The current US Airways sale, I must admit, is pretty d*mn good. So good, in fact, I stopped bashing them for 10 minutes while I bought my first ticket from them in years. However, tell me how they are making money off of me:

Bought 3 day advance fare TPA-PHL for $240 RT with no Saturday stay. Yep, $120/each way for a walk-up fare that was about $800 each way before Southwest moved in.

In return, I get
- Transportation to and from Philadelphia from Tampa
- 992 miles there
- 992 miles back
- 3,000 bonus miles for first booking on usairways.com
- 1,000 bonus miles for first online checkin there
- 100 miles for online checkin back

That's 6,084 miles for $240. I then head over to milepoint.com [corrected] and convert 6,000 miles for 15 months of the Wall Street Journal, which is valued at $250 at their online subscription price.

Now I'm pretty sure that the WSJ does not discount their paper -that- aggressively to milepoint.com. Even with a 50% discount on the subscription, I'm not sure how they make money on the flight with their cost structure.

I'm intrigued - this seems extremely generous all around.

The current US Airways sale, I must admit, is pretty d*mn good. So good, in fact, I stopped bashing them for 10 minutes while I bought my first ticket from them in years. However, tell me how they are making money off of me:

Bought 3 day advance fare TPA-PHL for $240 RT with no Saturday stay. Yep, $120/each way for a walk-up fare that was about $800 each way before Southwest moved in.

In return, I get
- Transportation to and from Philadelphia from Tampa
- 992 miles there
- 992 miles back
- 3,000 bonus miles for first booking on usairways.com
- 1,000 bonus miles for first online checkin there
- 100 miles for online checkin back

That's 6,084 miles for $240. I then head over to points.com and convert 6,000 miles for 15 months of the Wall Street Journal, which is valued at $250 at their online subscription price.

Now I'm pretty sure that the WSJ does not discount their paper -that- aggressively to milepoint.com. Even with a 50% discount on the subscription, I'm not sure how they make money on the flight with their cost structure.

I'm intrigued - this seems extremely generous all around.


Quite simple. They don't make money on this -- they lose

It's just another salvo in the war with LUV. The problem is that LUV makes money on these fares, US doesn't. LUV can live with this price model, but US can't. :(

The flight was going anyway and you just provided $240 they did not have prior to you booking the flight. Any wy you look at it, it is additional revenue.

duplicate post

You bought a ticket that you would not have otherwise bought and filled a seat that would have otherwise been empty. Take away the $15 incremental cost to carry you and they made about $225 more than they would have if they hadn't sold the ticket.

The problem isn't individual tickets. The problem is the mix of tickets and the overhead costs.

I was referring to "making money" as in profits.

Anybody can sell their inventory at less than what it costs them and they will make revenues all day long until they close the doors.

That wasn't a just a few seats being sold at that price. That IS the walk-up fare. I'll be sitting on a plane with others who paid that fare, or less if they bought it further in advance. Knowing US Airways' operating costs, there is no way that they are making money at 1.2 cents/seat mile, even BEFORE the prize that they are giving me afterwards (15 months of the WSJ), which millions of people pay a retail value of $250.

Assuming that they paid 50% of the online subscription price (which I doubt is that low) in cash to milepoint, they are flying me to PHL and back for 0.6 cents/mile for a full fare ticket. Unbelievable.

On a side note, I've been encouraging my colleagues to cash out their orphan US miles by laundering them through milepoint.com for up to 3 years of free WSJ subscriptions. I'd love to see the bill that US Airways will be receiving for all of this.

In fact, if you are really into point arbitrage, you can currently launder eBay points --> points.com --> US Airways --> milepoint.com and buy a year of the Wall Street Journal for $64.

The problem isn't individual tickets. The problem is the mix of tickets and the overhead costs.

The problem for them is that they usually expect their walk-up fares to businessmen like me at the last minute to subsidize the rest of the seats. Now they are offering cut-rate walk-up fares + effectively a year or more of the Wall Street Journal with each ticket.

How much does it cost US Airways for that subscription?

I'll bet you a beer that it doesn't cost them anywhere near what you seem to think it costs. You might even get me to bet you that they get paid for it.

Knowing US Airways' operating costs, there is no way that they are making money at 1.2 cents/seat mile,

Where on Earth do you get 1.2 cents/mile from?

They're flying you 1984 miles for 24,000 cents. That's 12 cents/mile.

... even BEFORE the prize that they are giving me afterwards (15 months of the WSJ), which millions of people pay a retail value of $250... Assuming that they paid 50% of the online subscription price (which I doubt is that low) in cash to milepoint...

What do Publisher's Clearing House and the ilk offer the WSJ for?

... they are flying me to PHL and back for 0.6 cents/mile for a full fare ticket. Unbelievable.

On a side note, I've been encouraging my colleagues to cash out their orphan US miles by laundering them through milepoint.com for up to 3 years of free WSJ subscriptions. I'd love to see the bill that US Airways will be receiving for all of this.

In fact, if you are really into point arbitrage, you can currently launder eBay points --> points.com --> US Airways --> milepoint.com and buy a year of the Wall Street Journal for $64.

Given the apparent lack of quality in the WSJ's reporting on * tickets being honored I think your friends are getting ripped off.

Tino,

You forgot one thing. When you use the Kiosk for the first time you will get 1,000 miles and then 50 miles there after. I always use it to check in my bags.

T

I'll bet you a beer that it doesn't cost them anywhere near what you seem to think it costs. You might even get me to bet you that they get paid for it.

Agreed. The traditional rule-of-thumb at newspapers is that the newstand price should cover the cost of paper and ink only. The rest of the revenue, which is lion's share by a very large amount, comes from advertising -- and that is determined by the newspaper's paid circulation, as verified by the Audit Bureau of Circulations.

As long as the newspaper can get paid 1 cent per copy by the subscriber (or in this case, milespoint.com) its verified circulation goes up, it can charge more for advertising, and it makes a bigger profit. Publishers are always seeking ways to increase their paid circulation and sweetheart deals are very common.

WSJ is hoping for paid renewals after the "free" subscription. However, to the print media the circulation number is infinitely more valueable than the individual subscription price. As an example, I get a 1 yr. free subscription to Newsweek for being a contributor to my local NPR station. I doubt Newsweek is sending them an invoice for this.

Also, as Tom noted, you paid 12 cents a mile .. covers their <still high> CASM in this case.

WSJ are the ones distributing huge number of free copies at all top business schools. Imagine also the copies on the planes - zillions of circulation paid for by advertizers and "paid subscribers"...
So not that bad US Air. You would fly them again, won't you, if they fly?

$240 includes taxes and fees. US' real revenue is closer to $200. Which puts it closer to just breaking even on the seat.

Are costs to the frequent flyer program such as this example of getting a reward via milepoint included in US' CASM?

Okay, my bad on the initial calculation with respect to $/seat mile.

What do Publisher's Clearing House and the ilk offer the WSJ for?

$199/year. Find me a significantly better deal if you can for a one year renewal (and no, driving to the local Marriott and stealing a copy from the concierge is not an option). :D

I just checked the prices at several sources. Milepoint.com, using DM miles, is offering up to 3 years of WSJ -renewal-, which will run you $597, even at discount shops like magazines.com, usubscribe.com and the ilk.

This is not an introductory offer. If they were offering first-time subscribers a 3 month deal, that's one thing. Their circulation does not increase at all with a renewal. Plus, the WSJ does not discount like Newsweek. You can find that rag for >90% off the cover price or better everywhere. Plus, I am not receiving a wholesale copy purchased at a bulk discount. It's door-to-door delivery for three years.

If the price of the WSJ to vendors was really "a penny", like someone quoted, why are all of the WSJ resellers charging 80 cents/issue? Why wouldn't there be a reseller willing to cut their price and pick up more subscribers?

I'm betting that US Airways is paying out at least $100 for each year of WSJ I'm subscribing to, and if you allocate that to my ticket, along with overhead allocations, they are losing money.

So not that bad US Air. You would fly them again, won't you, if they fly?

If they are still around in 2008 after my WSJ subscription is again up for renewal, I'll give them a shot. :p

$199/year. Find me a significantly better deal if you can for a one year renewal (and no, driving to the local Marriott and stealing a copy from the concierge is not an option). :D

In the great white north, a WSJ subscription costs C$208/year, about US$160. That's after additional transportation costs, etc. Only point is to show that there is room for discounting.

Milepoint.com, using DM miles, is offering up to 3 years of WSJ -renewal-, which will run you $597, even at discount shops like magazines.com, usubscribe.com and the ilk.

I am having trouble finding the 3 year offer. I called MilePoint and they said the most I could do was three of their roughly 3 month offers - and I might get 3 papers a day for the three months rather than 9 months.

How do you get 3 years of the WSJ for DM points? (I have like 200,000 even after burning a lot the last few weeks, and need to renew the WSJ at this point anyway...) :)

Thanks....

Are costs to the frequent flyer program such as this example of getting a reward via milepoint included in US' CASM?

Yes.

I'm betting that US Airways is paying out at least $100 for each year of WSJ I'm subscribing to, and if you allocate that to my ticket, along with overhead allocations, they are losing money.

I doubt that anyone who really knows will tell us but I'll bet that you're very, very wrong about that.

Beyond the question of whether or not the Journal itself discounts more deeply than the examples you cite you're forgetting that there is a middleman here. My impression is that Mile&Points is burning through investment money trying to build market share -- they may very well be eating the cost of the Journal while paying US for the miles. They wouldn't be the first company to try a model like that :rolleyes:

I am having trouble finding the 3 year offer. I called MilePoint and they said the most I could do was three of their roughly 3 month offers - and I might get 3 papers a day for the three months rather than 9 months.

How do you get 3 years of the WSJ for DM points? (I have like 200,000 even after burning a lot the last few weeks, and need to renew the WSJ at this point anyway...) :)

Thanks....

I also called them and a rep told me that you could extend for up to 3 years.

I am having trouble finding the 3 year offer. I called MilePoint and they said the most I could do was three of their roughly 3 month offers - and I might get 3 papers a day for the three months rather than 9 months.

How do you get 3 years of the WSJ for DM points? (I have like 200,000 even after burning a lot the last few weeks, and need to renew the WSJ at this point anyway...) :)

Thanks.... Same problem here. The web site limits the subscription to 3 months. Two reps and a supervisor at milepoint said that's the limit. Is there something different on the web site that I'm missing?

I did it differently - I put in an order for three months, waited a week to see if my account was updated on wsj.com, and then re-ordered. I've been doing this for the past couple of months, and my expiration date on wsj.com keeps moving forward 3 months at a pop.

On one occasion, I ordered and logged out, immediately logged back in and reordered. Both orders went through. I've been spacing them out to see if they stop any of them, and they have not yet - my expiration date just keeps moving forward three months at a time.

In return, I get
- Transportation to and from Philadelphia from Tampa
- 992 miles there
- 992 miles back
- 3,000 bonus miles for first booking on usairways.com
- 1,000 bonus miles for first online checkin there
- 100 miles for online checkin back

I'm not sure how they make money on the flight with their cost structure.


2/3's of the miles you earned were one-time deals (first time booking and on-line check-in). Companies ofter offer free/discounted samples and trials to get you to experience their product with the hope of luring some of them to be new repeat customers. If they got you and a bunch of other folks to fly US when you otherwise wouldn't have ("I bought my first ticket from them in years"), even on a break-even basis, they accomplished their goal.

I'm sure the Marketing department would be very happy reading this thread.

The whole exercise is a moot point now.

My flight was cancelled due to Hurricane Jeanne, and I was only able to get a flight out on Southwest. USAir coughed up the refund.

Oh well.