LockheedElectra

This is an interesting thesis, and got me to do some bean counting. As of today, I have 75 flight segments, and 114,000 status miles. I also have 24 segments on DL. Last year I did 102 segments and 129K miles ,and maybe 4 or 6 on DL. I have flown DL primarily because of the UDU, as DL is our corporate flyer and they comp'd me G as an exec. This year I will easily get my own S status, and will likely be comp'd to P, so I'm more likely to fly even more on DL. So this year I will spend well over $100K on AC and probably around $30K on DL. I can also directly impact my company's travel policy, but let's forget about that for a moment. So I figure $30K is the revenue lost to AC as I get more disgruntled, and less loyal. So all this means that whether AC cares about my business or not I suppose depends on margin and load factors. I know for a fact that none of the AC flights that I used DL for instead were full, as I always looked at both. So if they are not full, a margin calculation is kind of irrelevant. They lost $30K in income as contribution to overhead. It would be interesting to know how many TT members they have, as it would take say 1000 of us to move to make any significant impact (say >$10M), which even then isn't even 10% of last Q's EBITDA. AC's quarterly revenue is around $3B, and last Q they had an EBITDA of $316M. In addition they need to run lounges etc to keep us happy, which is a hit on gross margin. The marginal cost of the lounge per FF would be interesting to know, as they already have the infrastructure and are paying the rent. UDU doesn't really cost DL very much, as they have those empty seats anyway, and the cost of a drink or two and a bad meal isn't much (and they charge for lounge privilege's). Despite all the negativity on this board, AC did see a quarterly increase in traffic of 3.3%, so I guess the bottom lime is that we're important, but not that important to them. That would explain a lot of this nonsense.

LockheedElectra

btw, here is a link for Q2 2012 for those interested http://aircanada.mediaroom.com/index.php?s=43&item=573

canopus27

Sadly, I agree with you ... but given that Air Canada Top Tier created this thread, and will presumably be reading these responses, I wanted to do the best I could to make sure there was absolutely no ambiguity about the impact of the changes.

The crazy thing is that they seem to be intent on driving away the customers who value them most. Many of the people I work with travel on random airlines - they just pick on a flight by flight basis - and none of them will be bothered in the least by this change. I'm the one that goes out of my way to try and fly with AC, and I would still rather stay with AC ... but as you observe, the intent seems to be to drive me away. Does AC really want me to reduce my flights with them?

It leaves me sad, and shaking my head in wonder.

canopus27

Interesting numbers & perspective ... but don't forget that unless they plan on removing the lounges (etc) for J, then all the infrastructure will have to remain in place.

I could only imagine two ways that this change will make money for AC, and neither holds water for me.

(1) If enough customers make a choice to purchase Tango+ fares while there are also Tango fares still available, then that would drive incremental revenue. I can tell you that I don't have this choice, maybe enough others do ... but enough people would need to be able & willing to do this, to offset the loss of some number of their top tier customers.

(2) If the reduction of Top Tier members allowed them to sell additional high priced tickets (presumably J), rather than have to "give" them away as upgrades - but this doesn't really make sense to me either, as the R games already ensure that revenue PAX get priority.

So, I agree with your premise, but I can't figure out how AC hopes the math will work out.

nowinyow

I share your sentiments. I have been loyal to AC almost since AE was introduced. Granted, I do fly UA, AA etc from time to time, but I always tried to fly AC if they flew to my destination.

I don't consider myself a SE bottom feeder, having routinely paid Z, Latitude and T+ flight passes.

Perhaps the intention of AC is to go completely low cost. No frills. It's their company and they have every right to do so. I just wish they'd come out and say it instead of making slow incremental changes.

Instead of the slow strangle method, ACTT, why not just haul out the guillotine and get it over with?

back to more research on the UA + AA forums.....

canopus27

If AA or DL were to offer a time limited status match without challenge (similar to what AC did for BMI customers), I bet they could swoop in right now and AC wouldn't know what hit 'em.

The Lev

@ACTT, can you confrim whether or not codeshare flights being flown on AC metal but booked with a Star Alliance partner will also be re-booked and whether that will also be done this weekend?

I have received conflicting information from AC's Super Elite phone and e-mail.

KenHamer

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If you go back you'll find that many for many people (I.e. those that only travelled domestic or transborder) the eUpgrade schedule was an improvement.

PreferBulkhead

Indeed it has been for me ... however this new change on Tango is not.

bonecracker

I'm a first time poster but have followed this forum for about a year and have enjoyed learning from the knowledgeable people on this board through my lurking.
I am one of the *SE's that will be affected by the T fares internationally. Lowest price flight wins in my company but I am allowed to choose the carrier/routing of flights, as the company does recognize the importance of the rewards/benefits that we receive by attaining *G status, be it reward flights through AE or the upgrades received, which I find secondary to the reward flights using miles. The difference between T and T+ internationally will not allow me travel T+ anymore. Within Canada there is a close enough price point that I can choose T+. I believe AC is trying to do away with my class of FF which only purchases T+ fares not Lat or J. Using only T fares to reach any level of status to upgrade regularly/even only the long trips, will be nearly impossible. I actually enjoy flying AC but cannot fly 100k miles and not be 'rewarded' for doing it. Regretfully, I will be one of people looking for alternatives to traveling internationally with AC.

KenHamer

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Those "Super Users" also exist outside of FT, and will have the same effects, though perhaps delayed (until they discover the changes themselves.)

KenHamer

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Easy. There IT department is doing the math.

Clipper801

Unfortunately, this may be a one-way love affair. These customers may not be the most desirable for AC from a profitability perspective. There are flaws in the present programme (which has been discussed here numerous times, e.g., attaining SE for ≤$6,000 with min. 10K Status Miles on AC). I can understand why AC wants to plug the hole but it really did a botch job.

KenHamer

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I was one of those primarily Latitude (or at least M) purchasers, and AC previously drove me away by choking R space, even when J was wide open.

bimmerdriver

I hear you. As an E, I had very little luck getting upgrades, even when there were a lot of open seats in the forward cabin. I ended up not using most of my upgrade credits, because I almost never made the cut. As an SE, it's definitely better, but AC still is playing games. For example, I'm flying on AC854 this evening. When I booked the ticket earlier this week, within the 7 day window, there were lots of open J class seats, but I didn't get the upgrade until a couple of days ago. Even now, a few hours before the flight, there are open J class seats, but they are holding the upgrades back until the last minute.