SQ to launch bidding system for paid upgrades?

It is a fact, universally acknowledged, that SQ does not give free upgrades unless it absolutely, absolutely has to. My father, a PPS Solitaire member of 20+ years, can count on one hand the number of free upgrades he has received in that period.

The unspoken reason for refusing to upgrade is that SQ wants to preserve the “image” of its premium cabins. After all, the last thing you’d want is all the riff raff lowering the real estate value. How dare they! (SQ adopts a rather extreme stance towards this. I’ve been told that station managers sometimes prefer to bump economy class passengers from a flight and give free accommodation instead of upgrading. SQ also has a cabin protection policy that means it doesn’t release its long-haul premium cabin seats to partner airlines for awards)

On the other hand, SQ, like all airlines, is under pressure to monetize every seat it can. Numerous other airlines have rolled out upgrade bidding systems to allow them to monetize premium cabin seats that would otherwise have gone empty (you can read about my experience with Etihad here)

Therefore it was interesting to read this on FT today.

As per Beolab on FT-

Hello all,

I just got his email from Singapore Airlines introducing the possibility to bid for an upgrade from Economy to Premium Economy. It appears to start on an “invitation only” basis for now.

Dear Mr xxx

We would like to introduce mySQupgrade, a new invitation-only bidding system to allow customers to make an online bid for a one-cabin upgrade.

mySQupgrade will initially allow invited customers booked to travel in Economy Class, the opportunity to make a bid for a seat in Premium Economy Class. This functionality will be gradually introduced across the network, and provide customers another option to upgrade their class of travel, and enjoy greater levels of comfort when they fly.

Here is how it works:

For more details, please click here:

https://www.singaporeair.com/en_UK/h…ySQupgrade-faq

For our KrisFlyer members, we would like to assure you that your membership continues to be important to us. Redemption booking confirmations will receive priority over upgrade bids through mySQupgrade.

We thank you for your continued support, and hope you will find our upgrade options useful. We look forward to welcoming you on board soon.

Yours sincerely,

Shirlene Teo
Manager Loyalty Marketing
Singapore Airlines Ltd

If you click on the FAQ you get directed to a page on the SQ website which seems to confirm the legitimacy of this.

This seems to be part of the HK site, leading me to think that they are testing this in a smaller market first before rolling it out to Singapore and elsewhere.

There are many questions going through my head now

Will SQ eventually expand this to allow paid upgrades from economy/premium economy to business?

I am convinced the answer to this is “no”. SQ is loathe to do anything to devalue or cannibalize demand for its business class product. That is why it only allows full fare economy class passengers to use their miles to upgrade to business (and very soon even that option won’t be available if the flight has premium economy class), and why it has a one cabin policy upgrade only (i.e. so there’s even less of a chance that it will allow economy passengers to pay and upgrade to business).

I don’t think SQ’s loads in business class are struggling. On the contrary, my limited (and completely anecdotal) experiences flying in its premium economy cabin lead me to believe it could be facing a lack of demand here. From that point of view this makes more sense- giving passengers the option to pay and upgrade to premium economy allows them to monetize those seats while preserving the sanctity of the business/first class cabin.

What does this mean for award seat availability?

The message on FT seems to address this concern directly, saying that “For our KrisFlyer members, we would like to assure you that your membership continues to be important to us. Redemption booking confirmations will receive priority over upgrade bids through mySQupgrade.”

I maintain that it does not make sense to redeem miles for premium economy, given the small incremental amount you need to shell out to redeem a business class seat. And because I cannot see SQ expanding this paid upgrade system to cover PY->Business upgrades, I don’t think you need to be unduly worried.  I would be more worried about how business saver awards are increasingly difficult to find on certain routes…

How much will the upgrades cost?

No one knows for now. I imagine SQ will be using a similar bidding system to Etihad that specifies a floor price with a slider that psychologically encourages the user to bid much more than that in order to have a better chance of securing an upgrade.

Another interesting thing to muse over is whether the upgrade system will look at total revenue or incremental revenue. I can see good cases for using either system

• One might argue that you should reward passengers for total revenue generated. So if Passenger A buys a $1,000 economy class ticket and bid $300 for an upgrade, he should trump Passenger B who buys a $600 economy class ticket and bids $500

• But others would argue that you should only reward incremental revenue because the base fare is a sunk cost for the customer. So Passenger B would trump Passenger A in the example above. Of course you could then say that the unintended consequences of such as system would be to train people to buy the lowest economy fares possible and try for the upgrade, and since upgrade space is limited the airline would lose out on overall revenue…

The best option would be to stay mum about how the upgrade system works so people keep second guessing themselves. (omg I need to buy a high fare economy class ticket AND bid a high amount for my upgrade! etc etc)

I’d be very eager to see how this plays out. If the price is right I wouldn’t mind upgrading a long haul economy class flight, but I think it’s safe to say we will not be seeing paid upgrades to business/first anytime soon.