Low Domestic First Class Fares and Purchased-Upgrade Trends are Killing Elites Softly. Who Really Wins? Loyalty-Free Agents.

It seems to me (and perhaps to you, too) that I’m always dissing elite status. But, in fact, it’s usually only at year-end, when I get countless emails from FCF members questioning their domestic upgrade approach. With another year’s perspective, I can really go into my opinion on the current state of Elite Pursuit Think, provoked by observing too many members’ lost investments and opportunities.

I’m not really in the opinion business. I prefer to provide exclusive perspectives with hard data and let you decide how they fit your specific situation. With that in mind, this piece is not a how-to, but a how-to-see-through—to get a clear perspective on what’s happening to elite status, especially given the drop in First Class domestic fares and other low-cost upgrade opportunity trends.

The High-Level Trend

Elite status used to come with exclusive trimmings: priority check-in and boarding, preferred economy seats—plus a good shot at a class upgrade. The first three changed when airlines started ‘bundling loyalty status perks’ (we’ll get to class upgrades in a moment)—which means selling the perks to non-elites to maximize revenue, even at the expense of diluting the value and concept of elite.

Everyone Became an Elite

As these low hanging elite goodies became available to every Tom, Dick, and Harry carrying the airline’s co-branded credit card or hotel partner elite card, or just willing to pay up for this or that perk a la carte, it drained the blood out of the word “elite.” Now, it’s largely an ego boost with dangled promises, which usually go unfulfilled, especially for mid- and bottom-tier elites.

The Inherent Contradiction in Everyone Being an Elite and Eligible for Free Unlimited Upgrades

For most of the last 20 years, domestic First Class fares have been high enough that premium travel habitues rarely paid the published fare. Instead, they relied on low-cost elite status upgrades to get into First Class, given that the upgrades were very often confirmed. As not many elite fliers were willing to pay for the elite upgrade, the upgrade line used to be relatively short; and the frequency of confirmed elite upgrades, confirmed the wisdom of maintaining elite status.

That all changed back in 2009, when United started giving away, unlimited complimentary upgrades (sounds great, doesn’t it?) to elites, following Delta which had been doing this for a number of years. So everyone got in the for-free, elite-upgrade line—not good when you only have so many seats to go around. The disappointment quotient under the everyone gets free upgrades practice could only skyrocket.

2015 Will Have Fewer Elites, But…

Delta and United have made it significantly harder to earn elite status this year by imposing Minimum Spend Requirements. You could argue that the move is going to free up upgrade seats. But that’s being undercut by two other powerful currents: The nosedive in domestic First Class fares, and the ever-increasing class up-sell offers being offered at point-of-sale online and at check-in.

While those seeking elite status now must strive to meet the spending requirements, the Loyalty-Free Traveler—and bottom- and mid-tier program members if they’re smart— go for the ever-increasing number of Low-Cost Upgrade Opportunities. 20-20 versus tunnel vision. In effect, the airlines are taking down the velvet price rope to the First Class sanctum. What’s the point of striving for elite status if you can afford the seat?

It’s Leap Year

For domestic First Class air travel, 2015 is when Loyalty-Free Agents and savvy travelers will leapfrog “the elite.”

New Lines Drawn for Domestic First Class

There are only as many elite upgrades as there are empty premium seats near departure time. That in itself is not new, but back in the old days, when most domestic First Class fares went for $1,600 to $2,300, the cabin was wide open. Many of these seats are now selling at up to 68% off. I envision three to six times the number of First Class seats being sold, well before elite upgrades begin to clear, on routes where upgrading matters most.

The number of First Class seats available for elite upgrades will continue to dwindle because airlines are getting increasingly more creative about how not to give away upgrades. The best example: Delta and United no longer offer upgrades on their premium transcon routes, one of the few flights on which it still made sense to pursue an elite upgrade since premium fares start at $1,600+.

Often the Blindingly Simple Antidote: Just Pay the Fare Difference

The difference between First Class and economy, given all of the fees that have been imposed in the latter cabin, is at an all-time low when you look at airfares closely. Fare-Difference Upgrades (FDUs) can be astonishingly low when you compare apples to apples.

Paying in cash can also be a much better value than mileage upgrades on many routes. So if you’re a top-tier elite, take note: You are paying dearly for your status when it comes to domestic fares. I—an elite status nobody nowadays— am equal to most elites in the eyes of the airlines—and yet without constant compromise. Short of premium transcon flights, save your miles for international travel, where they still count.

Speaking of Other Paid Upgrade Schemes

They are everywhere now. Class-upgrade auctions have gone viral. Domestic-flight upgrade offers are being pushed at point-of-sale online and check-in, often at very tempting prices, to anyone and everyone. It’s only going to get worse for the last-minute elite-upgrade hopefuls. The airlines have no intention of giving away elite upgrades anymore. (Did I said that already?)

The Free Elite Upgrade concept only worked in a competitive environment—which seems like long ago now—and is disappearing through all the mergers and alliances, while lawmakers look the other way when it comes to competition issues.

Business Travelers Still Pay the Rent

Sure, the airlines are increasingly creative in how this all works. The lowest First Class fares require a 7- to 21-day advance purchase, and they come with other rules and availability restrictions that seek to exclude as many travelers as possible. But if you’re even a bit flexible, you can make this New Fare World work for you.

My Conclusion

Elite upgrades are coming full circle: They worked years ago when they were on a paid basis. Airline marketers messed that up by giving upgrades away to fliers who valued them little, and would only take them on a for-free basis. Now, the airlines are going back to the old idea: Offer them to those who are willing to pay for them.

Only this time around they won’t be going to elites as often as they used to, but instead to those who can read between the Domestic Upgrade Lines.