How to Use it it Win an Upgrade
It’s easy to think that oil prices, mergers, and Chapter 11 filings are the major determinants of domestic First Class fares.
They do play a role, but not as great a one as they do in shaping economy class prices. No, there are five others, less visible factors that largely determine domestic First Class prices:
They do play a role, but not as great a one as they do in shaping economy class prices. No, there are five others, less visible factors that largely determine domestic First Class prices: excess inventory liquidation, market-share grabs, loyalty program retention, hub-city pricing power, and keeping up with the competition.
Here’s an explanation of each and how you can use them to get domestic First Class for much less.
Excess Inventory Liquidation
Often First Class supply exceeds demand, particularly on routes with frequent flights, which are there mainly to accommodate economy class travelers. Rather than fly with empty First Class seats or give them away to elite status members, airlines significantly discount domestic First Class.
When one carrier has too many First Class seats on a route: Three major airlines, American, Delta, and United, fly New York-Atlanta. On June 11 Delta operates 34 non-stops from New York (JFK, LaGuardia, Newark), while United offers only nine, and American seven. That’s reflected in First Class fares: Delta charges $576 (plus taxes) round-trip, American $1,112 (93% more), and United $1,358 (136% more).
When every carrier on a route has too many First Class seats: American, Delta, and United fly non-stop from Atlanta to Chicago. On July1 the three will offer 26 flights on this route, with the First Class fare about $600. Compare that to Chicago-Albuquerque, a route with only four non-stop flights on July 1 and a First Class fare of about $1,800.
Market-share Grabs
It is not uncommon for an airline to charge top dollar on routes that originate in a hub city when it doesn’t have significant competition at the other end. That’s exactly what US Airways does on flights to Newark from its Phoenix hub. On the five non-stops it offers, First Class fares are about $1,800 round-trip. It’s a different story on Phoenix-JFK (three flights daily), where US Airways is flying to a Delta hub. On this route, US Airways’ First Class fare is about $800, $250 less than Delta’s, a clear effort to steal business.
Post-merger Loyalty Program Member Retention
Two post-merger airlines—Delta/Northwest from Atlanta, and United/Continental from Chicago—are fighting over passengers on the Atlanta-Chicago route. In 2011, the average First Class ticket price was about $850—not bad, even back then— but now fares start at about $600 round-trip, a drop of 30%.
Expanding a Hub
United is currently trying to expand its Denver hub. That’s why it has slashed fares there since last year. In May 2011, United charged $1,700 for a First Class Denver-Chicago ticket; now the price is $720. Houston-Denver is $700, down from $1,250; Denver-Newark $900, down from $1,950. (In March 2013, United starts flying Denver-Tokyo; look for come-hither Business Class prices on that route during the first few months.)
Keeping Up With Competitors
Delta has singlehandedly brought down First Class ticket prices on New York-Chicago. In April 2011, American and United charged $1,246 round-trip for First Class, whereas Delta charged $580, almost 115% ($666) less. Today the difference in fares among the three carriers is only about $150 (see chart below).
Comparing First Class New York-Chicago Fares
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Putting It All Together
Here are three ways of getting the best domestic First Class fare that you can.
“Break the Fare”
That’s airline speak for booking two separate tickets for a trip. The strategy works best when an itinerary involves a connection, but it can be used to create a low-cost, one-stop routing, too.
A good example is US Airways’ New York-Phoenix fare of $700. I often travel to New York from Monterey, which means I have to make a connection in San Francisco, Los Angeles, or Phoenix. The First Class fare from Monterey to New York is usually about $2,400—and the legs from and back to Monterey are often on flights that only have economy class. So why book one First Class ticket?
IInstead: If no other upgrade strategy is working for me, I can buy US Airways’ $700 Phoenix-New York First Class ticket and book a separate Monterey-Phoenix/Phoenix-Monterey economy ticket (about $300). That saves me about $1,400.
This strategy can be applied from other second-tier airports. For example, Hartford-Phoenix is about $2,000 on US Airways in First Class, but if you buy an economy ticket to New York ($200 to $300) and a separate New York-Phoenix ticket ($700), you save about $1,000. See the chart below for more routes on which “breaking the fare” yields big savings.
Don’t Bother with Miles or Elite Status Upgrades
When First Class fares are low, it’s smarter to pay cash and use the trip to earn award miles for future travel.
Entry or mid-level Elites: Forget elite upgrades, too. They’re a lose-lose strategy on most routes when fares are this low. If you’re flying Delta, United, or US Airways, all of which offer free upgrades to elites, you’ll have a lot of competition. Why play upgrade roulette when low fares are a sure bet?
Take Your Mid-year Mileage Run in First Class
With low First Class fares, it might be smart to do a mid-year mileage run. United elites should consider adding on the Premier Accelerator when offered to get even more EQMs.
Samples of Low-Cost Domestic Routes
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