As many of you know, CO announced quietly that it's following Delta and giving only 50% elite miles on lower fares. The CO section is boiling over with comments on that and promises to switch programs, complain or both.

More generally, and applicable to all, I wonder if CO is the domino that decides whether all programs do the same. DL is obviously pressuring CO to align with it (rather than the other way around), and it's hard to see NW bucking it if CO doesn't turn around (NW FFers are worried, too).

If CO, NW and DL do that, will the others be able to hold out for long? Will they want to, given the dwindling competition thanks to the alliances? Will the DOJ do anything?

DL has had the most hostile program to low-fare flyers since 1998 or so and could stay off in a corner by itself, but I'd bet with CO and NW they're counting on the changes rippling through the rest of the industry.

I also wonder how it would play with corporate customers to have programs like CO that are even MORE stacked toward rewarding last-minute bookings of high fares that travel managers are trying to stop.

I think we're seeing some of the results of less competition among the major carriers.

I've wondered this very same thing. There are some excellent posts in the NW forum that attempt to analyze whether NW will follow suit or not. If they do, you have to wonder about the others, especially US Air, which tried a similar, even more restrictive move a year or so ago.

I would love it if Randy would weigh in on this question, as I think it has profound impact on the frequent flyer world as most of us know it. Randy, any plans for some "state of the union" thoughts in light of what has transpired this week?

....only a matter of time. The only mistake AA made when coming up with the program was the lack of acknowledgment for revenue over trips and miles.

This just goes to show you how the typical airline mentality is to take things away from their customers and effectively make the experience of using their product continually less enjoyable. When in doubt, let's just rip something away from our most frequent users.

I understand the underlying rationale: find a way to reward the customer that pays full fare more than the customer that flies on rock-bottom fares. I'm fine with that. Makes good business sense.

I think there are a few good examples of airlines that have tried to reward those fliers without kicking everyone else in the teeth: AA using Q-points to get premium fliers to Plat/EXP faster, providing easier or complimentary upgrades to full-Y customers, etc.

I hope the industry follows some of these examples to reward the high-revenue passenger without making everyone else's travel experience unpleasant.

Well, if a small fraction of the discontented CO & DL flyers decide to start jumping ship to say UA and AA and UA and AA get inundated w/ a bunch of elite comping requests from CO, DL, etc... then maybe the dominos don't start falling. But if the folks posting on the CO board are just blowing some steam and don't actually start voting with their wallets, then maybe the dominos start to fall. I can't see how NW can be in an alliance w/ CO and DL and not implement some of the same FF guidelines as their alliance members.

I didnt blow steam when I moved my traffic from Delta to AA.

Glad I did.

Christian

CO made a bad series of changes to OnePass about 10 years ago (give or take a few months) that they had to go back on when Bethune came in. But there was more competition then, at least among the full-fare carriers.

I think you'll definitely see run-off at CO of lots of low- and medium-yield customers. Unlike DL, CO was something of a haven for those people, so CO has more of them to lose. I also think that most of the loss will be in the BACK of the plane; looking at my own low-yield activity, much was on flights that didn't qualify for EUA anyway (to HNL or international), and a good chunk of the rest either got beaten out (EWR-IAH) or never had the possibility (RJs).

I had gold status, but what about all the low-yield silvers with low success % on upgrades anyway that are looking at getting busted down to no-elite? Not a hard decision to go somewhere that might give you lowest status, some bonus miles and a few perks. Those losses also will come mostly from the back of the plane. Maybe CO thinks they can easily replace those customers, but I doubt it, especially with CO's coach product not comparing well and the airline not being able to shrink itself to success indefinitely.

These changes are geared to appeal to the shrinking pool of travllers who always buy high fares. They alienate those who fly a mix of fares, full fare for business and low fare for personal, for example. With many corporate travel offices trying to save money by booking as many low fares as possible, the mixed fare flyer is a growing segment of the travel market. DL and CO are kicking these people in the teeth, and driving them into the arms of their competitors.

Either one or several network carriers will be bright enough to want to continue to appeal to this important segment of the market, and they will reap the rewards of more business, or all of them will follow DL like lemmings off the cliff, hastening the death spiral of the network carriers.

I have been DL gold for a number of years, with a mix of fares. DL has definitely created an anti-loyalty in me when they trashed Medallion. For years, I regularly paid $50 to $100 extra to fly DL to Europe rather than NW or AA or US. If some other network carrier still has a decent elite program, I will give it the same loyalty. If not, I will fly SW, Iceland Air, EasyJet, RyanAir, other LCC's, and whoever has the cheapest fare. IF loyalty is not a two way street, it does not exist at all.

Elite programs are what have kept me from using the LCC's to this point. If the network carriers are stupid enough to destroy these programs, they deserve having their formerly loyal elites defecting to LCC's is droves.

I know that the average FlyerTalker has no problem digesting the complexity of the CO and DL multiple fare options and coming to a quick decision regarding the wisdom of booking in a particular fare class!

HOWEVER.......

My guess is that your average flyer is doing good to keep up with these three:
- first class
- refundable coach
- nonrefundable coach

The CO and DL changes seem to hinge upon the notion that a significant number of folks are going to willingly pay a voluntary surcharge by booking a particular class of fare. The DL website is now even set up to do just that.

Are there really enough people out there who grasp all this? Really it even makes this FlyerTalker's head spin!

OR...If the assumption is simply to reward the people who HAVE to book these classes of fares, is there really going to be any substantial added revenue to the airline?

I will confess to the possibility of being entirely out of touch but almost EVERYONE I know looks at the bottom line - price - for business and leisure travel and then simply enjoys elite benefits as they come.

I just don't see the positive spin for CO or DL.

I don't think we'll see the day anytime soon where companies of any size will let employees go book their own business travel through websites. Unless it's a REALLY small outfit. But the airlines had to make it easy to filter out the lowest fares just the same.

In a way I used to really feel for the corporate travel people at a large company where I used to work. Theirs was a world of constant whip-cracking and edicts and general non-empowerment, yet they got travel-agent-like pay. The worst of both worlds.

Meanwhile, I was able to do stuff on my own leisure bookings (ENT coupons, FF gaming, etc.) that still made costs on the "one size fits all" policies look high.

But filtering out the lowest fares also means filtering out the people who fly on mixed fares, a large and growing segment of the travel market. Any airline that wants to throw the baby out with the bathwater in this fashion should have their corporate heads examined. The travel world today doesn't fit so neatly into the high fare passenger vs. low fare passenger that their bean counters base their policies on. The network carriers which grasp this will be the ones that are still in business alongside the LCC's in a few years.

I believe, at least in UA's case, it will depend on - based on data they gleaned from their "Great Offer" - how many CO OnePass members switch their travel to UA and how much revenue they bring with them.

If it is mostly low-fare travellers with aggregate revenue measured under $5,000 per year (and especially on a handful of long-haul international trips), I imagine UA will consider doing the same - especially if CO's balance sheet starts to improve (even if CO has to shrink as an airline to match the lower capacity).

If it is indeed the "mix of fare" traveller pulling in better than $20,000 and mostly domestic - or paid First/Business international with lower domestic in the $50K+ range - then UA will not consider it, for they would then drive that income on to AA.

Based on UA's "bribe" of the "Sweet Spot SWUs" to all their 1Ks, I tend to think UA has seen a significant enough decline in revenue (possibly to other carriers via pax-matching "Great Offer" statements) that they felt their attempts to do what DL/CO have done - increase average fare paid per elite - has not worked. Therefore, I think UA would be even less likely to do it, unless AA also moved.

So I tend to think that for at least 2004, UA will "hold the line", offering targeted revenue enhancement schemes - UGS, bonus miles - like they have now to passengers who currently spend what UA wishes everyone would.

I tend to think AA will do the same as UA, and wait and see. They have their MQM program to recognize the higher-fare folks and grant theme elite status with less miles flown.

I would be surprised if UA does not move to the same program (and either eliminates segment-qualification, as AA has done, or keep it, offering another elite qualification avenue that AA does not).

[This message has been edited by SEA_Tigger (edited 09-21-2003).]

I may now be ore confused that before reading this but I thinkI get the jist if you have to arrive in a window of tiem and are on Business well you pay the friegth if you are flexible then ...

I believe this is the key to why these program changes aren't going to achieve the desired results. For personal travel, most folks either choose the best fare for the dates and times they want to travel or choose the dates and times they will travel based on the lowest fare.

Corporations usually use travel departments or travel agencies to book, as has been pointed out. The largest ones get a corporate discount rate even on the least restricted fares (albeit still a higher rate than web fares and the like). The corporate rates and the ability to produce data that shows their travel purchasing muscle are the reasons large companies centralize bookings.

Add to this the fact that since the late 90's, companies have been reducing travel, allowing the purchase of restricted fares (part of the reason for the experiment with no residual value on restricted tickets?), requiring coach rather than business on longer and longer trips, etc. Airlines aren't the only corporations worried about their bottom lines.

My own flying pattern mirrors the changes in my company's policy. I fly international for business flights. Initially, I made several trips a year, all in business class. Gradually, the number of trips reduced. One year, they scheduled them back to back on a RTW ticket. They stopped buying refundable tickets for domestic and Latin America trips. Last year, I was cut back to two destinations, with other team members flying to those destinations to meet me. I am now only allowed to fly business class on flights 8 hours or longer. And this year, I've had no trips at all and it's looking like that will hold through calendar year end.

I've never been a top level flyer anyway as I never got to choose the airline for my business travel. I have gone from low tier status on two airlines to only having it on one. While I've concentrated my personal travel into keeping the one I still have, I may not make it this year. But if I do, this year I will be one of the "riff raff" elites due to the cutbacks my company has made in its travel policies and budget.

I suppose CO and DL wouldn't miss a flyer like me, since if my company wants to book a biz class ticket for one of my trips, they will only give me a choice of airlines if the price is equivalent. In the past, when they have, I've channelled those travel dollars to the airlines to which I've been loyal, just as I have with my personal travel dollars. In the future, I'll go with the most convenient schedule and fewest stops. Since both DL and CO cut benefits at the same time they made it more difficult to earn them when flying low fares, why should I even worry about status any more?

Similarly, UA instituted its UGS (United Global Services) program for high rev, premium customers. Given that, I would think UA has no immediate plans of its own re any restrictions similar to DLs & COs.