FlyerTalk Forums - View Single Post - AA getting more restrictive on domestic mileage upgrades?
Old Mar 6, 2007, 9:38 pm
  #27  
ijgordon
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Join Date: Apr 2001
Location: NYC
Posts: 27,190
Jakebeth -- the point I was trying to make is that there are clearly competing interests at play in terms of $ revenue and mileage redemption. Usually airlines like to have tight control over each of these so they can best balance their P&L, cash flow, balance sheet and customer service. That's why upgrades on other airlines book into special fare classes generally reserved only for upgrades. By co-mingling mileage upgrades and fairly expensive revenue tickets, AA loses a lot of control in balancing these elements of the equation. That's the "havoc" I was talking about in my previous post.
Perhaps a brief example -- say a flight is F4 A0 P0 and departure is approaching. Yields on the flight aren't looking great, and they don't expect to sell many more full-F fare tickets, but they still want to try and make the flight profitable. Revenue management would possibly decide to open up A (and perhaps P) inventory, effectively lowering the first class price, in the hopes that supply-demand dynamics result in the sale of additional seats and the generation of additional revenue. By opening up A, however, they also put themselves at "risk" of losing that FC capacity to a mileage upgrader. Sure, they get a liability off their books, but on that particular flight they were really trying to get a higher level of cash flow. A bit of a quandry for AA.

When they re-jiggered the booking classes a few years ago (remember when P used to be 3-class transcon?), and YUP/KUP fares became much more prevalent, some of us thought that at a minimum AA was going to change the mileage upgrade bucket from "A" to "P" inventory, which would give them incrementally more control over revenue management, since they could release discounted F seats into A inventory without the risk they'd be taken by upgraders.

Fortunately for us, that hasn't happened. Again, I'm thrilled that upgrades still book into A, it makes it pretty easy to upgrade with miles on AA relative to the competition. But it can't be good for AA's bottom line.
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