How the Lack of Parity in Domestic First Class Pricing Impacts the Cost of Loyalty

How the Lack of Parity in Domestic First Class Pricing Impacts the Cost of Loyalty

Locked-in loyalists get fleeced.

It’s easy to think that oil prices, competition, and mergers are the major determinants of domestic First Class fares.

They do play a role, but not as great as they do in determining economy class prices. Two less apparent factors largely determine domestic First Class prices: excess inventory and mileage program costs.

In this report we look at the cost of loyalty for the low- and mid-tier elite—if not the super elite, too—and often a friendly reminder that mileage loyalty programs are focused more on luring, not rewarding.

The Cost of Loyalty

Think twice before committing to one airline loyalty program, given that airlines are now selling the perks you’ll work hard to get. You only have eyes for the program, but the program has its eyes fixed on revenue.

The answer for bottom-tier elites is to fly free—free from the delusion of elite status value. Go back to basics: Choose flights based on the lowest price. Carry your favorite airline’s credit card if necessary to get whatever elite ground perks you need.

Delta’s Reserve Credit Card, for example, offers first checked bag free, priority boarding, free Sky Club access, and a free domestic First Class companion ticket. Granted, there is a $450 annual fee, but less costly than trying to earn at least 25,000 miles and spend $3,000 each year to sit —ignored—on the bottom rung of the Delta elite ladder, which gets you roughly the same perks as the credit card, and you’re allowed to fly other airlines.

Example United Upgrade Cost Comparison: Chicago - New York

Round-TripFirst ClassPremium Economy Lite1Economy Class
Published Fare$390$156$156
Flight Time4.5 hrsFeels like 6.5 hrsFeels like 7.5 hrs
PE Lite Upgrade$101
One Checked Bag2$0$50$50
Premier Access3$0$73$73
Avg. Meal / Drink$0$30$30
Miles Earned41,950780780
Miles Earned Value5($43)($17)($17)
Total Cost$347$393$292
Cost DifferenceFirst Class $46 less than PE Lite
First Class only $55 more than Coach
Upgrade Cost to First Class:
From EconomyAbout $12 more per flight hour
*Fares are based on Oct. 6 to Oct. 13 travel. 1United calls its PE, Economy Plus. 2First Class, two free bags. 3Priority boarding, check-in, security. 4Now based on base fare (miles shown based on NO elite status bonus); Premier Silver earns 7x, Gold 8x, Platinum 9x, and 1K is 11x. 5Value of miles = average cost of miles when purchased on sale (average about 2.2¢).

American offers a similar card, the Executive A Advantage card, for $450; and United has the Mileage-Plus Plus card for $450. (Did these guys discuss the price?)

But what, in fact, will you give up if you give up bottom-tier status? Here it is:

  • 24-hour upgrade window for First Class and Premium Economy Lite (at bottom-tier level too often, a lost cause).
  • Instant upgrade on full fares, which is usually a bad deal because discounted First Class fares are now often much lower.

The good news: You can buy these services as you need them.

Save 35%+ on Domestic First Class When You Are a Loyalty Free Agent

Now let’s look at what you’ll gain by not being chained to one carrier’s loyalty program.

You Can Shop Around for Premium Fares: This is where a good travel agent can be helpful. Here are two examples of non-stops that can cost as much as 40% more if you’re married to a loyalty program.

Miami-New York is $430 round-trip on Delta, whereas the same ticket on American is $654 and on United is $699. Cost of loyalty: as much as 39%.

Chicago-New York is $390 round-trip on United, whereas the same ticket on Delta is $464 and on American $590. Cost of loyalty: as much as 34% more.

Pay More for First Class and Forget About It— But Do You Really?

On some routes First Class now costs less than economy, if you factor in all the “paid upgrade options” airlines now offer, such as Premium Economy (PE) Lite, which gives you an economy seat with up to six extra inches of legroom. But those add-ons can make PE Lite more expensive than First Class. So why chance an elite upgrade when a low First Class fare is a sure bet?

You should forget about elite upgrades. They’re a lose-lose strategy when airlines are selling domestic First Class so cheaply so often— especially for mid- and bottom-tier elites, who are last on the priority list.