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Austrian Airlines allows customers holding an economy class ticket to bid on an upgrade to its longhaul business class. Business class award space on those same flights has dried up in the seven months the scheme has been in place.
Is that a coincidence or is this a possible scary future for us where airlines auction premium cabin seats at a discount instead of giving them to us with miles?
What is an Austrian Airlines Smart Upgrade? How is the award space in business class from the US to Europe on Austrian? Is selling discounted upgrades the future of business class cabins? And where does that leave folks with miles?
Austrian Airlines allows folks with an economy class ticket issued by Austrian Airlines to bid for an upgrade to business class up to 72 hours before the flight.
For more information, see the Smart Upgrade Frequently Asked Questions and Terms & Conditions.
The key term that would trip most of us up is that the ticket has to be issued by Austrian, meaning the first three digits of the ticket number are 257. If you booked an economy award on Austrian Airlines with United miles, you would not be able to use a Smart Upgrade because the ticket would be issued by United, meaning its ticket number started with 016. According to a FlyerTalk thread, awards booked with Miles & More miles are also ineligible for a Smart Upgrade.
Here is a FlyerTalk thread with info on some folks’ bid attempts and successes.
I used to find that award space on Austrian’s flights were a gold mine. That was great news because Austrian flies an almost fully flat business class product that is quite comfortable to New York, Chicago, and Washington DC. (I just flew it last week VIE-ORD. Trip report coming soon.)
But now that some business class seats are being sold as upgrades, space is very poor in business class with United miles.
Washington to Vienna
There are only 10 days in the next year with business class space–shaded blue or green–from Dulles to Vienna; two are in the next three days.
New York to Vienna
There are 16 days in the next 11 months with award space in business class from JFK to Vienna; again two in the next three days.
Chicago to Vienna
O’Hare to Vienna has the best award space with 22 days in the next 11 months having at least one business class award seat.
My three takeaways on the award space in Austrian Business Class from the US to Austria:
- Award space is awful, averaging fewer than two days per month on all routes.
- There is no business class award space after January 11, which is very strange since February and March are very low season to Europe.
- There is far greater award space within 72 hours of departure than further out.
I can’t explain point two, but points one and three make me wonder if Austrian is selling business class space as upgrades that it might otherwise release to folks with miles.
Presumably Austrian makes more cash selling an upgrade than its partners reimburse it for one of the partners’ customers booking an award ticket in Austrian business. All those upgrades are cleared 72 hours before departure, so at that point, Austrian makes no more money form upgrades and might as well release seats as award seats.
But all I can offer is my observation that award space has fallen since the introduction of the Smart Upgrade program and my conjecture about which is more revenue for Austrian, upgrades versus award seats. I can’t say for sure whether Austrian is replacing award space with upgrade auctions.
But even if Austrian isn’t, is this the wave of the future?
Part of me wants to say yes. Airlines want to sell all their seats, but especially their premium cabin seats with their massive mark ups. If they can’t sell them at full price, airlines want to at least get something for those seats. These auctions are a great source of revenue (as long as they aren’t just used by people who would have purchased business class seats to save money on the same seats.)
But if they are the wave of the future, why aren’t they the wave of the present?
I think the main reason to be optimistic that these auction won’t replace our access to premium seats is that they are fairly uncommon despite being technically feasible for all airlines.
Auction theory has been well understood for decades. The technology to handle an online auction like Austrian’s has been around for years.
And yet only a few airlines like Austrian, Etihad, Air New Zealand, and El Al use these auctions. That tells me that most airlines have concluded these auctions would lower their profitability.
Your Take
Are these auctions good or bad for us? Will they flop or will they spread? If you had an economy transatlantic flight on Austrian, how much would you bid for an upgrade to business class one way?
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Thank you for this very interesting posting! I will certainly keep tabs on this program with Austrian Airlines (OS) as it unfolds. I often travel to the Mideast for my job, and was able to upgrade with OS last February from full-fare coach to business for $750 rt. In my experience, OS airplanes are all showing their age, and their service is not quite up to other airline’s standards. We also had a younger and relatively untrained crew/waitstaff on our plane from IAD to VIE. I was told by my seat neighbor that OS is now owned/run by LH. If true, things should improve. Will LH and other airlines go the route of bidding for business class seats? I was certainly pleased to get my seats at the price I did, as, in my experience, coach class on OS is certainly nothing to be excited about!
Austrian is part of the Lufthansa group (as are a lot of European airlines.) We’ll see whether the rest of the group starts to use these auctions.
I am convinced that airlines who either have a new product (such as OS new Austrian business which is terrific) or who just joined an Alliance release lots of space in the beginning to let people try it on an award and then pull back to get them to pay retail in the future.
It’s a pretty good strategy if you have a good product because you get a lot of ‘free’ publicity.
Hi Scott, I’ve noticed how the award space has dried up on OS since this past summer and now it all makes sense with the introduction of their Smart Upgrade program. At first I thought they were following LH’s approach on just releasing award space to partners within 15 days of departure. I’m curious though whether Miles & More members see more award availability since they’d be the loyal customers!
These auctions probably do not work on our favor. I wish they auctioned off regular business class seats versus award seats since it at least gives members with miles some form of hope that it is still possible for them to redeem a business class longhaul OS flight through miles. That being said, this scheme may flop but only time will tell.
How has this worked out for Air New Zealand, El Al, and Etihad? I rarely fly those airlines but I do fly Emirates the past few years and recall EK would send an email to economy passengers the week prior and to offer them an upgrade to business class for $1000 when it seems like economy was overbooked. At first I thought this was a great idea but as an EK Gold (the highest tier at the time), that meant I won’t be getting an operational upgrade which I was used to getting whenever economy was full/overbooked. 🙁
Thank you for this post! I met you at Chicago seminars and will admit I didn’t know about your blog until this past weekend!
Glad to have a new reader. I don’t know how it’s worked out for the other airlines. I think we’ll know it’s worked well if even more airlines adopt this plan.
Ah that’ll be scary. I hope to fly OS business next Feb but I guess I’ll have to wait until 2-3 days before!
Copa Airlines does this also. Was upgraded on the flights down on a Thursday (from Status), but bid (and lost the bid) on the flights returning on a Sunday (obviously more peak travel time). They gave an indication at time of bid, the likelihood the bid would succeed based on previous bids on that route. That’s pretty vague, and the bids were high, so I low-balled it (set the slider to the minimum bid). The whole time I was bidding I felt dirty, like I was helping to usher in what I think will be the future, and which is very bad for us. Still, a marketplace for those seats certainly makes sense and I’m surprised it hasn’t been more effective in the past. Seems like this is the best way to achieve price discrimination and that it’ll be more profitable than loyalty. Might be hard to measure though.
A commenter in the FT thread made a good point that the airlines have to be inconsistent in their acceptances. Otherwise savvy people who would have outright bought an expensive biz ticket will know to buy economy and what to bid for an upgrade.
If I ever have the chance, I am likely to low ball it too. That way I’d get an upgrade in an oversell situation on the cheap, and suck it up if I don’t get the upgrade.
I see 25 days with business ORD-VIE in the next 3 months, and that isn’t including the possible days that united.com occasionally displays as economy/none despite the business availability.
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