This is partly true.

IMHO the principle of excluding or discounting some fares is not a problem per se - miles/points are a "perk" and if people are prepared to forego the perk and save a few dollars, that's fine economics.

There are (at least) two problems I see with implementing it. First, if the extra amount that must be paid is out of all proportion to the "perk", e.g. the lowest miles-enabled fare is double the non-miles fare. Second, if it makes one airline a lot more tight-fisted (or even appear to be more so) than the competition, the bad public perception could grow to outweigh the savings. I don't know that either of these pitfalls are too much of a problem for the moment.

What I think is a REALLY BIG problem with the QF/AA arrangement is the way they have applied the discounting to each others fares but not to their own.

Let's take a QF/AA example and compare it to SQ/UA.

Say I fly QF Q fare. I earn AA miles at 0%, or QF points at 100%. Now say I fly an AA V fare. I earn AA miles at 100%, or QF points at 50%. This undeniably means I'm best off earning QF points for my flights on QF. And I should earn AA miles for my AA flights, unless I fly a lot more with QF than AA which is not the case for most US residents. Bottom line is that those who fly routinely with AA will end up with points split between AA and QF.

Now look at SQ/UA. SQ have many fares that don't earn miles full stop. But the point is, they don't earn miles on EITHER UA or SQ. If the fare DOES earn miles, SQ don't discriminate whether those miles are put on UA, SQ or another *A partner.

Speaking personally, alect I think you know I looked at switching from QF to AA about the same time you were making posts about it. I did the switch; I'm AA PLT and will put about 50K mi on AA (mostly for business). I'll put about 30K mi on QF for leisure (Q fares). By excluding QF Q fares, I'm effectively forced to shift 30K mi into QF where it is nearly useless - and worse, it will make it a much more difficult task to requalify for AA PLT.

By contrast, I could put 80K mi on UA. With their current offers, I'd have a good shot at PE1K. If it wasn't for living in DFW and my work having a preference for AA over UA, I'd seriously consider switching from OW entirely due to the new arrangement.

In short, I don't believe that AA discounting fares is bad in itself, but the fact those same fares are not discounted on QF (or vice versa) causes all sorts of problems for flyers who travel regularly on both.

Since you posted about US domestic stuff, I've argued this from the perspective of an AA member. But, the system is nearly symmetric so very similar arguments could be advanced from the perspective of a QF member.

In summary, I certainly think it dilutes OW so its bad news for the alliance. Personally I am having a hard time seeing how OW as an alliance gives me much benefit versus QF/AA being out on their own.

[This message has been edited by jridge (edited 07-09-2003).]