View Single Post
Old Jun 28, 09, 6:52 pm
  #24  
Gargoyle
FlyerTalk Evangelist
 
Join Date: Mar 2004
Location: Under an ORD approach path
Programs: DL PM, MM. Coffee isn't a drug, it's a vitamin.
Posts: 12,905
Originally Posted by me4yankees View Post
CEO and Senior Leader Review of Program benefits, line by line

Direction from CEOs to pursue “Best of Best” Program which would have resulted in $200M in dis-synergies

Recommended “Best in Class,” while trying to offset some of the $200M in dis-synergies

1. Fee – Huge revenue impact ($160M swing) in whether we take DL or NW fee structure:
- Not a top 10 customer benefit or primary purchase
Make the difficult decision to increase the NW fee structure rather than find “financial benefit” in other “more valuable” benefits (e.g. upgrades) DL will not abolish the unlimited complementary upgrade benefit – customer benefit outweighs the financial benefit.
We had a huge amount of info thrown at us this weekend, hard to retain and process all of it. Thanks for taking detailed notes!

To expand on your point above... this is based on my flawed memory, hope I got the gist of it correct. Right from the start Anderson asked Jeff and Bob to prepare a comparison chart of every feature in the SM and WP programs, and how they stacked up to the industry. The chart was about 5 pages long, complete and detailed. They started by trying to pick the best in each category, but hit snags. Some were due to delta's rez system not having the hooks on which to hang some NW features (and if they chose NW's rez system, it would have been the same problem with DL features)... the cost and time of allocating resources to change that just doesn't hunt.

As to the change fees, they wanted to get rid of those, till they saw the numbers. Those fees generate a huge amount of money for DL, the biggest chunk of the $160M that me4yankees refers to. If they eliminated that income, they'd have to balance with lots of other changes to make up the difference, and, as mentioned, that isn't in the top 10 of concerns in customer surveys. It's only a very small percentage of customers who make multiple changes to award itins.

Those changes are costly. When you cancel or change an award ticket, the flights you release do NOT go back into award inventory. They go into general inventory, which the computer then divvies up and allocates to whichever fare bucket it chooses. So, you've removed both the original and your new seat from the total award availability. Change again, and another seat gets taken out of the award system. Book seats with the intention of changing, and you're taking away availability from others. That is a contributing factor (maybe a small one, but it is) to the perceived poor availability.

Why doesn't the released seat go back into award availability? Because at any given time, they want the computer to assess demand and allocate seating accordingly. We don't like it, but it makes sense from a business/revenue standpoint, especially for a company with such thin margins and high operational costs.

Hope this clarifies some things, and also gives you a sense of how open and detailed Jeff, Josh and Bob were in their presentation.
Gargoyle is offline