Originally Posted by ACORD
Air Canada and AeroPlan are separate businesses.
Yes and no. AC calls the shots, I would think. We are dealing more or less with an internal pricing situation, and it sounds like they are the prisoners of their own beancounters. Unable to look in different ways at the value of points when sold to paying cusotmers, and the value of points when paid for to Aeroplan by AC.
Air Canada has decided to reduce Aeroplan expenses in 2005 by buying fewer miles from Aeroplan than before. Air Canada are aligning "points expenditure" with revenue -- so if you fly on AC metal, buy a City Pass, or purchase a more expensive ticket the number of points go up.
Again, it seems to me the issue hinges on how you costs your points. True FF programs were predicated upon the notion that the marginal cost of a seat otherwise going empty is close to zero.
OTOH, while the marginal cost of seats provided for points by AC to AP is still close to zero, if they move into a business model whereby selling points is in effect selling a relatively large number of seats through the back door, these are no longer marginal. And furthermore, they now have a criterion for assessing the value of the points: what other customer pay for.
However what we are dealing with is not truly a change in the fundamentals. Seats given away to FFs presumably are still few and could still objectively looked at as marginal.
But the beans counters seem not to be smart enough to distinguish between the economic reality and their accounting models. With the results that the "free" flights given to FFs are now perceived as expensive.
As frequent flyers we might not like it -- but it helps to understand why Air Canada are making these moves: No rational person can really believe AC management sat down and said "How can we punish Frequent Flyers this year?" -- I suspect AC management sat down and said "How can we reduce expenses and increase revenue this year?".
Perhaps. Still, it stems from a narrow and misguided accounting view. Not seeing the bigger picture. And more to the point, the implementation would seem to be designed precisely as if they wanted to punish frequent flyers. Deviousness, lies and manipulation. Taking the best customers to be idiots instead of making their case in a more candid manner. When in fact, all indicates the stupidity is really at AC, unfortunately.