Transpacificflyer

The market data emphasizes the importance of corporate travel contracts, not me. I believe the next most valuable segment is the block purchase in the leisure market.

In respect to not caring about you, that is a bit dramatic. Of course the airline cares, but it does not worry if you are unhappy as you are easily replaced. Today, Elites and Super elites are a dime a dozen. A few long hauls in a year can easily produce a 50k customer. Whoopdee doo. I made my status on long hauls and not on the salesman shuttles. However, AC made more money on my 10+ flights than on the super elite salesman with status who flew 2-3X more miles than me. Why? Because I didn't use the MLL more than once, I flew with 1 bag, I paid for the J class seat, I didn't use any concierge or hotline service. When I flew on a sales trip to YYZ, I used the MLL and it was packed with moochers stuffing their faces. On that Rapidair flight many of the J class seats were occupied by upgrades or employees. I sat in my Tango fare seat and ignored the misery of sitting next to a fat guy and of being smacked every time the FA went down the aisle with her trolley.

Instead of asking me about the key market segments, ask AC.
I guarantee you that it will be a long time before you receive a clear and honest response. However, there are some delusional people on here who will insist that the PR boys give them the inside scoop.

antirealist

Aren't you contradicting yourself? If AC isn't worried about losing frequent flyers who aren't on corporate contracts because we are easily replaced, then ipso facto they don't care about us.

I'm not a salesman, I don't buy Tango fares, and all my travelling is entirely for leisure. In 2014 I spent just over $70K on flying with AC, mostly on international J tickets, so I have 119 eUpgrade credits which will expire on March 1. I know there are people who also don't fly on contracted corporate fares who spend a great deal more. But it's good to hear that people like me are easily replaced.

margarita girl

Guess you don't have to worry about people hitting you up for travel advice!

Transpacificflyer

AC has revenues in excess of $12billion. Do you honestly think they are worried about the potential loss of $70 thousand? A corporate or leisure contract is for a set period and continues if one of the user's dies. If you die, your purchasing of AC product ends.
As a for profit business AC certainly cares about its clients, but that doesn't mean it will put at risk its financial plans and projections because a few hundred FFs are upset over the FF program. The loss of FFs was factored into its cost benefit analysis when all of the FF changes were considered. AC is one of the best airlines in NA, and it knows that its domestic competition is crap. Why then should it worry? The business I gave to KLM instead of AC was replaced quickly and the AC C-suite couldn't care less about my views. The opinion that matters is the investment community's.

BTW, I have lots of credits too. They are as useless to me as they are to the thousands of others who hold them.

superangrypenguin

Only time will tell if AC got the cost benefit analysis right. While I can buy your argument Transpacificflyer, the basic business truth is that the cost of customer acquisition is usually higher than retaining a customer, and losing $70K isn't that bad - sure, but if you go digging, there are a LOT of high spenders on this board who went ape**** and took their money elsewhere after the 2015 changes (many posting photos as proof). 70K * 1000 people (again we are just one board), is $70,000,000. That's still a sizable dent...

Again, we'll see if AC got the calculations right in time.

The Lev

I'm assuming that this $70K is for you and significant other/family.

My question is as a SEMM you are almost guaranteed an upgrade on most routes. It probably makes sense to buy J for the people travelling with you (if you can afford it and J is important to you), but why not book yourself into a Flex fare from time to time and use up the eUpgrades while saving thousands?

yyznomad

If one can afford to do so, then who cares?

ffsim

This argument comes up often, and honestly, I don't buy it. Consider the number of passengers AC carries (35 million in 2013) and then figure out how many of those are spending $70k. Or even $35k as part of a couple. AC would be foolish to not *want* antirealist's business, much like a Vegas casino not caring about a millionaire because they host a bunch of billionaires on a regular basis.

yyznomad

+1

After Burner

That sounds a bit like my AC travel profile and spend. But, honestly, during the normal course of travelling with AC I've rarely felt under appreciated. I really don't get what it is that AC has done to make people feel this way. (Other than, of course, the one huge elephant-in-the-room-sized exception!)

ensco

This is almost never framed properly around here. Of course they care about someone who spends 70K.

They have to make choices - in this case, looking on the population of 70K spenders, vs the population of large corporate spenders, they are trying to figure out who they can get more out of, and what are the costs/risks of defectors, across both those population groups.

It is not dumb to lose some big spenders if you more than make up for it by increased spend by another big spending group. We obviously have no ability to evaluate this question.

But the constant drumbeat that AC are idiots because they make choices that might decrease their competitiveness to some 70K spenders is tiresome/counter-productive.

ffsim

Indeed, we have no ability to properly evaluate this question. That's what makes FT fun -- discussing topics and questions from various perspectives.

The way I look at it is like this: an individual big spender is not the same as a corporate big spender. They're not equivalents, not the same category of customer at all.

I consider the individual big spender belonging to the upper tier of the same category to which the VBIT belongs, i.e. individual customers. Similarly, a big corporate big spender is the same category as a corporate little spender, i.e. corporate/contract customers. In my mind, they're both more important than the other customers within their respective category. In other words, I would keep an SE happy before bending over backwards for a VBIT just like I would keep a Fortune 500 customer happy before bending over backwards for a small company. I'd adjust my offerings accordingly for each category of customer, and when I make changes to those offerings, I think about how my customers would be affected within their respective categories. But again, that's just my utopian opinion.

When did I say "AC are idiots"? I disagreed with someone who said AC shouldn't worry about a customer spending $70k. "I don't buy it" were my exact words. What's tiresome/counter-productive is having words put in one's mouth.

SurveyHand

Ensco... why do you say that AC, "need to make choices"? I don't understand why any business would want to pick and choose one demographic over another.

I know that at my company I wouldn't last long if the boss thought I was providing less of a service or was indifferent to the needs of a smaller client, just because we also have bigger ones.

Who knows how small, the small client is going to be come this time next year.

In my simplistic view it's surely better to try to keep as many customers as you can, big and small. But then maybe that's why I'm not in management.

superangrypenguin

Marketing 101. One must have a basic understanding of each segment of the market and then go after that particular customer by way of marketing spend, loyalty program etc. You have to be able to paint who your target customer is. A lot of newbie younguns in business school have that same belief - let's go after everyone! The reality is that it's not realistic.

Aka. Lululemon pants are after trendy younger fit women in the yoga market and/or athlei-leisure space and have minor disposable income who are brand loyal and either love premium brands (will pay for it) or are aspiring to buy premium brands.

Result? Size 0 to 12. Mostly smaller women, you see young people wearing them (not a lot of mom's wear them), or men for that matter...notice how logos on these pants are so obvious? (see brand part)

PS I overgeneralized a lot there on Lululemon. I could write (and did write) a business strategy paper on them (marketing masters believe it or not). But hey, this isn't B school, it's FT

SurveyHand

But would Lululemon go out of their way to avoid selling merchandise to someone not in that target demographic. It's one thing to chase a certain customer, it's another to actively chase other customers away