Ugly Math - AC Basic vs AP Classic
 

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The other half of the equation is status and the added benefits (savings) that it can bring.

(says the FOTSG who doesn't even have an Aeroplan number:) )

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Can't. This is way too aggressive tbh.

I think at the bare minimum you have to include seat and luggage.

Where I would be flexible is if you prorate the luggage and/or seat fees with assumptions like "bag only checked 50% or the time".

For example:
Pdelta = Standard - basic - sum[n,i=1](pi(xi)), where n is the amount of addons and p is the probability that the add on will be used and x is the price.

This way, you're not too agressive with your price delta (include the benefits), but not too conservative either.

If you're AC, you likely have access to historical data on who purchased what, and can easily find p and x for each i.

Then you few out internally how often you want to "reward". 10:1? 20:1? Well, using your pdelta on the route and the "price level" you assume for rewards (e.g. X inventory = G inventory) you can set your redemption levels.

You can probably get a good idea of reward levels AC wants to give if you do the reverse math, but even with assumptions above you'll get wildly different results.

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I guess you could, but why are you interesting in price elasticity for this particular exercise?

In this case, we are focusing on the price delta for a specific product at a specified price level. I.e., your RM/Pricing strategy has already decided which fare/inventory to make available, so if you decide to forgo price elasticity and only focus on price delta, you are not make a horrible assumption.

This is why branded fares are good for AC. On one end, they can have a team establish their product pricing strategy and reward program benefits without having to make supply/demand assumptions. On the other, you can have your RM/Pricing team focus on the overall fare pricing strategy, and supply/demand adjustments based on that strategy.

You can now discriminately focus on S&D management and product pricing without interfering much between one and the other.

I have become a fan of the AMEX Platinum. I don't leave home without it. That provides the lounge access (on both AC and WS) as well as priority security at YYZ. Spent $500 for the card. You still come out ahead and have access into any Priority Pass lounge (including the Maple Leaf lounges in the US).

The other thing it does it lets you fly who you want when you want. Ten years ago I was exclusively flying AC now it is a combination of WS and AC. WS has their first 737 with real business class seats. The rest of the fleet by the end of the year.

AC has "optimized" their loyalty program to the point where I don't see the benefit any more. Fly whoever, bank into Aeroplan (for Star), into Delta (for Skyteam or WS), and Alaska for everyone else.