Adam Smith

Trying to compare any one flyer's CPM to AC's CASM to determine that customer's profitability (or comparing one customer's CPM to another's) is essentially meaningless for a few reasons, including:

• AC's costs are vastly different depending on the routes flown. Generally, longer routes and bigger planes means lower CASM. Back when Chorus (Jazz) published CASM, theirs was significantly higher than AC's. Some of the guys who fly a lot of short hops and complain about the benefits they get fail to recognize that although they have high AQD, the cost to AC of all their flights may be much higher than someone who does a few TPACs a year.
• A lot of fares don't earn 100% AQM (either more or less), which hurts comparability of AQM-based CPM and CASM based on BIS miles.
• Plenty of fares earn AQM but no AQD since they're ticketed by an airline other than AC. Someone who gets $20K of AQD on 50K AQM of AC metal flights and flies another 50K on flights that don't earn AQD could be a lot more profitable than someone who flies 100K AQM on AC metal.
• The profitability any any frequent flier also depends on the benefits they consume. Someone who uses their 10 IKKs to redeem 10 mini-RTWs in J for 8 people each, burns a ton of eUps on low Flex fares and generally makes maximum use of their benefits could substantially eat in to the profitability of their flying relative to someone who rarely consumes their status benefits.

Are your AQC in USD or CAD?

Actually, it's not hard at all to earn status without 100K BIS miles flown. I can pretty much guarantee you that most of those above talking about earning just over 100K AQM have at least a few Y/B or business class fares. Not to mention the 1500 AQM we all got this year after the IKK bust early in the year. I've qualified for SE the last 5 years and only once did I do 100K revenue BIS miles on *A and never 100K revenue BIS miles on AC alone.

Ziptie

I have never calculated any "values" to myself or Air Canada.
When I need to fly somewhere I do, I pick the route I want and usually its on AC.
They probably like me for that reason.

yyznomad

canadiancow

CAD. AC only reports it in CAD.

Adam Smith

Yes, I just didn't know whether you were running your own calculation converted to USD given your locale. An impressively low figure though!

canadiancow

I have a spreadsheet with total costs for me (i.e. including taxes/fees), and this is in USD.

It never really made sense to track AQD in USD though, since the number doesn't matter to AC (they use CAD) or me (I care what I spend, and what my AQD is, but not a fuzzy-AQ(US)D number).

skybluesea

You are correct comparing a single metric from one AC customer to another AC customer provides NO indication towards overall AC outcomes. You are also correct to identify multiple cases that explain why each individual case cannot be compared to other individual cases.

Yet AC, and every airline financial report I have ever read reports these same metrics. And of course AC cannot be wrong with its aggregated results, as the aggregated metric reflects the combination of every single different case you note. Bernoulli's Theorem comes to mind (although Cardano two hundred years earlier had the original thought), all of which has been refined to what we currently know as the Law of Large Numbers and Central Limit Theorem.

I contend, theoretically of course, that each and every case reported here on FT adds to the case originally presented, and therefore moves our understanding closer and closer to what AC reports as an aggregated metric. Consequently, when CanadianCow reports a below 6c metric, by definition this requires that another flier must have 30c metric for AC to achieve 18.2c, all other things being equal of course...

Now that I am past drinking heavily spiked pre-Christmas eggnog, I will ask for your indulgence as I think little more clearly about your post. Strikes me that the application of Bernoulli's Theorem is NOT applicable here as this would presume a random sample among all cases. Clearly, those who post frequently on FlyerTalk are NOT at all likely to be even close to resembling the mean of AC travelers, writ large. In fact, this highlights another problem that emerges with FlyerTalk posts as non-representative of the mean - i.e. Self-Select Bias, whereas those who post here have some personnel/professional incentive to do so, and thus in NO manner can be deemed as a random assessment of a case.

Now that I have forced myself to think back 40 years to undergrad times, I'm sure you can prove why all of this is wrong, theoretically speaking of course...

In short...your' right.

Yhztraveller

Looks like I am the one that offsets Cow's low AQD/miles flown. I am $0.52 per actual mile flown. That sounds like a huge number, but works out to $342 (net of HST) per 1 way flight.

I suspect the "slope of the curve" is fairly steep when comparing rev/seat mile over various flight lengths.... I am sure Sky could have a couple of drinks of my Johnny Walker Blue (nice gift) and tell us why we are all just subjects in one of Pavlov's experiments!

canadiancow

That is not true at all.

My NH operated flights count for AQM, but they have no impact on AC's RASM or CASM.

skybluesea

Now your talking...have an unopened bottle of Double Black (not as good as Blue) but still might you wish to trade

All kidding aside, had an intern some years ago work with us on a major project - individual was a Financial Engineer, but the intern described the role as Quant - who knew such a thing existed?

We'll this Quant now works at AC on route profitability analysis, and tells me some interesting things about behavioral economics being applied in modern airline pricing models.

ps...my economics training way back when turns out to woefully rationalist - while modern economics is teaching behavioral theories in first year...Little SkyBlueSea just completed degree in Economics, and in first year was reading this...

https://www.behavioraleconomics.com/...niel-kahneman/

and thanks for the post...just looking for something to read on our trip tomorrow to Texas and Louisiana...will re-read this ground-breaking NOBEL Laureates work again.

Yhztraveller

Frankly, while Blue is an excellent Scotch I do not apply the same value to the taste difference (to Black) than I do to the cost difference (ie. Blue doesn't taste 4 times better than Black). Since the last economics course I took was 30 years ago I can't recall the economic theory for this.

I am sure that EYW is designed to try to take advantage of behavioral finance, but they obviously didn't take into account the genius that is the "Cow Theorem" that completely ignores the value of time spent accumulating wings (or places $0 value on his time) when computing the marginal benefit of the 1,000,000 aeroplan miles vs the cost of being in the top 30....

Enjoy the read! I plan to settle in with an anthology of two great philosophical minds, one a 16th century theologian named Calvin, and the other a 17th century philosopher named Hobbes.....

canadiancow

By that definition, if you've ever taken a vacation where you did not receive some form of compensation (like a million miles), then you place a negative value on your time.

skybluesea

agree, hard pressed to pay for Blue, when my Double-Black is half the price and pretty fine too...the real genius of marketing fine alcohol of any kind is that once you have the 2nd or possibly the 3rd shot, you won't remember the difference anyway.

As for 2018-2019 re-qual, shaping up already to be another excessive year of flying, likely making SE again by April-May...and heading off today to Texas & Louisiana, first on United, then Southwest, and returning on AC...

Long ago stopped favoring AC, and pretty much use the carrier that suits the journey best...and with Little SkyBlueSea living in Central Canada, stop-over routings via AC often prove logical on my way somewhere else...

RangerNS

Basic concept of utility. Alcohol provides 3 major functions: 1) relaxation and/or getting drunk, 2) taste, 3) looking and/or feeling cool. Blue isn't getting you 4 times relaxed/drunk; it doesn't have 4x the taste. I deduce you feel 4x as cool drinking it.

skybluesea

yes, but this only applies if you are drinking straight out of the bottle where all those around you can see the label

seriously off track here, but hopefully Moderator will see the fun in these posts that reflect some spirit before another year of heavy flying.