FlyerTalk Forums - View Single Post - Are "cheap" FFs getting irrelevant for airlines?
Old Feb 18, 2002 | 9:03 am
  #4  
Beef or Chicken?
 
Join Date: Jan 2002
Posts: 212
<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by venk:
A letter I got from CO hinted that what CO is doing now in terms of policy is the right thing to do to stay solvent and that any other airline which doesn't do this is going to be in big trouble.

CO is clearly betting on high-fare ticket fares (low volume high margin) than lower fare higher volume traffic (which I suspect is a majority of the FF population).

Is this greed as some have hinted or really the sane thing to do in this environment?
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What makes CO think that the pressures of "this environment" which has led them to institute such customer-unfriendly policies as HoKY fares are any different from the pressures faced by even (or especially) their largest corporate accounts?

What makes CO think that the very same market factors which have caused itself to re-think its methods of generating revenue and, particularly, of controlling costs are only applicable to them?

Peddling higher fares in a market that is characterized by recession and cost-cutting is a strategy that would suggest a denial of reality exactly at a time when reality needs a good hard look in the face.

Rather than blindly applying the "80/20" principle to justify their actions promulgating widespread alienation and accusations of arrogrance, CO would be well advised to consider the converse of this theoretical standard, which would call for greater attention to be paid to increasing low-yield/high-volume ridership.

While the sale of one premium-fare seat can make up for the revenue of even five or six discount fares, just how many more premium fares does CO actually expect to sell in this economy? After all, it's not just making numbers for the next quarter that CO must be concerned about... their bean-counters also need to remember that this year's numbers are only as good as next year's make them. And it is with respect to the apparent disrespect with which CO is regarding its non-premium fare ridership by way of said HoKY policy that could very well come back to irrevocably harm CO when it comes time to comp next years numbers. The mass of loyal, albeit excursion-fare paying, customers whill have defected in droves to CO's competitors.

Moreover, CO's strategy of luring ridership by gratuitously matching or outright granting even its highest Platinum Elite tier is another penny-wise, pound-foolish gem that ultimately erodes CO's sustainability of popularity which CO hopes translates into profitability. This use-you-and-lose-you paradigm, experienced by the very writer of this diatribe (and I know it's getting longer), will create resentment in its once-ecstatic Elites who are now as frequently and aggressively communicating with the elite-status comp hotlines of other airlines as they once were with CO reservations.

CO will not achieve distinction as a premium airline by charging fares that are higher in absolute terms and, more insidiously, vis-a-vis misleading techniques such as HoKY (in its original and its "enhanced - more flexible!" incarnations). Moreover, CO certainly will not aid itself any further by continuing to *******ize the intent of the Freddies (i.e., to recognize and encourage fair and high standards in travel loyalty-marketing programs) to suit its aims to this end. With all due respect to Randy Petersen, et al., those who aren't winning the Freddies may very well be discounting its validity, particularly with CO nowadays hysterically running around and touting its winning streak as justification for their patently misleading marketing and customer un-friendly moves.

I don't know which is more ironic - that CO's means to achieving its lofty ends are as contradictory as they are, or that CO is so blinded by its own brilliant press that they can not see it.
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