FlyerTalk Forums - View Single Post - Revenue based programs coming, according to this article
Old Mar 29, 2013 | 1:07 pm
  #24  
luv2ctheworld
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Originally Posted by hiltonlondon2009
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Supply meets Demand. The market clears. We're not gaming them by mileage running, boys. Not even close...
The airlines are quite good at supply and demand; they have far more man hours in research and fine tuning this than any of us have (unless one happens to be doing that sort of thing).

The reality is that there are price points that the airlines will sell their seats at, and once that particular inventory is gone, they move up in price... supply and demand.

What the airlines also want though, is to maximize the profit, so they are hoping they can get a premium out of each person, and to offset any "perks" that have to be afforded to the person sitting in the cheap seat. For example, an elite that buys the cheapest fare, then gets to choose and Economy +/Economy Comfort/MCE seat, which means one less seat that could have been supplemental revenue, or if upgraded to first, via miles or other means, one less F seat to try and upsell, not to mention whatever cost that may entail for supporting an elite sitting in this cheap seat (calling in for an upgrade, free standby due to status, etc.).

So one way to capture some of those "true" elite dollars is to bring in a revenue based elite track. They want some tangible dollars for the perks bestowed upon us.

The other way is to get revenue from non-elites that will be interested in paying cash for an upgrade, or extra cash for extra inches, or priority boarding, or changing same day flights, all for a price.

I think historically, airlines originally thought of status as a reward for the frequent flyer, assuming that the more you flew, the more you spent. As a result, those perks should come with that frequent flying. As the industry got squeezed in the past couple of decades from all sides (operating cost, lower fares, etc.), they have taken a hard look at these perks and realized there is an actual cost associated with them and there is now a desire to get some of that back in form of revenue, one way or another, via a la carte services/perks, or a revenue floor that qualifies one to be an "elite" or frequent flyer. I am sure this has been aided by MBA number-crunchers and the development of systems that allow for data-mining.

Last edited by luv2ctheworld; Mar 29, 2013 at 1:13 pm
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