This new Delta upgrade is even better than first class

Airlines are running out of ways to nickel-and-dime passengers, and instead focusing on posh upgrades for passengers who spend the most - luxury travelers and frequent flyers.

Delta Air Lines will soon offer upgrades beyond first-class seats, to a private jet, as the Atlanta-based carrier merges some of its commercial traffic with its private jet service.

Bloomberg News' Justin Bachman reports:

The new upgrade program, targeted at what Delta calls "high-value customers," will cost $300 to $800, depending on destination. Beginning as soon as this week, passengers who have achieved elite or "medallion" status in Delta's SkyMiles frequent-flyer program will be eligible for the upgrade offers. But officials stress that the initial number of private jet flights will be small and focused mainly at Delta's East Coast hubs.

Currently, Delta Private Jets maintains a fleet of 66 aircraft, and functions as a wholly-owned Delta subsidiary.

"This is truly a groundbreaking new approach from both industry standpoints," James Murray, vice president of operations at Delta Private Jets, told Bloomberg News. "Nobody else can do what we're talking about doing."

Several startups have also entered the private-jet market, offering one-off and subscription-based services, mostly targeted towards business commuters. A startup offering unlimited flights between Boston and New York for only $2,000 per month raised $7.5 million in venture capital last week.

Financially, the goal is "not necessarily to break even, but to at least get some type of income," Cyril Turner, Delta Private Jets' chief executive officer told Bloomberg News in June.

"The hope is that once someone flies private, and they don't have to go through TSA, and they have the experience, then they may determine that they want to fly private more often."