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Airlines see surge in paid first-class ticket sales as free upgrades decline

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Airlines see surge in paid first-class ticket sales as free upgrades decline
Research
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Kristy Tolley Editor | The Points Guy

Delta Air Lines has reported a significant change in its first-class cabin dynamics over the past 15 years. According to Delta executives, only 12% of passengers paid for their first-class tickets in 2009. Today, about 75% of those seats are purchased outright, reducing the availability of free upgrades for elite status members.

"The biggest loss leaders on the airplane in 2010, and before, were the premium products," said Glen Hauenstein, Delta's president, during an investor day presentation on November 20. "We didn't sell them," he added, referring to previous practices of offering free upgrades to elite members.

Hauenstein attributed this shift to a strategic reduction in the price gap between coach and first-class seats. In 2010, a first-class seat was approximately 13 times more expensive than a coach seat. Currently, this difference is much smaller; for example, on flights from Raleigh-Durham International Airport (RDU) to Los Angeles International Airport (LAX), first-class fares are about two and a half times the cost of main cabin tickets.

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"We brought the separation way down. We've made them much more affordable," Hauenstein told investors. "And guess what — when you make something affordable, people want to buy it."

Other U.S. airlines have observed similar trends as they capitalize on increasing demand for premium seating options. Enhanced technology allows airlines to offer strategically priced paid upgrades after booking but before flying.

Kerry Tan, an economics professor at Loyola University Maryland specializing in airline industry research noted that airlines have become more adept at filling seats profitably since emerging from financial challenges earlier this century.

"As airlines emerged from bankruptcy [in the early 2000s and 2010s], I saw them going from what I would call 'market share maximizers' to now 'profit maximizers,'" Tan said.

In response to these market dynamics, airlines are expanding their premium offerings. Frontier Airlines recently introduced "Upfront Plus" accommodations with blocked middle seats as part of its pivot toward premium services.

JetBlue President Marty St. George highlighted customers' continued willingness to pay for upgraded experiences: "We've got very clear data showing 'buy-up' revenue and customers who are buying into more premium products."

Despite these developments favoring paying customers over complimentary upgrades for elite members navigating competitive upgrade queues remains challenging due largely due partly overcrowded status tiers cited by Delta when revamping its SkyMiles program last year along record frequent flyer sign-ups across major carriers recent years

High-level status can still improve chances at securing an upgrade while also considering alternative strategies like leveraging credit card spending earning guaranteed certificates taking advantage dynamic cash opportunities maximizing non-upgrade perks offered through airline programs or cobranded cards

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