Qantas has released a new product called Bid Now Upgrades which offers frequent fliers the opportunity to bid for an upgrade using miles.
Travelers in Economy and Premium Economy are eligible to bid for the upgrade, and can also use a combination of points and cash. These upgrades will be processed after the standard miles-only upgrade redemptions.
The auction-style product is currently invitation only. Eligible travelers will receive a notification around seven days prior to the flight date to make an upgrade offer, and then will learn within 24 hours of the flight whether the offer was accepted.
This opaque price-your-own-upgrade trend is fueled in part by a young startup vying to redefine how upgrades and other perks are distributed. Plusgrade promises "a new chapter in merchandising and ancillary revenue" by increasing "its partners' revenue...through targeted upsell opportunities."
This is where travelers are asked to set their own price for the upgrade, which the airline can then choose to accept. If the airline opts not to take the bid, nothing changes on the ticket.
Each airline has its own policy as far as how far out from the day of travel a ticket must be, as well as certain other airline-specific conditions.
Plusgrade is available in some capacity on 25 airlines, including American, Cathay Pacific, Lufthansa, Virgin, and Etihad. The following two videos demonstrates how the system works for both Air New Zealand and Austrian.
https://www.youtube.com/watch?v=WlcvfPCt5zo#t=43
These novel manipulations of upgrades, traditionally reserved for the most frequent of flyers, show how eager airlines are to boost revenue per seat via technological experimentation.
Ancillary revenue is growing alongside these sorts of experiments, which ideally reward both airlines and passengers with a better experience.