used to give away their best seats for free? Ha! The economy is strong, and airlines are offering fewer upgrades. Passengers who want to sit up front need to pay for it. But don't worry. Another recession will come, and the good days (for upgraders, at least) should return.
When PlusGrade launched in 2009, it sought to persuade airlines they could make incremental revenue by offering unsold premium seats through a Priceline-style bidding process.
The idea made sense. Carriers faced high fuel prices (much pricier than today) and a global recession, and they weren’t selling many business and first class fares at expensive prices. They were happy to earn extra cash at the last minute from seats that would have gone unsold.
It is a slightly different business now. Many airlines report robust demand for premium seats through their own booking channels. For example, Delta Air Lines, which is not a PlusGrade customer, last month told investors its revenues for premium seats increased 19 percent, year-over-year, and United Airlines executives reported similar strength.
On many routes, and during high-demand periods, carriers can sell much of the cabin in advance, leaving fewer seats for deal-seeking passengers.
With less distressed inventory, PlusGr
