Last updated: 10:30 AM ET, Mon March 07 2016

Delta to Offer Cheaper First Class Tickets, But Give Fewer Upgrades Away

Airlines & Airports | Delta Air Lines | Josh Lew | March 07, 2016

Delta to Offer Cheaper First Class Tickets, But Give Fewer Upgrades Away

Photo courtesy of Delta

Getting a free upgrade is one of the main perks of belonging to a frequent flyer program. Loyal customers can use their frequent flyer status to get either cheap or free upgrades, or they can use the miles that they have accumulated to buy an upgrade without actually having to hand over any cash.

Want first class? You'll have to pay.

Now, at least one airline is changing the way that it handles upgrades, in particular, and frequent flyer miles, in general. If you want to get into the first class cabin on a Delta flight, you will probably have to pay.

There are good and bad aspects to Delta’s new upgrade strategy. The bad news is that airline will be focusing on selling premium class seats rather than giving them away to loyalty-club members. The good news is that first class fares could soon become much, much cheaper. 

Incoming Delta president Glen Hauenstein, who is replacing now-CEO Ed Bastian, explains that the change is good for the airline's bottom line because it has always had a hard time making money on domestic first class tickets. “Historically, the domestic first-class cabin was a loss-leader” because people simply didn’t want to spend, so the seats were filled at the gate by frequent fliers who requested upgrades.  

READ MORE: The Airline Upgrade Auction Trend: Is It Worth It?

Not going to give it away for free

In short, the free upgrade was a great perk for travelers, but not a good business model for the airline. Delta simply ended up giving away the most expensive seats on the plane while getting nothing in return. 

One solution would be to take a page from Southwest Airlines and use single-class planes on domestic routes. But Delta is not going to give up on its domestic premium classes. It has something else in mind: the carrier will lower the prices on its domestic first class fares so that more fliers can afford them.

READ MORE: Biz Travel Increasing With Sharing and First-Class Travel On the Rise

Doing this will undoubtedly lower the potential amount that a given flight can earn. However, it will most likely raise the actual amount of the profit for a given flight because more first class seats will be filled by paying customers rather than non-paying upgrade recipients.

Is there a silver lining?

There are some "silver linings" for fliers. First of all, the new Delta strategy will mean that premium class fares could be more accessible in many markets because the price tags will be cheaper. Also, since Delta is switching to a spending-based frequent flyer model (points are earned based on amount spent, not miles flown), springing for a first-class ticket will bring better awards than simply flying economy.

None of this is comforting to fliers who have become adept at using their cleverly-accumulated miles and loyalty program status to score frequent free upgrades to first class. At the same time, however, the lower premium class fares could make first class flying more accessible to casual fliers. We will have to wait and see how low Delta has to push its first class fares in order to fill seats.

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