FlyerTalk Forums - View Single Post - Common sense (or lack thereof)

Oct 13, 2002 | 5:34 pm

#2

DrivingRain

Join Date: Feb 2002

Location: USA

Programs: AA2, DL2, Amtrak2, US2, SPG1, MAR2

Posts: 2,566

Vulcan,

Offering International upgrades to Elites would affect revenue. I have quoted myself in a summary of the rationale and the pros and cons.

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On most domestic hops, most pax and businesses are not willing to pay for FC. On international flights they expect a certain % of pax (a significantly higher % than domestic) to pony up the cash for the upgrgade because the value of long haul upgrades is something more people and companies are willing to pay for. If they were more liberal with this product (like AA is), then they would lose incremental revenue to those who would have been willing to purchase BF but instead choose to take their chances on a free upgrade.

Whether this strategy works or not depends on the amount of the cash inflow of customers who pay for BF who would otherwise try to get an upgrade versus the loss of system-wide revenue from those who choose to fly a different carrier because of this policy.

You know that YOU are not willing to pay 8k for a BF seat. The airline, however, is not able to read your mind. They MUST assume that there is a chance that you would be willing to pay the price for BF. To a certain extent in the long run they are right. Indeed there is a certain % of those who pay for BF who would otherwise take their chances on getting an upgrade. The question is whether the revenue generated by that % is significant enough to outweigh the loss of system (domestic and Intl) revenue the airline has experienced from the loss of a flyer who would never pay for BF and decides to switch carriers b/c of it.

Different airlines have different opinions about this issue and it translates directly into their upgrade policies, non-rev policies, and the quality of their Intl Biz product.

The price of a BF ticket is probably more than many individuals in our board spend on CO tickets in a year. It takes many lower fare defectors to make up for 1 BF pax who would otherwise try to upgrade a lower fare tix. How do the net $ shake out at the end of the day? I dont know...none of us pax do.
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DR