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Going once, twice, sold! Air Canada auctioning off flight upgrades

Michael Shulman
Air Canada chief executive Calin Rovinescu poses for the media beside the new business class pod before his speech to the Council on Foreign Relations, Tuesday, February 17, 2015 in Montreal.(THE CANADIAN PRESS/Ryan Remiorz)

Air Canada is adopting a new method to sell empty seats in its business and premium-economy cabin, which could please bargain-hunting passengers.

According to The Globe and Mail, the airline began a pilot program to auction off upgrades online late last year and plans to fully roll out the option this summer.

Air Canada isn’t the first airline to test out this method. More than 30 others around the world have already implemented this system that gives casual fliers the chance to move up out of the cheap seats for a fraction of the price.

The method is being widely adopted because airlines see it as a way to bring in added cash, rather than giving the seats away for free to frequent flyers.

“They’re all thinking about it because they all have the same problem, which is if they have a class of service or a cabin that is underutilized by initial purchasers, they’re trying to monetize the inventory that’s about to spoil,” said airline analyst Robert Mann, principal of R.W. Mann & Co., told The Globe.

“Anybody who has differentiated cabins or classes of service has this problem and so eventually they will all do it.”

Virgin Airlines was reportedly testing an upgrade auction through an app called SeatBoost on its Las Vegas flights.

Bids start while travelers line up at the gate before boarding and can put down bids of $10, $30, or $50, depending on the seat.

Mark Nasr, managing director of e-commerce, loyalty programs and ancillary revenue at Air Canada, told The Globe that the airline launched the pilot, which prompted customers to participate via email, for the first six to nine months with the intent of slowly ramping it up in terms of eligible routes and customers. But its popularity has forced them to  change plans.

“Because of customer demand, we’ve grown the product faster than we were originally intending to,” he said.

Nasr said the auction is designed, in part, to incentive casual flyers to fork out some extra cash for an upgrade.

“It’s really designed to appeal more to leisure customers who might not have a willingness or an ability to pay the published business-class fare up front, but might be willing to bid a reasonable extra amount of money for a discounted offer,” he said.

The auction program is being run by Plusgrade, a Montreal-based company that also offers its services to Air China, Deutsche Lufthansa AG and Qantas Airways Ltd.