Originally Posted by
AgencyGuy
Thanks to everyone for all their comments and feedback on this, it’s a great thread.
[*]Revenue recognition is the way to go. Almost every other industry (hotels, retailers, banks) rewards and recognizes spend / revenue, so why should an airline be different.
Er.... no? Hotels (at least the ones in USA) chains are pretty standard in giving status based on nights and stays spent (some chains started to add revenue, but only as an additional qualification factor and not a replacement), so in essence instead of replacing something that works well and offend an entire segment of customers, they simply added a way to make big spenders happy, perhaps something CX should look into?
We all know that miles are a poor measure of revenue and as we have seen in the airline industry, that is changing. I would expect most of us work in business, and in a business (which CX is) we are all trying to encourage revenue.
Again no, or depends on how you breakdown the data into useful information. If you are only comparing ONE Y flier vs. ONE J flier then yes, it's no comparison. But if you look at the market potential of the entire Y fliers market, vs. market potential for J fliers, you will quickly realized the economy of scale favors Y fliers, or in another words quantity Y flier out weights the few premium fliers.
Put it this way, if you wish to have one more tycoon spending $15,000 but sacrifice 100 regulars spending $1,000, that is not smart business model at all. Airlines, the nature of its business, is not simply about quality, but also quantity, that's why for a full-frills airline like CX it is so hard to balance the two, and much easier for no-frills airlines that only going after Y market to have an easier time, but the solution is by no means abandon the Y market for the sake of a little increase in premium markets, because the number of spenders in the premium markets grows at a much slower rate than its counterparts at Y markets.
I believe that it should be recognized. But let’s get real, a 25% mileage/sector bonus in Business Class over Economy comes nowhere close to recognizing the value of the business traveller vs. the economy traveller. This is an industry legacy from way back and the recognition of class of travel needs to align to revenue delivery for the entire airline industry. (Incidentally over the same period an airline industry that has changed beyond recognition)
Again, it shouldn't be a single person vs. a single person comparison but market segment vs. market segment. Trust me, if any airlines think they can dump Y and only provide premium seats and make money they will do so in a heart-beat (those that tried in the past all failed miserably).
Giving Y recognition is not about recognizing the individual of their individual contribution (it is light), but giving thanks to the ENTIRE Y COMMUNITY that an airline such as CX values THEIR REVENUES AS A WHOLE, and rewards them as such.
I would notion a hypothetical bet that if CX all of a sudden loses all of their premium pax they would struggle, but would get by. But if CX all of a sudden loses all of their Y fliers, they would go bankrupt in a month.