Why offer FF programs then? What exactly would be the point, if the FF program provided no meaningful benefits?

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Vasant

If you are buying full fare F on your own dollar, why are you even flying commercial aircraft? At that rate I would be flying on a private aircraft. A G 5 is light years ahead of anything SQ can offer.

Chartering a Gulfstream 5 is also about 10 times the price of full F for transoceanic flights. Anyway, on my own dollar, I usually buy C. On someone else's dollar, I often buy F.

I don't think anyone here suggested that FF programs shouldn't offer meaningful benefits. FF programs outside the US all offer meaningful benefits (else FF wouldn't participate) without giving away the store.

On LH and SQ, for example, I earn miles and status. I can use the miles for free tickets or for upgrades. When operational upgrades are necessary, status helps determine whom is upgraded. Status is also good for lounge access and for getting a seat during IrOps.

Sorry, I don't see a Y to C or a C to F upgrade as giving away the store. Those miles used for the upgrade are not free! They or the certificate used for the upgrade was earned by flying a ton of miles or by shopping/other means, both of which deliver plenty of revenue to the airlines. Airlines need to expand, not shrink access to the premium cabins. If they feel that's not economically feasible, then they need to charge their partners more money for the miles they sell. And they definitely should not reduce/eliminate miles earned on cheap tickets. If they want to reward high spenders, let them increase miles earned on those tickets. I sincerely hope Delta pays through the nose for gutting the SkyPiles program.

Well done Spiff. I couldn't agree more.

Much of the ire about "reduced benefits for some" and "enhanced benefits for others" seems more a result of sour grapes that real analysis.

Filling a plane is not the goal, nor incremental revenue at a greater incremental cost. Sure the empty seat makes nothing and cost little, but we are not talking selling one seat for $230 transcon. The number of tickets sold at deep discounts, can be eliminated by "right sizing" the operations. Maximizing the net income is.

Lots of things go into that analysis. Thousands of people in the industry work on these programs. I am inclined to believe they do it right for THEM, maybe not YOU. It a wonderment that so many people on FT think the airlines do not know how to run an airlines, but because they fly as a sideline to there job, they believe they know it all.

Gleff, I believe that there is a lot of thought and logic in your analysis, but it still fails to prove your conclusion. I beleive that, IF, you consider some other products and benefit programs in other industries you may come to a different conclusion the airlines and their progarms.

We all know programs are constantly being twicked. The industry, at most airports, is very competitive, so noone company get that away from the others unless it is trying to draw a nitch.

ARCO does this with its no service, no credit cards, etc approach to discount gas sales. IF everone did it then there would be no advantage.

Some supermarkets offer double coupons. Some rest. 2-4-1 diners. Think about some of these in comparison

I don't think anyone here has suggested that one shouldn't be able to upgrade using miles. You're right that miles aren't free. It has been suggested that giving out free upgrade certificates is giving away the store. This is particularly true when a situation is created in which FFs know with reasonable certainty that they can pay Y and sit in C or pay C and sit in F. Because US majors have created such a situation, many FFs pay lower fares than they would otherwise.

Virtually all non-US carriers redeem miles for upgrades. Most don't give out any free upgrade certificates and those that do (e.g. LH) give out a tiny fraction of what the US majors give out.

If we had to burn miles for every upgrade, the airlines would be more profitable. Some people would pay the fare for the cabin they want instead of relying on a free certificate. Some people would buy tickets instead of redeeming miles for free tickets in order to use the miles for upgrades.

If the airlines were to start selling upgrade certificates instead of giving them away for free, I'd think about buying airline stocks.

I dunno. I like to think that I am in my patterns a typical business traveler:

I pick my airline and schedule.
I pay on my Corporate Amex.
I pick my fare (with the wrath of accounting the Sword of Damocles dangling over my head).

Sometimes "I" pay $200 DCA-ORD, sometimes "I" pay $1200...it depends on my schedule and urgency. When I travel for fun I'll do an award or find a good deal.

At years end "I" spend a little under $20,000 or so on airline tickets.

Until very recently, 95% of that money went to UA. They are not always the most convenient or cheapest, and if it were not for UAMP, much of that money would surely have gone to other airlines.

So I am neither the "high roller" nor the "mileage runner." Just what I like to think of as a "bread and butter" flyer. And MP means I am cash in UA's pocket.

BTW, the only reason my percentage on UA has dropped is that I can earn status miles flying on US. So once again, it is the marketing program driving my buy choices. So the marketing programs works. And if it aint broke......

I'll be the first to admit that I don't know it all. But given the number of airlines in bankruptcy, the number that are teetering on the brink of bankruptcy, and the almost universal customer view that airline service has declined, yeah, I would say that most airlines don't know how to run an airline.

That's really bizarre - U.S. Air backs away as a result of negative P.R.

But Delta forges on ahead, and what do they get? They get a grassroots campaign that's generated enormous attention (saveskymiles.com).

The thing I'd like to know is this: Had Delta known ahead of time that gutting would lead to saveskymiles - and that saveskymiles would generate such a huge response and the accompanying PR - would they have made the changes?

I bet they never anticipated the sort of response - and the volume of responses - that it got.

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I'm only here trying to shed light on public relations issues brought up on this board. I do work for a subsidiary of the New York Times Co., but I don't represent their final word when answering a question because they prefer to fabricate their own answers from phony sources and package this fiction as news. Please e-mail Customer Care with your questions.

[This message has been edited by jmartin (edited 05-20-2003).]

Just a thought. Perhaps the airlines business is in trouble in general. It is hard to believe that they all (most) are so incompetent!

FF programs were not in existance 20 years ago but some airlines went bellyup anyway. FF programs have been dramatically changed before many times. The industry has been up and down and it does not seem to be the result of ff programs.

Now, when the economy is sick, that impacts the airlines as they loose some high end travel. When corporations cut back employees and trim costs, travel budgets are cut back and that hurts airlines. When fuel prices rise dramatically, that hurts airlines. When the labor union/management balance get our of wack (this time referring to union "winnig") then labor cost rise rapidly and that hurts airlines. When the world economy tanks and asia becomes an economic basket case, that hurts airlines with international business. When we had an almost unprescedented terrorist attack and most people were affraid to travel period, let alone on an airplane, the chosen weapon of the terrorists, that hurt airlines. When the US "starts" and wages two wars in a couple years further blunting any business or personal travel, that hurts airlines. When so many countries are in turmoil, that cuts into travel hurting the airlines. When a potential international epidemic of a untreatable deadly disease occurs and corporations put a moritorum back on travel, then that hurts airlines. When the stockmarket takes a dive, people lose a lot of discresionary travel money, further hurting airlines. This is also reflected in making the financing of airlines with equity too difficult (among other reasons). I am sure there are other factors that I just have not mentioned.

Peoples concern about the economy (job or no job), the loss of saving (to the stock market, including the wealth loss impact in IRA"S and 401-ks, the lower retirement income interest and dividend clippers are receiving has made much of the travel by car, not plane. Fear has set in. The terrorist have won. The added insult, is that all the new security measures make travel by plane, slower that by car for many trips. Then there are all the costs of the security measures.

It is no wonder that a few airlines are in, or near bankrupcy!!!!!!! Maybe we need to stop thinking of our own little travel issues and consider the job being done just to keep these airlines, AND all our points, worth anything at all. Read some of the crying that went on during the prebankrupcy of US and UA. The issues with TWA.

Seem like the airlines in general have been in crisis mode since the recession that plagued the economy in the last part of the Clinton second term and have not had a breather since for many of the reasons listed above.

Honey or vinegar attracts more flies?

ranles, I agree with almost all of your points about why the airlines are in trouble. I would also toss in the unions as part of the problem and add that management must shoulder the blame for not reacting soon enough or deep enough to at least attempt to stem some of the losses. I would also suggest that in some cases (UA), management still doesn't know which end is up.

As for FF programs, you are again correct in stating that the programs do not seem to be the cause of the issues. Still, many airlines (DL and CO; US tried) have seen fit to cut FF benefits. I can't speak for others, but I'm not going to accept that and continue to give them my business. In fact, I would rather that the likes of DL and CO go bankrupt (and me lose 550K miles in the process), than accept less service & benefits and pay more. These carriers seem to believe that I, and others like me, will. In the end, I believe they will be proved wrong.

ranles: You state above: "FF programs were not in existance 20 years ago but some airlines went bellyup anyway."

For the record, more than 20 years ago in 1981 the AA and then the UA FF programs began. I was automatically enrolled by each, being a member of their airport club programs.

Second, I can't recall any prior major airline bankruptcies you allude to. Can you cite them for me?

[This message has been edited by kappa (edited 05-20-2003).]