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The downside of complimentary class upgrades of US airlines

Recently, on an on-line forum, there was a great debate on how the legacy domestic carriers could deal with the issue of an empty premium class on many of their flights.

Be it Air India, Jet Airways, or Kingfisher, many a time, fliers will observe just about three or four passengers in the premium class which has 20 or more seats.

Kingfisher Airlines Domestic First Class ServiceOne of the forum members suggested these airlines follow a liberal upgrade policy akin to that practised by legacy US carriers like Delta, United, Continental, American, etc., as this would build brand equity.

While both Jet Airways and Kingfisher do offer a limited number of upgrade vouchers for their premium passengers, unlimited upgrading, in my humble opinion, has become a bane for the US airline industry causing a huge blight on their premium class service levels.

Class upgrades do bring brand loyalty. It is but natural for a customer to prefer a provider of freebies; but how long before the benefit becomes an expectation, and then the upgrades actually become a slippery path for the airline and makes it impossible for the carrier to withdraw the service.

Secondly, as the premium classes start getting filled with upgrade passengers, there is a significant decrease in per seat revenue and proportion of income to cost is no longer maintained.

Passengers experience the end result of this flawed policy of US carriers on a daily basis. Thanks to liberal upgrades, resulting in a significantly lower revenue per seat, the carriers in the US have been forced to curtail services in their premium classes.

The so called US domestic “First Class” does not hold a patch to the domestic Business Class in India and most other countries, be it seat comfort, food and beverages, reading materials, or service, both in the air and on the ground. Even on international flights, let’s face it, US carriers are not highly rated when it comes to their premium class.

Very frequently, there are hardly any passengers in the premium cabin who have actually paid for a “first class” seat. Due to the enforced lower levels of service, these paying passengers feel denied and short-changed, which further lowers the incentive to actually buy a premium class ticket, which in turn deepens this already vicious downward cycle.

On the other side of the spectrum is Singapore Airlines (SQ), an airline I had the pleasure of being an ultra-frequent flier with. I have often wondered how does Singapore Airlines manage to charge fares that are close to double that of their competitors, including fellow Star Alliance carriers, and still go full, in all classes.

Singapore Airlines Business Raffles ClassFrom past experience, the airline is fanatical about protecting and maintaining the levels of their premium classes and does not resort to upgrades unless absolutely forced to, due to extreme overbooking. Despite flying more than a million miles with the airline and being one of their top passengers from India, I got a free upgrade only twice in about 1,000 flights that I have taken with them.

The net result is the airline receives full revenue per seat and in return offers a premium class that offers one of, if not, the best, travel experience in the sky. One that passengers both frequent and otherwise are happy to pay a significant premium for.

This still begs the question, how does Singapore Airline retain the loyalty of its passengers, and the simplest answer is service. The airline perceives itself as a full service carrier and offers exactly that — full service. Customers get a lot more than they pay for.

What are your views on complimentary upgrades? Are they a boon or a bane? How would you implement a customer loyalty program? Post a comment.

Images courtesy Kingfisher Airlines and Singapore Airlines

About Devesh Agarwal

A electronics and automotive product management, marketing and branding expert, he was awarded a silver medal at the Lockheed Martin innovation competition 2010. He is ranked 6th on Mashable's list of aviation pros on Twitter and in addition to Bangalore Aviation, he has contributed to leading publications like Aviation Week, Conde Nast Traveller India, The Economic Times, and The Mint (a Wall Street Journal content partner). He remains a frequent flier and shares the good, the bad, and the ugly about the Indian aviation industry without fear or favour.

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