After these changes I am more and more thinking of totally forgetting about loyalty to any particular airline / alliance and just going for the cheapest / most convenient option available every time. That includes LCCs.
If there are miles to be credited somewhere, sure, I will credit them (more to keep my accounts active and prevent them from expiring, until I use up all my miles), if not, tant pis, I'll be happy in knowing I got the best value for money for my travels - after all, isn't it what it should ultimately be about?!
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I think I agree with Alan. AF has got their research right in telling them that high profit customers don't select their flight based on the FFP. Most of their high profit customers either don't chose and follow company policy, or they are looking at the overall product experience (regularity, schedule, consistency of the product, and then "details" like price and FFP) for their business trips.
The goal of the FF program, in my mind, is no longer to attract customers (like it can when it's really more generous than the competion's), but to prevent customers from going away. That's why they don't "just drop FB" as much as they'd like to (or if they do, they [i]will[/b] feel it).
Yes, very clear. All the majors have a FFP and are still expected to have a FFP but many don't want what they have had and do want their cake and eat it too. PE for Life was almost a way of admitting that many of their current long-term best customers would not quality under the future system nor find the future system appealing; in effect, a feeble lifesaver attempt to bribe them to keep flying the company anyway. Future crops of 10 year + PEs will be much smaller and mostly harvested from the captive, corporate contract crowd flying business anyway on their employer's dime.
It is like trying to torpedo an entitlement system like welfare or unemployment insurance. You gradually have to wean those who have been making their decisions dependent on it away from it if you want to eventually get rid of it without a revolution. Limit benefits bit by bit, make it harder to qualify, invent rules that automatically throw you out if you don't jump through periodic hoops (fly every 20 months or send in their weekly proof of solicitation).
AFKL will apparently and unsurprisingly play primarily in the LCC low price pool with small, marginal premium cabins primarily in name, and in effect sell in return for hard cash a minimal set of FFP benefits to those people(s' employers) who for whatever crazy reason actually travel with them on high fare classes for their low service.
Would these figures be segmented out in the annual reports? Are the filings with tax authorities available?
Any company is required to make public a basic accountancy result, but I don't know how detailed it must be. We'd at least get gross revenue and expanses, so if profitability can be controlled (as Falco pointed out), the gross revenue can't.
I'll try and find it online, but it's probably only available in paper format. But it's definitely publicly available. There are less obligations than if it were a publicly traded company, but there is still a basic obligation. I'll try and find more. Maybe it's simply mentionned in consolidated accounts for AF/KLM ?
After these changes I am more and more thinking of totally forgetting about loyalty to any particular airline / alliance and just going for the cheapest / most convenient option available every time. That includes LCCs.
I think you really have a point there. I know several people who just go for convenience and price, and don't bother with an FFP. Even without the FFP number, or any status, they seem to do quite well and end up scoring op-ups - more than I do, at any rate. Think of the time and hassle they save, not doing stupid routings for the sake of requalification, and the money they save.
Programs: BD *G, NW PE (back home :)), FD RW (no more), HH Gold, MR Gold, some Amex
Posts: 7,204
they completely lost it, their minds and their pax. No way on earth can I retain my PE status in 2010 and beyond. With flying until 3/31 I should be o.k. this year, but next year?
This is the worst devaluation I have seen anywhere on Skyteam or anywhere in the airline industry. Does AF/KL really think this is not going to impact business?
O.k., we all expected to see DL LUT-fares to drop to 0-75% and some of the others, but this goes beyond imagination.
Does anyone have the earning scheme for DL/CO/NW after 4/1/09?
Obviously, something changed in 2000/2001 as these two years show gross revenu (chiffre d'affaires) much higher than the previous and next years. But since 2001, the gross revenue was:
EUR 25 millions in 2000 (exercice ending 31/3/2001)
EUR 27.8 millions in 2001
EUR 30,4 millions in 2002
EUR 26,9 millions in 2003
EUR 27,7 millions in 2004
EUR 38,5 millions in 2005
EUR 38,8 millions in 2006
EUR 40,0 millions in 2007 (exercice ending 31/3/2008).
The activity is listed as "call center". I guessi it's the closest category they could be fitted in, but it's possible that this revenue could be also generated by the selling of ticket through the FB call center, and that we don't know if the price per mile sold the AF/KLM was constant. More information could certainly be found in the detailed account, but it's only free to look at it on paper, physically going to the relevent tribunal de commerce.
An interesting thing is that while AF traffic has gone up from 43,3 millions pax in 2001/2002 to 74,8 in the last year (logical since they bought KLM), a 72,7% increase, the revenue of the company selling miles to AF has gone up only 43,8%. Either they're getting much less revenue than they used to (but the separation of service charge should have brought them MORE revenue), or the airline is buying miles cheaper (meaning they found a way to make them cost less, ie be a less valuable asset to the loyal customer) or that they are giving less mile per passenger.
AF is clearly under pressure to account for the balance sheet liability created by all these accumulated award miles. They chose one route to improve their balance sheet, namely reduce the accounting value of th existing (and future miles). As mentioned below BA (and other carriers such as QF) chose another route: take advantage of the current low loads to offer a fire award sale in C & F that has cleared a lot of existing miles from their balance sheet.
AF seems to believe that it would not affect its traffic stats too much as FB is not a major motivation to fly on AF, especially in premium cabins. AF seems to believe that corporate accounts have other benefits from AF (price discounts and rewards to the VIPs who make airline choices) and that the change would not affect their travel policy. But they seem to forget all the small business owners in other parts of the world, as well as numerous rich people (especially in Asia) who go to expensive restaurants and travel in premium cabins. The rich are less rich, but they are not paupers yet. Let's be very egocentric and take my example (as others have done above). I share my time between Asia (mostly) and France, work hard and allways fly C or F on longhauls. For price and product-quality reasons I tend to choose other longhaul airlines. And I know a lot of small-business owners who do the same in Hong Kong. I fly a lot and am gold on BA (OW Emerald is better status than Plat as it gives preferred seat selection, access to F lounges on OW and upgrades certificates) and *A. I still flew periodically on AF premium cabins (as well as European flights) just to maintain my elite status and because the FB program was quite generous for premium cabin earning/spending. This is not worth it anymore. FB is taking a giant leap to reduce benefits in all directions. Other programs are now more attractive, both in terms of earning and spending. On the other hand BA is doing the opposite for its FFP. Last fall, BA offered a 50% sale for all destinations in the next 12 months (plenty of seats available on most flights, fully changeable dates online at no cost).. I got a CDG-HKG return ticket in F for 120Kmiles. BMI program (*A) may merge into M&M, but I just bought a CDG-HKG return F ticket on TG for 70Km+500€ (the miles-only alternative is 140Km). AF is now requiring 400Km for the same itinireray in F or 160Km in C.
On the CDG-HKG route AF is much more expensive than CX in C & F (out of CDG), with a much inferior product. Even out of HKG, AF C prices (flexible Z/I bucket) are similar to the new CX prices, with a clearly inferior product. My basic reaction: dont bother earning status in AF and enjoy better products for lesser cost. If someone can convince me that I am wrong, I would be happy to listen. AF will only get their big French corporate customer accounts flying in premium cabins.
AF is clearly under pressure to account for the balance sheet liability created by all these accumulated award miles. They chose one route to improve their balance sheet, namely reduce the accounting value of th existing (and future miles). As mentioned below BA (and other carriers such as QF) chose another route: take advantage of the current low loads to offer a fire award sale in C & F that has cleared a lot of existing miles from their balance sheet.
I must say that it was the route I thought Air France would be taking, as the marginal and opportunity cost of transporting people with the current low yield would be lesser than the future miles liability... And indeed, we were to expect more "promo award" to be available. Quite the contrary happened.
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AF seems to believe that it would not affect its traffic stats too much as FB is not a major motivation to fly on AF, especially in premium cabins.
I would also add that most benefits from FB are already included when flying in premium cabin (lounge access, bonus award miles (as for exemple, flying in European Business as a Plat yield 1 regular status mile, 1 cos status mile, and 1 elite award mile, total 3, while flying as an Ivory would yield 2. The elite bonus is "only" 50% to the business traveller), onboard recognition and priority check-in etc.) So basically, they get less incentive than leisure travellers to be loyal.
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AF seems to believe that corporate accounts have other benefits from AF (price discounts and rewards to the VIPs who make airline choices) and that the change would not affect their travel policy. But they seem to forget all the small business owners in other parts of the world, as well as numerous rich people (especially in Asia) who go to expensive restaurants and travel in premium cabins.
There are obviously many customers who fly business on leisure trip, but I still think the bulk of the revenue comes from companies. On the other hand, you're spot on. The very concept of "travel policy" is linked to larger business. Most SMB don't have a travel policy, and individual travellers do what they want as long as it's not outrageous.
I fear they come to the conclusion that most SMB would have instead a "go there as cheap as possible" policy, and that Flying Blue wouldn't bring them any additional revenue as the exec in these companies don't have the leeway to select AF over another company offering a better deal, and they won't even have the leeway to select business class over coach. It would be, in my opinion, a very bad analysis.
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The rich are less rich, but they are not paupers yet. Let's be very egocentric and take my example (as others have done above).
You're welcome. With travel interest in premium cabin to Asia, I must say that I consider dropping Air France for these trips. I was inclined to do that because of the fuel surcharges (other companies might have the same, but not dropping them as sheduled and promised was felt by me as a breech of trust), and with the new redeeming rules, it will certainly be the straw that broke the camel's back.
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I still flew periodically on AF premium cabins (as well as European flights) just to maintain my elite status and because the FB program was quite generous for premium cabin earning/spending.
Indeed. But the 300% COS bonus and a 100% elite bonus for flying in P as a Plat, were interesting when the redemption rate was on par with the competition... But it's no longer the case, and as I wrote earlier, I think the new and improved FB isn't attractive to premium traveller. I didn't look at business class in my comparison because we don't know yet the redemption table for business, but I guess we'll also see an increase...
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My basic reaction: dont bother earning status in AF and enjoy better products for lesser cost. If someone can convince me that I am wrong, I would be happy to listen. AF will only get their big French corporate customer accounts flying in premium cabins.
You mention BA, is it the better program to suit your travel pattern? Isn't there one offered also more miles for flying in F?
I'm wondering if these changes will affect awards on non-ST airline partners.
I hope to get just enough miles for a business class flight award to HKG on JL, but was also thinking of holding on to the miles for any intra-Europe ST flights I might want to take in the future. However with this devaluation coming up, I better do the mile burn before April comes!
P.S. I've always thought that AF's Première product is one of the most overpriced first products in the industry for a premium airline ... sure, the "new" seats are nice, but really: "enhanced" business class food with a marginally superior wine selection and some recent efforts to have better ground operations at CDG? That's not a lot of bang for your buck, to say the least.
But if they seriously think they are going to get a lot of FB members to fork over huge amounts of miles (it looks like the multiplier is 5x the "classic" Y award, so let's say 5x 50K for First awards to the US) for a "grand moment de luxe" then I think they are quite mistaken. At least as far as I am concerned ... there is no way a Première award from Paris to the US, for example, would be worth burning 250 000 miles!
But if they seriously think they are going to get a lot of FB members to fork over huge amounts of miles (it looks like the multiplier is 5x the "classic" Y award, so let's say 5x 50K for First awards to the US) for a "grand moment de luxe" then I think they are quite mistaken. At least as far as I am concerned ... there is no way a Première award from Paris to the US, for example, would be worth burning 250 000 miles!
Yes, I think that's exactly what they have in mind. They seem to believe that people will spend more miles as they double the number of needed miles. They obviously don't think people with 400,000+ miles in their account either don't care at all about loyalty programs and won't spend miles anyway (bad news AF, these liabilities are here to stay...) or they will try to squeeze the best value out of it. Improved service in P for a constant redemption rate would improve the value of booking award in the front cabin. Now, it will simply makes these customers use the miles for business award (and worse for AF, they could book it on other airlines as well, which will cost AF more money than having them book P award).
... Now, it will simply makes these customers use the miles for business award (and worse for AF, they could book it on other airlines as well, which will cost AF more money than having them book P award).
Ping! Exactly.
But they are still soaking us on the Business awards: take the US awards, which only recently went from 80K to 90K ... now they are up to 100K for exactly the same product ... wait, I take that back. I consider the current Business product to actually be inferior to what it was a just few years ago: the seats have improved, but that is all. The food and wine are far inferior to what they used to be (don't get me started on that cheese dish served with your main course, dangling off the side of an already overloaded meal tray! ) and the service can be all too often just average.
As a side effect in the long term, it's probably going to hit badly the (revenue generating) co-branded AF-KLM-AMEX Gold card too. I suspect most people would enroll just to catch the few thousands EQM necessary to qualify for FB Gold... Less miles for AF and KL flights, harder to get status, more expensive awards, who needs an AF-KLM AMEX Gold now?
![The new rule book is here! The new rule book is here! [merged]](/forum/iconimages/flying-blue-air-france-klm/new-rule-book-here-new-rule-book-here-merged_ltr.gif)
) and the service can be all too often just average.
