Originally Posted by
Andrew Yiu
That being said, when looking at a more flexible upgrade currency, we realized that we had to better understand how people upgrade versus how many certificates they actually wind up using. In order to deliver a program with this level of flexibility, we wanted to ensure that we were allowing people to upgrade as often as they have previously, without drastically increasing the costs associated to our upgrade program. As with any other airlines, there's a huge cost associated with the upgrade benefit. In fact, we took a holistic view on members earning credits both at time of qualification and for eligible Status Mile thresholds.
Sorry, but this is nonsense. >90% of all FFs will not be able to upgrade nearly as often as they did this year. The new program is not about preventing additional costs, this is about cutting benefits in an attempt to cut costs. All Elite members flying internationally will get fewer upgrades (regardless of whether they pay T+, M or Lat fares). As pointed out
here, Es do not even get enough credits to upgrade all flights even if they always purchased Latitude fares (without foregoing the tier bonus). Those who do a mix of intīl travel and travel within NA also donīt benefit, neither do E/SEs who formerly bought flight passes (SEs used to get 2SSWUs, which is equivalent to 28-40 credits, I donīt quite see how earning 12 credits is not a huge cutback in benefits)
The only group that will benefit from this new program are:
- FFs who only fly within North America and now will be able to upgrade 2-4 segments (vs. 2SSWUs this year)
- FFs who (exclusively) buy Latitude fares within North America.
Thatīs it. All other groups face cutbacks of 40%-70% depending on their flying pattern.
Originally Posted by
Andrew Yiu
In the end, we've developed a system which align the amount of credits required to the actual fares that we're charging in a market - for example, J fares to/from Asia are typically higher as well as given that we have less frequencies to/from Asia versus Europe, it makes sense for an upgrade to Asia to cost more than an upgrade to Europe. M fares now cost more to upgrade than Y/B as realistically they do cost more but yet we didn't group it along with the rest of the Tango Plus fares because it's at the high end of the Tango Plus group so we wanted to give a bit more incentive to those who purchase it. U class has been grouped along with the rest of the Tango Plus fares as they're not being sold on many markets anymore and it's not the same fare level as the Y/B/M fares. In terms of flight passes that are currently booked in U class, this I can assure you that we'll review in the coming weeks and adjust if we deem necessary.
Letīs hope a reasonable decision will be made. For many this will sound like “reviewed and changed if deemed necessary” = “considered and dismissed”
Originally Posted by
Andrew Yiu
Many of you have also commented on the fact that we have decreased the number of thresholds in our program. While this is indeed the case, we did it for two reasons. First of all, we wanted to simplify the thresholds for our members by streamlining them at 20,000 Status Mile levels. These thresholds remain the most generous of any equivalent frequent flyer program in North America, none of which offer a system-wide upgrade incentive from such a low level for all tiers. Second of all, we needed to be conscious of the costs of offering additional eUpgrade Credits which can be used so flexibly.
Itīs nice to hear AC is admitting that the new program doesnīt only consist of improvements. And to be honest, the reduction in threshold bonuses is the cutback most of us are most understanding about due to the added flexibility. Itīs the ridiculous low amount of credits to start with COMBINED with a huge reduction in credits for crossing thresholds AND flight passes which is more than upsetting and causing many FFs to reconsider their loyalty/flying pattern.
Originally Posted by
Andrew Yiu
It’s important to note that, when it comes to the Threshold program, we did make the decision this year to continue to align the expiration of the eUpgrade Credits to the benefit year (ie, February 29, 2012). However, that does not mean that we will not evaluate a change to this going forward. What’s more, even within the 2011 Top Tier program, we have the intention to extend the validity of credits earned later in the qualification year through until early 2013.
Sounds like good news, if it happens.
Originally Posted by
Andrew Yiu
Lastly, the amount of initial credits allocated are mainly driven by the fares of various markets that our tier customers most often upgrade on as well as the average amount of revenue a tier member generates (which can be as little as $2000 as 2 r/t trips to Asia from the East would earn someone Elite and $10K for SE with 5 r/t to Asia - I am not implying this is what you guys are doing but this is realistically) as well as the average cost of an upgrade, the amount allocated is the base amount that we can afford to give each customer. While we would love to give more, we have to balance between revenue business class and upgrade demand while maximizing revenue at the same time.
Fair enough, I think most FFs understand the requirement to balance benefits and costs. Just take the recent implementation of the 10k miles/5 segments requirement. While it is a devaluation of the program, the vast majority were very supportive of this measure.
Anyhow, I doubt the new upgrade system will generate more revenue, the opposite is the case, maybe you could answer the following two questions:
1) Why would someone fly 35k miles on AC if he/she doesnīt even get 1 long-haul intīl upgrade from T+ in exchange? ACīs Y product is decent, but not miles ahead from its competitors who have mostly installed AVOD on most planes. If thereīs not even a chance of getting an upgrade, people will just buy the lowest fares.
2) Why would someone buying Latitude fares on intīl routes stick with AC if he/she doesnīt even get enough credits to upgrade those flights? (see
example posted here)
Originally Posted by
Andrew Yiu
Comparing the AC program to our competitors, we are still very competitive. We're the only carrier in North America with a mid tier that give members the option of complimentary systemwide upgrades while maintaining the lowest qualification miles required at 35,000.
I donīt completely disagree, but the 35k threshold on AC (vs. 50k on most other airlines) isnīt necessarily lower if you consider the following factors:
1) Tango fares only earn 25% non-status miles (and the fare difference between T and T+ fares has increased to a point where it barely makes sense to buy T+ fares)
2) Other airlines have often offered DEQM/DEQS promos, either for their entire network or on selected routes
3) Some of ACīs competitors offer status miles through their affiliatede credit card
4) Other airlines award 150% status miles for the most expensive economy fares (e.g. booking class B earns 100% with AP/AC, but 150% with UA MP)
So overall ACīs 35k miles requirement is pretty comparable with other FFPsī 50k requirement.
Originally Posted by
Andrew Yiu
Thanks again for all your feedback; both on here and via email (as some of you have sent emails to Calin in the last 24 hours), your feedback is very much appreciated and we want to keep this as a two way conversation. While we can't always promise to give you what you've asked for due to various constraints, rest assured that we do take it into serious consideration as we construct our programs.
Unfortunately this is not the impression the majority here have. The program has been devaluated for the vast majority of E/SEs, and trying to spin it like an improvement didnīt build any goodwill at all. Either AC was hoping the majority would be stupid enough not to recognize the devaluation with the more complex credit system, or someone made some major mistakes when calculating the impact for various types of FFs.
Just to summarize the above comments: Most of us fully understand that AC needs to balance benefits and costs of the FFP, but as of now the new credit system doesnīt seem to provide enough incentives to stick to AC. If this is about revenue (which it is of course), here are a few
suggestions how to minimize the negative impact of the new program for those who spend $$$$ on AC metal.
Anyhow, thankīs for your presence here on FT which is greatly appreciated.