NWIFlyer

Not quite ...

300% to 150% on First Class
200% to 100% on Business Class

The abolition of the minimums and halving of First Class suggests to me that this is another attempt by A3 to rid itself of American members using A3*G to access lounges on Domestic itineraries. Even at 24k renewal, collecting 48 very short domestic legs, or alternatively a fairly long F return during a sale, would still have been very straightforward for many people.

Whilst still a massive devaluation overall, the only bright spot is for Europeans travelling to the US in Y, where now all fares now earn again (with the inclusion of 'N') and all earnings exceed the minimum anyway.

If this is the reasoning, it's still a horribly botched execution with little logic applied, particularly for Business Class which is not a domestic UA offering (other than on a handful of routes), so it does nothing to suggest M&B is remotely stable or under control at the moment.

Jma12

I guess it makes sense if A3 wants to get rid of it's Gold member in US. After this year I think A3 will lose half of it's current gold members. I just hope that they don't change their chart for AC.

sokolov

But who does that leave? Large parts of *A-Europe are in LH-group territory, with zero to dismal earning in European Economy. Is Greece, Cyprus and Bulgaria all they want?

KLouis

Why would they want members who hardly ever fly with them (except for those who do take the two (or is it four?) A3 flights and just use the UA lounges overseas? That does, indeed, leave the Europeans and Greeks, and it sort of transforms their frequent flyer program into a... frequent flyer program!

intuition

I guess that goes back to the assumption that frequent flyer programs make money from the credited miles. If the redemptions cost less than the value of the miles, then the frequent flyer program is a moneymaker on its own. In such a case, an airline might use the program as a revenue stream and not as a loyalty program.

Heavy cuts in earnings or other devaluations might indicate that M&B is turning into such a program, where the economy of the miles is more important than the loyalty effects. ("if frequent flyers are loyal to us, then they will fly more with us and thus generate more revenue by flying" vs "let's make the earn/burn ratio into something that makes us money regardless of who is flying what")

In a loyalty focused program, it might even be that the program itself is running a deficit, consider to be a marketing cost, because you strongly believe sales will benefit.

intuition

BTW, "Liabilities from customers loyalty programs" increased by some 330% from 2013 to 2014 according to A3 annual report.

NWIFlyer

Which, indeed, is what BD did with Diamond Club - it was the only part of the airline that actually (so popular rumour would have it, at least) made any money.

There were many, many people that never flew with BD but credited to DC, and that became greater as their route network shrunk ever further due to the proliferation of war zones around many of their destinations. I certainly fly with A3 far more than I ever did with BD, but I was never taking advantage of Diamond Club - the airline simply didn't have enough destinations at the end that were remotely appealing.

sokolov

Air Canada and Air Berlin have sold their FFPs because they needed a lot of money quickly instead of an ongoing revenue stream. LH's program is outsourced to a subsidiary. Millions of Canadians collect "Air Miles" - not affiliaed with any particular carrier.

Despite their name, the core of these programs is not focused on loyalty or frequent flying, it is to make money. Which is why they are switching to revenue based earning instead of miles travelled.

The liability on A3's books that has been mentioned is the value of miles that members have collected but not spent yet. That comes with any reward program.

Actual loyalty programs are very few: No-BS would be an example (SeaPort Airlines).

Swissfly

Actually with the new M&B they have pretty improved, if you look at it from an european flyer. Their Gold status is really easy to attain and to keep (if you live in europe going to Greece once a year is not big deal and actually that land is amazing). All the new perks you get also in hotels, restaurants and so on are really nice. And actually the earnings on A3 metals are really good. And their product is above a lot of others european carriers (I really like to travel A3, nice food, smiling and friendly staff, good legroom and clean airplanes)

I was angry when I saw that the LX earnings were cute down but after a bit of research I found out that it was actually Lufthansa who cut down all the earnings for discounted Y to everyone (until then crediting LX flights to Miles & More was a nonsense).