Originally Posted by
FlyDeltaJets87
You can debate how it will play out, but Bubba's post is right about where the airline mentality is heading. As the airlines merge and capacity is reduced while the economy slowly picks up and demand picks up, the remaining airlines will have far more control over the market and far less of a need to "compete". This is simple supply & demand at work. The airlines won't have to have offer as many perks to sell the seats because there will be fewer seats. The airlines are banking on the fact that if they don't fill those seats with current elites, they'll still fill those seats with other passengers and those passengers may be paying additional revenue for perks the elites are receiving for status right now. It will be interesting over the next couple years to see how that strategy plays out but right now, the major airlines are believing they can cut their low revenue elites and focus on the high revenue elites, while still selling those seats to either 1) the used to be elites who are no longer elites due to not meeting new qualifications or 2) other passengers who still need to fly. After all, why does DL care if it sells that seat to an elite or to a non-elite? All they ultimately care about is selling the seat. The elite perks help entice passengers to consider one airline over the others when choosing airlines, but the reality is now the airlines can be more selective as the economy improves, demand picks up, and yet capacity is reduced.
There are relatively low barriers to entry in the airline business. When the economy picks up, new carriers will pop up, capacity will be added, and perks/loyalty will make a comeback as a strategy to fill planes. It's happened before and it will happen again, just as surely as capacity will contract in the next major recession, temporarily giving the carriers pricing power for a few years yet again.