FlyerTalk Forums - View Single Post - AA will drop ORD-DEL (effective 1 March 2012)
Old Jan 10, 2012 | 8:38 pm
  #204  
panjabi
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Join Date: Apr 2001
Location: Texas
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Conspiracy Theory: Hidden Economic Reasons for ORD-DEL Cancellation

OK. Put on your tinfoil hat, as I have a theory about additional economic reasons for the ORD-DEL cancellation

AMR made it clear that the route did "not perform well economically"

What made this confusing to a lot of FT'ers is that the average fare on AA seemed higher for each class (Y, J, F) than competitors and that the load factors were quite high

While, it could be argued that the flight was not the best performing flight, it certainly did not "seem" to be an abject money loser

I am now thinking that there may be an additional hidden economic reason for the cancellation: FREQUENT FLIERS!

I think that the AA 292/293 flights produced too many EXPs and even PLATS. This caused problems for AMR

As an example for my thesis, a SFO-DFW-ORD-DEL RT would get you 20K EQM for about $1000 in Coach, assuming you used the Costco Gift Cards and the Founders 10% discount

5 of those RTs would make you EXP. If you had any domestic travel at all, you could become EXP with just four trips

Now, we have all heard anecdotal evidence (search this forum for a GA in Miami blaming the DEL route for "too many EXPs") about a large number of EXPs solely (or for the large part) qualifying due to the DEL flight

I am thinking, as an overall economic metric, AMR took into account the reduction of EXPs and PLATs by eliminating the 292/293 flights. EXPs and PLATs represent lost revenue

1. Plats and EXPs earn double miles. So revenue lost there
2. EXPs use SWUs, where in atleast some circumstances they would have used cash or miles
3. EXPs get free domestic upgrades, whereas Golds and Plats have to buy stickers

Now, when you have an EXP, who did 100 domestic segments and spent $30,000 on AMR, then AMR feels, that the bennies are well deserved and wants to keep the flyer loyal

Similarly, if the EXP flew paid J to London 6 times to London and got 1.5 EQP, well then he/she spent atleast $30K in tickets and thus deserves the benefits

But, if someone ONLY flies to INdia and spends "only" $5K to earn his/her EXP, then AMR feels that they are not adding any value to AMR.

Please keep in mind, once qualified for EXP, the next year, the flyer will still only spend $5K to re-qualify for EXP but now do all his/her flights in Business!

In a worst case scenario, assume out of 320 RT flights a year, 20 people on each RT were EXPs (using those flights to qualify) and on average they flew 4 RTs a year, then the 292/293 flights by themselves would on their own produce 1600 EXPs!!!

Now, with BA being so involved in AMR, with the anti-trust and possible post restructuring funding, BA may have laid down the law to AMR to reduce the number of Elites.

With complementary benefits across OneWorld, BA may have wanted to reduce AMR elites, especially the "kettle" elites that do not produce any revenue.

This reduces stress on Lounges, Checkin lines, bonuses etc

The more I think this through, the more I believe that this was ONE of the determining economic factors
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