MilesBuzz! - Interesting little letter in the USA Today paper

Here’s the text and link,

Get rid of frequent fliers

Some years ago, I suggested to American Airlines that the way for airlines to get out of financial trouble was to eliminate their frequent-flier programs.

I received no response from the company, but I still believe that this is an idea that will save the airlines millions of dollars a year.

My suggestion is to get rid of all frequent-flier programs because:
* No one should fly for free, and every seat should be revenue-producing.

* There no longer is a large selection of U.S. airlines for people to choose from.

Frequent-flier programs were once necessary to create brand loyalty. There are fewer airlines now, so why give away free seats?
There are approximately 15,000 passenger flights in the United States each day. If each flight had just three passengers flying for free, that would come to 45,000 free seats given away daily. If they were all paying passengers, that would represent a lot of money for the airlines. I believe carriers could become profitable if every seat were paid for. Consequently, fares could remain low.

I propose that airlines discontinue their frequent-flier programs on Dec. 31, but allow those folks who already have free air miles to use them during a three-year period.


http://www.usatoday.com/usatonline/20020821/4378086s.htm

How would your flying habits change if there were no FF programs?

Clearly this is written by someone who doesn't understand the airline industry and both the costs and benefits of frequent flier programs.

In my opinion, it's not worth responding to. It's like trying to explain to someone on a late flight why the airline won't hold their connecting flight for a half hour for them.

Who is this moron? http://www.flyertalk.com/forum/smile.gif

Even without "frequent flyer miles" there will be "free" seats. Up until about 4 years ago Marriott did not put miles in your airline account, instead having you book the seats with a specific code. (Sorry I don't remember the exact way it worked as I did it only once before they changed the system) They switched so that people could then use their other miles to combine with the Marriott reward miles for further destinations or for tickets other than coach. Interestingly enough there was much more availability of those (code-specific)seats as I had already been told that there was no availability on the same flights to use FF miles. I am sure that there are numerous other "free" seats that just do not get the press that the frequent flyer programs are getting from the media.

It's probably some twice a year flier who finally accumulated 25,000 miles for a free ticket and then his dates didn't have any availability. In any case, I completely disagree with his rant.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by inloworbit:
Here’s the text and link,

Get rid of frequent fliers

Some years ago, I suggested to American Airlines that the way for airlines to get out of financial trouble was to eliminate their frequent-flier programs.

I received no response from the company, but I still believe that this is an idea that will save the airlines millions of dollars a year.

http://www.usatoday.com/usatonline/20020821/4378086s.htm

How would your flying habits change if there were no FF programs?</font>

It ain't going to happen. Someone will just have to explain to him about all the tie-ins airlines have with companies that offer miles. An example is the money AA earns from Citibank AA card holders. And I bet there are plenty of AAdvantage holders who end up never using their miles, let them expire because they think they'll never earn enough for a trip, forget about them, or even die. Such revenue earned is money in the bank for American (or other airlines) because they never had to provide a service. So probably FF programs will be around for as long as we have fuel left to fly airplanes.

I guarantee you this is some person who is all pissed off that he has to get a middle seat in the back of the plane while others get to sit up front iwth the extra leg room, middle seat blocked, etc. They show up 30 minutes before the flight and have to wait in line 25 of them, seething that others skip the line and get served immediatly. We all know them, they are the first person to jump into the line to board, only to be told it's for Medialian, Mileage Plus, whatever members right now sir, please step aside.

Loyalty programs, in my mind work. I fly the airlines I fly because I want miles on them, and all the other benefits. I'll make a connection if necessary to stay with my preferred airline, and I'll pay more to do so.

And he misses the point that award seats, including upgrades, are (thanks to the magic of yield managment) nearly all seats that would otherwise be empty. So does the airline lose revenue? Only the cost of meals, plus the revenue represented by passengers who would have flown on that same airline anyhow if they had to pay for the tickets. I don't have data on that, but I suspect most users of award tickets wouldn't. I'm pretty sure that nearly all users of award upgrades, myself included, would stay in the class they paid for if upgrading cost any significant amount of real money.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by cordelli:
Loyalty programs, in my mind work. I fly the airlines I fly because I want miles on them, and all the other benefits. I'll make a connection if necessary to stay with my preferred airline, and I'll pay more to do so.</font>

http://www.flyertalk.com/forum/starsmilie.gif Totally agree. If the fare is reasonable, no reason to switch to another airlines without FF program. On the other side of the token, with all the sale fare, there're no reason why I should fly an airline without FF program.

Whoever wrote the USA Today piece doesn't understand yield management. In fact, he doesn't understand the airline industry at all.

This is the only way I can think of to respond to the initial letter.

Actually frequent flyer programs earn money for the airlines. When they sell miles to companites to award them, it is like selling partial tickets that the consumer may never use. And if they do use them, they have capacity controls to assure that each flight earns revenue. It is also these loyalty programs that keep frequent travellers (especially business trvelleres who do not buy their own tickets) coming back to the same airline.

Many airlines are losing money, but it is not the fault of loyalty programs.

I think this guy's onto something. If all seats are revenue seats and the airlines charge $1 million per seat, they wouldn't have any problems. But then I'd probably be getting around by grabbing a ride from one of those pigs that would be flying, so maybe it wouldn't work out after all.

I laughed at first, but then realized that someone needed an economics and marketing class. Airlines, like any other business, recognize that it's a lot cheaper to retain a client than it is to create a client. In any business, the best clients are recognized and rewarded (some are even given discounts and freebies, imagine that!). The miles are just like currency, it can only be used under certain conditions (hear of blackouts and limited availability?). It is pervasive, just like the almighty dollar, euro, etc., and it's not going away anytime soon; airlines make an incredible amount of money from selling miles to hotel chains, car rental chains, magazine publishers, telecon services, etc. From the perspective of an airline industry stockholder (and I need the industry to survive this downturn [near meltdown]), the best way that I know how to stimulate business is to keep my best clients coming back again and again and again. If they're there for you in the bad times, then they'll be there for you in the good times. I can lose the one-timer to a competitor (or to the train) and survive; I can't afford to lose an upper tier elite. As long as one airline still offers a spiff, the others will need to compete. Kill the program, and the airline won't survive Chapter 11. Just try tinkering with the contract and see how many dedicated flyers take flight, others just stand pat and the class action suits follow (great publicity); it's happened in the past. I'd suggest that someone rethink the bases for the proposal. Chicago's not that far from Peoria, and it won't sell there.

For one thing, no airline would want to take this step alone. A majority of the airline's customers would jump ship and flock to the other airlines that still had FF programs. On the other hand, if all airlines agreed to stop their programs simultaneously, it would be illegal collusion and the excrement would really hit the fan!

But worst of all, what would all us mileage addicts due without the programs and FT to consume all our time? I guess I could take up needle-point. http://www.flyertalk.com/forum/smile.gif

[This message has been edited by Neal (edited 08-21-2002).]

he letter writer is clearly quite ignorant. His biggest error is believing that the airlines are giving up revenue for the seats that are "given away." Yeah, sure.

I can't understand why USA Today decided to print such drivel. Surely they get enough letters every day to choose better ones to print.

Bruce

Frequent Fliers are REGULAR CUSTOMERS that come back repeatedly and buy the same product (airline tickets) from the same airlines.

This is a loyalty program that recognizes customer loyalty.

The people who are not regular customers and receive the basic services (without the upgrades, fast checkins, choice seating, etc.) are jealous and resent the extras they see but don't get.

Some things will never change.....

Originally posted by BravoZulu:

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">As long as one airline still offers a spiff, the others will need to compete.</font>

BZ, I'm afraid my (admittedly inadequate) dictionary doesn't contain the alternative definition of the word you seem to have in mind. Sounds like a synonym for "freebie." Could you enlighten me?

I am, however, familiar with Spiffy™ collar stays, from four years of regular use with Working Uniform Blue Alpha neckties, while maximizing my "stud factor." NATO Allied Tactical Publication 1 (ATP-1) was confidential in 1982 but I beleive has been declassified, since the Soviets all had copies anyway.

Regardless, well done. http://www.flyertalk.com/forum/wink.gif In fact, I like that pair of phonetic initials so much that I gave them to my second son -- with real names attached, of course!

Hoorah!

I also think we should also cancel out supermarket "club cards", coffee shops giving out a free cup of coffee when you have bought ten and, maybe, having the paperboy say good morning to you.

If I may be so bold for a moment, I would compare ending frequent flyer programs in about the same category as the ending of life on this planet as we know it. One as horrific as the other, IMHO.

Not in this lifetime! http://www.flyertalk.com/forum/wink.gif

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Sometimes right is just as wrong as wrong is!

Joe Brancatelli suggested something similar back in May:

http://www.zyworld.com/brancatelli/branc051602.htm

Well, I sent the following letter to the editor:

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">The letters published in today's USA Today (August 22, 2002, Page 9A, http://www.usatoday.com/usatonline/20020821/4378086s.htm) show that the leisure traveller clearly does not understand the world of corporate travel.

J. Moats describes travel as a perk including "first-class flights, three hours of business overseas and three days of partying." This perk sounds wonderful, but it's a harsh contrast from the real world of a corporate traveller -- three hours of travelling, ten hard hours of work, then a poor night's sleep on the red-eye return flight. Delays, missed connections, over-enthusiastic security -- this is the corporate travel of today. If corporate travel were ever glamorous, those days are long gone.

Similarly, Mr. Adler's assertion that airlines are losing fortunes with their frequent flying programs demonstrates a complete lack of understanding of the economics of the airline industry. Most loyalty programs are profitable and serve a real and valuable purpose differentiating a commodity product. In the absence of a loyalty program, travellers flock to the lowest cost airline, forcing fare wars and ultimately driving airline profits down across the board.

These 'free flights' are strictly capacity controlled, and in these days of yield management, should never take up a seat which would be occupied with a revenue traveller. Moreover, these seats are going to those passengers with high mileage balances -- those customers who have contributed significant revenue and loyalty to their preferred airline over time. Retaining these loyal customers is far cheaper for the airlines than winning new customers with price wars or new services.

Holiday travellers will never be profitable enough to drag airlines out of bankruptcy. The only real route to a successful recovery in the industry is attracting more business travellers back into the skies. Keeping these high revenue passengers loyal means that individual service, upgrades, and frequent flyer programs will be with us for a very long time.
</font>

We'll see if they bite.

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Please visit The Mileage Runner's Toolkit (http://www.mileagerunner.com) and Unofficial Guide to United Airlines (http://www.mileagerunner.com/article_showsub.asp?cat_id=17&cat=United+Airlines+%26+Mileage+Plus)

[This message has been edited by MatthewClement (edited 08-22-2002).]

You don't think I used too many big words for the average USA Today reader, do you? http://www.flyertalk.com/forum/biggrin.gif

Trust me I don't want FF programs to disappear, but just for arguements sake, what would happen if they did?

For me, I guess I would just fly on the cheapest airline that meets my scheduling needs with consideration to whatever perqs are available to me such as seat selection etc.

No airline offers Spiff, only Spiff offers Spiff. http://www.flyertalk.com/forum/smile.gif

oO("a" spiff??? What, do I come in six-packs now???)

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by BravoZulu:
As long as one airline still offers a spiff, the others will need to compete. </font>



[This message has been edited by Spiff (edited 08-22-2002).]

Great response, Matthew!

Thanks, ralf. http://www.flyertalk.com/forum/smile.gif

It's a very good response, though it is probably way too high of a level for them.

"USA Today -- news for intellectuals drawn to primary colors."

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by MatthewClement:
You don't think I used too many big words for the average USA Today reader, do you? http://www.flyertalk.com/forum/biggrin.gif</font>

Considering the "biggest" word you used wasbankruptcy I think you got the level of vocabulary just right for the average reader http://www.flyertalk.com/forum/biggrin.gif

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by MatthewClement:
You don't think I used too many big words for the average USA Today reader, do you? http://www.flyertalk.com/forum/biggrin.gif</font>

USA Today - for the person with an attention span too short for TV news!

(Your error was in going over one paragraph.)

While I can't say for sure, and may be completely wrong, I would assume that ff miles are used for upgrades far more often than free seats.

What the average flyer fails to realise is that aside from the revenue earned from a passenger during their earning of those miles, those getting upgrades are more often than not paying more for their original seat as more and more super cheap fares are not upgradable. Add to this, the airline has the chance to then earn revenue on the original seat, and the airline comes out in front.

[This message has been edited by bugsy (edited 08-22-2002).]

bugsy, I'm sorry to say but you are incorrect. Most awards redeemed are for free seats, specifically the U.S. domestic 25K coach awards. A far smaller percentage are used for upgrades. I don't have the stats handy, but if I remember correctly from UA or AA data I saw, upgrades are less than 20% of all awards.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by bugsy:
[B]While I can't say for sure, and may be completely wrong, I would assume that ff miles are used for upgrades far more often than free seats.
[B]</font>

I can't speak for others, but I've redeemed a few million miles thru the years and ZERO of them have been for upgrades. All of my redemptions have been for free Coach tickets. In my opinion Business and First classes are grossly overrated and are a huge waste of money (and miles).

I would never offend one of our uncommon champions; i.e., Spiff.

A small "s" spiff is common in the retail trade and is generally taken to be an incentive to push inventory. More often the incentive is for the sales staff, but some times it is split between the sales staff and the client (better half a spiff than no spiff at all). The excess inventory (e.g., unsold seats) moves, the supplier is happy, the sales force is happy, and the client is happy.

Go ahead, offer me a spiff [e.g., double (base) miles promotion (on top of my PM status)] at a good fare and I just might buy a ticket that I would not have otherwise and do a mileage run or a minivacation. Hawaii was great in February; entirely unplanned. More than 50K total miles for $670 for two; now that was a nice spiff.

I hope I did our Spiff proud.

Maybe I am simple minded, but I think that the airlines would dump FF programs muy pronto if the CEOs thought that they were not making money off loyalty flyers. For example, how many us really believe that Leo runs Delta "out of the goodness of his heart," and how many of us believe that he is a bottom line kind of guy? I belive the latter, (and I fly Delta by choice).

The way Delta airlines dealing with these loyalty-less flyers is to sell "LU"sers fares that are not upgradable. It shouldn't be too surprised that those who flew these cheap fares have little loyalty at heart and ready to switch allegiance if other airlines provide comparable service with a $1 discount.

The next sure thing that will happen those "LU"ser fares will earn fewer miles... Maybe they will try 50% mile accural like what AC, BA, and some Japanese airlines are doing already.

[This message has been edited by FT wannabe (edited 08-22-2002).]

There are two other aspects to frequent flyer programs that have not been discussed, agency costs and tax free perks.

"Agency cost" refers to the divergence of interests between the principal and his agent: here the employer and the traveler. Many FFs who spend a little more to stay on the airline where they have status are spending their company's money. Airlines sell more expensive tickets than they would without FF programs.

"Tax free perks" refers to the fact that, about a decade or so ago, the IRS considered taxing as compensation to employees award trips taken for personal purposes and paid for by miles earned on employer-paid business trips. Popular outrage and administrative difficulties made them back down. From an economic perspective, however, award trips are partial rebates of earlier employer-paid tickets diverted to employee use -- i.e., compensation.

The airlines have structured FF programs so that the benefits to to travelers and not employers for these reasons, among others.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by MileKing:
bugsy, I'm sorry to say but you are incorrect. Most awards redeemed are for free seats, specifically the U.S. domestic 25K coach awards. A far smaller percentage are used for upgrades. I don't have the stats handy, but if I remember correctly from UA or AA data I saw, upgrades are less than 20% of all awards.</font>


Hey MileKing, thanks for the correction - as I said, I was probably wrong in my assumption, and now I know...as they say you live and learn.

I happened to disagree with the assumption that ending frequent flyer programs will save the airlines money. I know it seems that way and even travel guru Peter Greenberg has suggested the same. But the economics say that there is far more to frequent flyer programs than free seats - revenue. My most quoted line from a series of speeches on this topic states that "the only great accolade we must award to the airline industry for their frequent flyer programs is the fact that they finally figured out a way to make money off of empty seats." And I'm fine with that.

There is one difference in my disagreement than some of the others posted here - I didn't call the poster any names, i didn't try to badmouth his/her travel experience, etc. Amazing, one really can post an oposing opinion without the trash talk. Leave that out on the street or on the court-wherever it belongs, just not here on FlyerTalk.

[This message has been edited by Randy Petersen (edited 08-23-2002).]

The guy who wrote this article obviously flies ATA http://www.flyertalk.com/forum/wink.gif

Most non FFers do not understand ELITE programs at all. Those that have no butt in seat miles, etc. The FF programs themselves could be abolished if it was only for occasional leasure, credit card tie ins, etc.

BUT- The airlines would see mass exodus if they touched their elites and that would cost them the BIG $$$$.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by MileKing:
bugsy, I'm sorry to say but you are incorrect. Most awards redeemed are for free seats, specifically the U.S. domestic 25K coach awards. A far smaller percentage are used for upgrades. I don't have the stats handy, but if I remember correctly from UA or AA data I saw, upgrades are less than 20% of all awards.</font>

But Bugsy is not totally incorrect. While more miles overall may be redeemed for free domestic seats, this becomes less true, and, at least for United, when you get to the gold card and 1K levels, upgrades and overseas flights take more miles than domestic flights. And it is just the loyalty of these elite level passengers that the airlines are trying to buy with their FF programmes.

Bruce

IMHO airline loyalty programs are among the most brilliant marketing innovations of the late 20th century. These programs can ocassionally spin out of control, but well managed programs are key to airline success.

In summary, I believe that it can be well argued that loyalty programs
- help the airlines and loyal/discriminating customers and
- hurt an infrequent traveller that does not employ optimal strategies with loyalty programs
- hurt competition among airlines (a good think for airlines bad think for many but not all travellers)

Flaws in the letter writer's argument:
- Assuming that award seats can generate revenue (in reality, most award seats are projected as spare capacity by yield mgmt)
- Assuming that miles are indeed free (most airlines do earn revenues on miles by selling them to partners or saving on discounts)
- Ignoring that FF programs are crucial to manage the transformation of traveller behavior. For example: Email stmts, direct booking on airline or official partner website, online boarding passes. FF incentives are much easier to adminster than micropayments or coupons.
- Ignoring that FF programs provide the most valuable communication tool between the airlines and its customers (which business would not love to have its loyal customers keep their profile updated and look forward to communications from the business)
- Not looking at the example of profitable airlines around the world for profit making strategies (SQ, LH, QF, and most Asian airlines). In most cases it is the cost structure, fuel savings, capacity better matched to demand, etc and NOT elimination of FF programs.
- Ignoring the importance of loyalty programs in creating an entry barrier to new airlines and in increasing the switching costs

To give credit to the writer, senior execs at Southwest (LUV) and JetBlue (JBLU) have in the past been quoted as saying that they prefer not to have to deal with loyalty programs but are forced to do so because of the larger money losing airlines. On the other hand they have also used these loyalty programs to induce behavioral changes in their customer base (double rapid rewards for online booking at LUV and similar promotions with True Blue at JBLU). Also note that the airlines not controlling capacity for rewards are LUV and JBLU (both among the most profitable airlines, thank you :-) ). These airlines makeup for this by expiring rewards within one year.

Consumers and Airlines should have different opinions on this. For a typical consumer, FF programs actually decrease competition and increase fares. (I agree with JOE BRANCATELLI's argument made at the link posted above). For loyal flyers, FF programs reward loyalty and make up for lost competition with gained perks. I know of no major airline that routinely sets aside seats for awards when they could sell them instead.

Spiffs are Sales Performance Incentives - some type of reward to a sales person for achieving a volume level. When the band member sells enough boxes of candy, posters, whatever to earn a prize, the prize would be the spiff.

These are especially prevalent in the electronic and computer industries at the retail level. Try walking up to a guy at Circuit City and ask him what the spiff is on a sony VCR.

The FF programs are really customer loyalty programs. It might be argued that the industry has escalated these rewards to a level that not having one is a competitive disadvantage. Given this "arms race" it may be that in the absence of competition FF programs are not profit generators.

As an accountant, I see two basic flaws in the writers assumptions.

1. The three seats per flight are currently filled with FF passengers on every flight.

2. If FF miles were eliminated, the three seats would be filled with paying customers 100% of the time.

The second one is where the whole argument falls apart. If Rolls Royce Airlines eliminated the free seats, who would pay top dollar when alternative carriers can get one there cheaper?

How many of us limit our search of available flights to those airlines where we can get miles? Take that away and there is less incentive to travel with a certain carrier.

As pointed out above, every competitive enterprise has to develop a way to differentiate their product in order to attract and retain customers. Microsoft is currently running an ad campaign touting "1 degree of separation". A service getting someone from Point A to Point B is commodity product. Sure, there are different modes of transportation, but the underlying economic principal is to let market forces rule. If the cost to travel by train is half the airfare, is the additional travel time worth the savings? This gets compounded by the fact that most FF'ers travel on corporate check books.

Furthermore, the airlines are not giving away the miles with nothing in return. By tracking the travel patterns of the most frequent of travelers, they can determine who is going where at what time of day and at what level of service. In other words, they use this information to understand their customers. This is key to their success - and sometimes their demise!

Clearly the USA TODAY letter generated a lot of concern on FT. I agree with most of the responders that ff miles are probably here to stay... for awhile.

But for ever ? The mileage programs are a marketing tool, nothing more. They have worked, or they wouldn't still be there. But when another marketing tool comes along that meets the airllines' purpose, the mileage programs will be as gone as S & H green stamps, which were also at one time as much an "altnerative currency" as ff miles are today.

Some very good points here. I would add that the letter-writer's thinking reflects a flawed zero-sum mentality that says that if some people are getting something, it must be to the detriment of somebody else. With airline seats, especially those that would go empty, it doesn't work that way.

But even the airlines themselves aren't above a Macchiavellian play-one-group-off-against-another scenario when convenient. I remember OnePass doing a crackdown on things like back-to-back ticketing a few years ago with a newsletter blurb saying that some small minority of people are breaking rules and hogging benefits to teh detriment of others.

That was wrong, too. Competition and "what the other guy is offering" drives benefits more than any other factor.

So the letter has a germ of truth to it in that if the consolidations get too severe, an oligopoly of, say, three big airlines/alliances would have much less incentive to offer much in terms of benefits compared to five or six airlines. I think that's the more immediate danger.

I encourage the McNews reader's opinion as it is as valid as ours and the reason we had debate teams in high school through presidential elections.

However . . . FF programs are not without cost, and the economy of miles is much larger than free seats and upgrades. A WSJ article last week extols that unused miles are a form of currency trailing closely in value to cash and commodities. Airlines have to ascribe a cost on their annual balance sheets to these miles, and therefore the seats and upgrades are not free. They have a cost and a value in very broad and far reaching ways.

They are services that have been prepaid by all of us FF in our previous purchase of tickets, yet to be compensated by the airlines. It is like buying a little more than a ticket each time you fly. No matter what status your FF account, or price paid for tickets it comes down to seat time. You have to pay to play and buy to fly. The awards are our receivables in the form of a rebate for our prior purchases.

Furthermore, the economy of miles expands to co-branded partnerships in the form of partners (hotels, rental cars, web-sites and retailers). These partners are also the airline's customers as they (including the company I work for) purchase these miles to award to their customers (Shop & Save, Wal-Mart, Ford, Home Depot, Neiman-Marcus et al). Miles are not only a marketing tool, but a revenue source for the airlines.

In a simple economy miles would be a line item for one company, but today it is a part of multiple multinational's and many individual's personal economies as we choose where and how often to spend our money.

I’m in a Holiday Inn Express right now and I am driving past three hotels that are closer to my work destination because I always stay at Starwood or Holiday Inn. I flew into IAH even though the place I am working at is between AUS and SAT. IAH on AA was much cheaper of a ticket than AUS or SAT. I could have paid the same fare to AUS or SAT on a carrier other than AA, but I always fly AA. If the FF programs did not exist I would not have be at the Holiday Inn or have flown AA. Need I say any more?!

Dear USA Today,

Some years ago, I suggested to American Airlines that the way for airlines to get out of financial trouble was to raise fares.

I received no response from the company, but I still believe that this is an idea that will earn the airlines millions of dollars a year.

My suggestion is to simply raise ticket prices to one meeeellion dollars per seat:

* No one should fly for a price on the supply-demand curve, and every seat should be revenue-producing.

* There no longer is a large selection of U.S. airlines for people to choose from.

Fares that were set according to macro-economic reality were once necessary to meet the realities of market dynamics. There are fewer airlines now, so why worry about these silly things?

There are approximately 15,000 passenger flights in the United States each day. If each flight had just three passengers paying one meeeellion dollars , that would come to $45 billion daily. That would represent a lot of money for the airlines. I believe carriers could become profitable if every seat cost one meeeellion dollars. Consequently, world GDP would grow by 50%.

I propose that airlines discontinue their belief in macroeconomics on Dec. 31, but allow those folks who already want to pay one meeeellion dollars to pay it now.

Michael R. Adler

Coral Springs, Fla.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by gsw:
Maybe I am simple minded, but I think that the airlines would dump FF programs muy pronto if the CEOs thought that they were not making money off loyalty flyers. For example, how many us really believe that Leo runs Delta "out of the goodness of his heart," and how many of us believe that he is a bottom line kind of guy? I belive the latter, (and I fly Delta by choice). </font>

Seems these comments predict a lot of what went on in USAirways the last week or so.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by nehopper:
Seems these comments predict a lot of what went on in USAirways the last week or so.</font>

The first response:
<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Clearly this is written by someone who doesn't understand the airline industry and both the costs and benefits of frequent flier programs.</font>

Hit the nail on the head. Unfortunately the original letter to USA Today was apparently written by Baldanza.

To paraphrase an old Robin Williams line, "I used to line the cat box with USA Today until the cat told me that it was redundant".
http://www.flyertalk.com/forum/smile.gif

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I'm growing older, but not up...

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by enjoystravel:
To give credit to the writer, senior execs at Southwest (LUV) and JetBlue (JBLU) have in the past been quoted as saying that they prefer not to have to deal with loyalty programs but are forced to do so because of the larger money losing airlines. </font>

This does not explain the existence of Southwest's Companion Pass, which goes above and beyond any other airline's benefits. I'd say 16 credits = 1 free RT is quite generous.