If US Airways really wants to reduce their "mileage liability"
It's still my opinion that this has nothing to do with liability for outstanding miles carried on the balance sheet. As a percent of the total liability, outstanding miles represent a very small portion - $161 million out of $6.4 billion or 2.4% of liabilities (AA reported $1.6 billion or 18% of total liabilities). Even cutting that in half (unlikely) would change total liability little - it'd be like a rounding error.
I think it's all about cash flow. Dropping the 500-mile minimum could ultimately reduce redemptions which cost money (particularly if on OAL) and affect the P&L statement. And, as one version of the form letter recommended, if short-haul fliers make up the lost miles through purchases at affiliated merchants and/or with the DM credit card that adds revenue which also affects the P&L statement.
I suspect they're looking at the potential for a large loss in 2008 and they're considering almost anything to add revenue except for increasing fares across the board (US is usually the follower and not the leader in that area).
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Quote:
Originally Posted by BoeingBoy
I suspect they're looking at the potential for a large loss in 2008 and they're considering almost anything to add revenue except for increasing fares across the board (US is usually the follower and not the leader in that area).
If so, this is precisely the reverse of the correct strategy. The whole point of FF programs is to bring in extra revenue now in exchange for a promise of travel in the distant future. The more generous the FF program, the more effectively it accomplishes this. If US wanted 2008 to look good, it would offer triple miles for full fare. Reducing miles awarded for the most expensive (per mile) flights will have the opposite effect: driving 2008 revenue down.
Don't recall seeing this here yet (but I've been traveling the last few days and may have missed it) - this was in response to my email to the Executive Office on 2/14/08 and comes from customer.relations@usairways.com. Since it addresses everything under the sun (including things that I never discussed in my letter), it looks like they're just trying to make their lives easier so they don't actually have to choose an appropriate form letter to respond to a given complaint - one size fits all
Quote:
Dear Dr. dstan,
Thank you for contacting US Airways regarding your concern with the changes in our Dividend Miles program.
>From time to time, US Airways makes adjustments to the Dividend Miles program in order to continue to deliver benefits to its frequent flyer membership. These changes do not become effective until May 1, 2008.
By awarding the actual number of miles flown on flight 500 miles or less, US Airways is able to control costs and simplify its accrual policy, which helps to ensure the long-term viability of the Dividend Miles program. Most of our benefits, such as segment accrual and award mileage requirements, have not changed and we continue to attract more partners in our program to make it easier for you to earn miles. Flights longer than 500 miles are not affected by this program change.
Tickets purchased within fourteen days or less from date of outbound travel produce the highest revenue for an airline. We made the decision, as a courtesy to our valued frequent fliers, to take these high-revenue producing tickets out of inventory and hold them for our Dividend Miles passengers. Award seating availability can always be checked by visiting our website at www.usairways.com.
In order to offer this last-minute availability, and continue to deliver benefits to our frequent flyer membership, the charge for award tickets booked on the internet is $50 and for award tickets booked through reservations the charge is $75.
Whether flying US Airways or any of our many partners, you can accrue your miles and get to an award ticket faster. In addition, unlike some competitor programs, by continuing to earn miles within the Dividend Miles program, you can keep your account active and avoid forfeiting your existing account balance.
US Airways feels confident we can continue to meet your travel needs. We operate approximately 3,700 flights per day and service more than 230 communities in the United States, Canada, Europe, the Caribbean and Latin America. US Airways is a member of the Star Alliance network where you can earn and redeem miles to nearly 900 destinations in 160 countries worldwide.
I hope the information provided will be helpful in understanding our decision to make the change. We look forward to providing a pleasant flight on your next flight with US Airways.
Sincerely,
US Airways Customer Relations
Corporate Office
CB
Last edited by dstan; Mar 4, 08 at 12:28 am.
Reason: formatting
Well, looks like my response to the last form letter got through, at least on some minimal level (emphasis mine):
Quote:
Dear Sir or Madam:
Thank you for your response to my email of Feb 14. Since much of your response is irrelevant to my initial email, I can only conclude that this is a form letter and that you have not, in fact, taken the time to read my letter (which is retained at the bottom of this page <redacted>). I assume that this is a further indication of the level to which US Airways does not value my business and will continue taking the remainder of my business to American Airlines.
There is still time for you to reverse this poorly-conceived decision to remove the 500-mi minimum, which adversely affects many of your east coast flyers and the lucrative Shuttle market in particular. Unfortunately, however, I anticipate that the damage to the reputation of the Dividend Miles program may take quite some time to repair.
Sincerely,
dstan
Quote:
Dr. dstan,
We have received your additional comments regarding the change in our mileage accrual.
Your comments have been added to the file we created with your original concerns. Your feedback will help us evaluate our decisions that impact your choice of airline. At this time, we do not intend to reverse our decision. Nevertheless, we understand how policy change feels from your point of view, so your candid comments will be shared with our management teams responsible for decisions about products and services our customers most value.
We sincerely hope you continue to fly US Airways and allow up to be your airline of choice.
Sincerely,
US Airways Customer Relations
Corporate Offices
TH
I'm not entirely sure why they are encouraging me to fly Bahamasair, but perhaps I'll give them a try
If you go to justplanenews.com and click on the PDF for the last issue of "About US," you can read a detailed explanation of the 500 mile change that they gave to their employees.
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Quote:
Originally Posted by iahphx
If you go to justplanenews.com and click on the PDF for the last issue of "About US," you can read a detailed explanation of the 500 mile change that they gave to their employees.
A username and password is required in order to access "About US"
__________________ Hey Dougie! I go all the way back with US Air to 1985, they don't get any more loyal than me, so play nice!
If you go to justplanenews.com and click on the PDF for the last issue of "About US," you can read a detailed explanation of the 500 mile change that they gave to their employees.
Love this quote: "Because it’s too costly, no one airline can have the undisputed “best” of everything."
Apparently the strategy is to prove that the opposite is not true.
I find it curious that they instituted this change in order to put a $20 million dent into a $800 million increase in costs, cutting out a whopping 2.5% of the increased cost of fuel last year. They apparently figure that the upgrades would wind up being more important to frequent travelers than mileage accrual, but those upgrades are meaningless for those whose typical flights (such as mine) are solely on regional jets or turboprops. I'm pretty sure I am not the only person who is in this situation.
Therefore, the only reason to stick with US would have been the 500-mile minimum, but by cutting this out, US eliminated the only incentive I have to choose them over some other airline.
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Quote:
Originally Posted by Spaceduck
I find it curious that they instituted this change in order to put a $20 million dent into a $800 million increase in costs, cutting out a whopping 2.5% of the increased cost of fuel last year. They apparently figure that the upgrades would wind up being more important to frequent travelers than mileage accrual, but those upgrades are meaningless for those whose typical flights (such as mine) are solely on regional jets or turboprops. I'm pretty sure I am not the only person who is in this situation.
Therefore, the only reason to stick with US would have been the 500-mile minimum, but by cutting this out, US eliminated the only incentive I have to choose them over some other airline.
I switched back over to CO for my trip later this month. Either ways it's a 1-stop on a Dash 8, might as well get 1000 miles instead of about 430.
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It's kind of funny, I did not PUBLICLY complain about a whole host of issues, including: plastic drink cups, plastic utensils, food quality (the food on other airlines is truly no better most of the time, and sometimes worse), reduced seats in Envoy, dirty planes, reduced seat pitch, reduced seats in domestic first on 320s and 321s, removing half the galley and coat closets in Airbuses, booking fees for everyone except CP, taking away transatlantic upgrades for preferred passengers, taking away multiple year club memberships (I had twice before purchased 3 year memberships, those are no longer available), giving incentives for new club memberships but not renewals, and several others. This "No more 500 mile minimum per segment" issue is the straw that broke the camel's back for me. I bought my next ticket on Delta, instead of US, for this Friday, for the first time since 1985, and it is to fly to Charlotte! As a matter of fact, it is cheaper than flying US by half. I am going to send over to DL for a status match today. If Dougie and his Court Jesters actually believe the BS that they are dishing out about saving $20 million in fuel cost and so on, over the lost business that they have already lost, and will probably will lose, they are truly crazy. I would like to know how much Dougie has actually lost in personal net worth from the devaluation of his US stock holdings over the last 18 months? I bet that alone is more than $20 million! I wonder when the board of directors and the stockholders of US are actually going to wake up and smell the coffee and realize that this idiot is running their airline into the ground? Will it be before or after US is the last airline standing "unmarried" in the next wave of mergers, or before or after US is headed full tilt to BK #3?
__________________ Hey Dougie! I go all the way back with US Air to 1985, they don't get any more loyal than me, so play nice!
Last edited by USirritated; Mar 5, 08 at 11:33 am.
Reason: clarity
I would like to know how much Dougie has actually lost in personal net worth from the devaluation of his US stock holdings over the last 18 months? I bet that alone is more than $20 million! I wonder when the board of directors and the stockholders of US are actually going to wake up and smell the coffee and realize that this idiot is running their airline into the ground?
As of 2/15/07 (the last proxy statement), W. Douglas Parker held 486K shares (20K held directly, 466K in options, excluding 177K unvested restricted stock units). On 9/5/06, LCC closed at 42.80. On 3/4/08, LCC closed at 12.61. Assuming all shares were held (and that's a big assumption), the total loss comes to approx $14.6M. (Total loss in market cap based on 93,821,000 diluted shares outstanding = $2.83B)
Interestingly, WDP's total compensation for 2006 was $5.35M, so if the board fired him and put that toward the $20M they're supposedly saving, perhaps we could at least get 500 min mi on a quarter of our flights?
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Quote:
Originally Posted by dstan
Interestingly, WDP's total compensation for 2006 was $5.35M, so if the board fired him and put that toward the $20M they're supposedly saving, perhaps we could at least get 500 min mi on a quarter of our flights?
No - because a good chunk of it is non-cash. You don't have to HAVE $5m to "pay" someone $5m when you can use options.
