canadiancow

Exactly. Earn status on an airline you can fly more.

It actually costs AC a lot to use their status flying other *A because they have to pay partners for lounge entry. That's an expense AC does not incur for domestic travelers.

zrh2yvr

Why would they do this?

I guess you have to just ask - who is the competition here for AC. Outside of Canada - they have the ability (at least in Europe) to 100% corner the market as their program is way easier to qualify within. But - it is also harder access the needed dollars on AC - so harder to qualify - thus the thinking behind the previous lower SQD. Now - in a market like mine - AC now becomes just another carrier among around 8+ that I can choose to fly (for example) Zurich to Vancouver with no more than 1 stop. Without the loyalty pull - AC is nothing - really nothing - and then one would just fly the cheapest J-Class. From ZRH to YVR your choices (one stop) are: AF/LH/LX/BA/KL/UA/DL/AA/FI/WK (Direct)/CX (ok it's long way around)/TK (longish). . . . . that is serious competition for which AC has to fight zero when they are selling to anyone E50 or higher. There are some JV carriers there so that is a bit of a wash but overall - all the choices are there. The amount I continue to pay is so far above what I could otherwise pay - - and isn't that why loyalty programs have value?

Now - we all have to get through 2022 first - to see how AC decides this worked for them. They would look funny to go 100% back but I could see either some tweaking (maybe 25% or maybe SE is reduced to 12 or 15k?) - - or - - during 2022 they figure out a model to credit other flights for other carriers (which benefits everyone - - fairly - and equally across the board). Going to a UA model would make sense and that would be something that people should find fair!!

Anyhow - I will make it next year - I have so many rollovers - bonuses - reserve card bonuses - and plus - I have one trip for next year not yet booked (lucky I did not book yet) and so I will basically just pay the amount needed.

On a separate note - talked to the country manager of AC here today - he had no idea this was coming and not even heard yet - so you can imagine how that went down . . . . .

Bohemian1

If there were any future tweaking, I imagine it would be on how the AQD was calculated for a given flight segment / fare class. There's nothing to say it has to be 1:1 (more or less) to actual dollars spent.

The Lev

Except that depending on your travel patterns it is likely far more expensive and difficult to earn the somewhat equivalent of SE on Miles and More which is the "home carrier" for someone like zrh2yvr ... so up to now, the sensible choice for them was to spend $10K to earn SE and all of its benefits for transatlantic travel while also being able to avail themselves of Star Gold benefits when flying within Europe or going to Asia/Africa. Going forward the calculus changes.

jmt18325

But, I have to ask--is that Air Canada's problem?

The Lev

Not at all - but that wasn't what I was answering. I was addressing canadiancow who said "Earn status on an airline you can fly more" by pointing out that (at least up until now) there was a very good reason for certain types of flyers to ignore that guidance.

canadiancow

If you can't earn status on an airline that's convenient to fly, that kinda suggests you're not the greatest customer.

If I lived in Munich, I would likely be LH SEN. Or I'd still be SE. I don't know. It would depend on my travel patterns. UA has been very tempting over the years for me, and I'd have no issue hitting even their latest 1K requirements. But AC suits me better, and I easily qualify.

They've made it very clear most people are way over on SQD for their earned status, and are short SQM/SQS.

As I said before, it costs AC a lot of money for foreign *G expenses that they don't have for domestic. I don't know how status bag fee waivers work, but if it's anything like lounge entry, it gets billed back to AC.

People seem to think "I don't fly AC that much, therefore I don't use my benefits", but I'd argue it's the opposite. It costs AC "nothing" to let you in an MLL, check your bag, or give you a preferred seat. It costs them a non-negligible amount to get you into a United Club or Lufthansa Senator lounge, and probably for you to check bags on UA and LH.

So you're paying AC less and likely costing them more.

I'm surprised by this change, but not entirely unhappy.

Far Siren

I just hope they allow more opportunities for earning AQD including ancillary fees like seat assignments, bid upgrade fees, LMUs etc. Or a portion for AC vacations. You are, after all, contributing revenue to AC with this kind of spending as well.

canadiancow

For everything you mentioned other than ACV, I 100% agree (though I'm not sure how much of a cut Plusgrade takes from bids).

I don't know how ACV works, but United Vacations is basically a separate company that leases their name and buys lots of bulk fares.

But yeah, onboard purchases, etc. It should all count.

The Lev

Just as United Vacations is part of the parent organisation UAL, likewise VACV is a part of Air Canada but does operate as its own business buying capacity (exclusively AFAIK) from Air Canada for flights and various other partners for hotels, etc.

As a data-free guess, I would expect that somewhere between 30-50% of the average selling price of a package holiday is the airfare, so it would seem appropriate that at least 30-50% of the spend on VACV be credited as AQD. I don't think AC should or would want to break out the airfare from the rest of the price for AQD purposes - just pick a "typical" number and use that.

escape4

In general, yes, and in fact most people do. Except that some travellers cannot concentrate their flying on only one or two airlines if their travel pattern is global, hence the value of alliances. Among the numerous airlines that an international flyer can use, most end up picking a program which gives interesting benefits. However if more and more airlines go AC's way with a high threshold for status which requires passengers to mostly fly with them and not partners, then it will make independents increasingly attractive, such as Emirates. It also makes the value proposition of flying with airlines in an alliance where you don't have status (Sky Team for me), a bit better. And definitely more attractive to concentrate more on One World to boost status there.

Adam Smith

But only one airline bears the cost of awarding that person their status.

Most frequent flyers don't think like FlyerTalkers. They don't hold status across multiple airlines and they're not constantly trying to optimize their status and points earning. They often credit flights to their home airline even when they might do better to credit them elsewhere. They choose a lot of their flights on price and schedule. To the extent the airlines want to keep their FFPs competitive, it's with their closest competitors. For example, EK, which runs a few flights a week to Canada, is not a close competitor to AC. The amount of business AC will lose to EK (and others like it) is likely tiny compared to what they expect to save in not handing out status to a bunch of Americans and Canadians with fake US addresses.

This is not the mid-2000s anymore, when airlines were constantly chasing market share. Obviously they've been losing tons of money through COVID, but before that, they had largely stopped chasing market share and tried to quit spending money attractive high-volume, low-profitability customers. If AC is eliminating the SQD discount for non-residents, you can be pretty sure that someone ran the numbers and realized it was costing them way more than it was making them. They're not stupid. They're well aware they'll lose some business. But they also have a good handle on what it costs to hand out status to all those people.

escape4

Yes AC bears the cost of awarding status. However, either you want to be part of an alliance, or you don't. AC is more than happy getting paid a fee when LH or ANA frequent flyers use the AC lounges, but they don't like as much when the SE100K uses the LH/ANA lounge. But that's how alliances are supposed to work. Right now AC is pushing the boundaries by reaping (keeping) the benefits of being in the alliance, while restricting the number of its members which will use the alliance benefits at AC's cost by requiring qualification to be mostly AC-based, not *A-based. In other words, let's say my flight pattern is 30% AC 25% LH 25% ANA 20% TK. AC would like me to continue the 30% of my flights with AC, but would prefer that I credit my miles to LH or ANA and get status there instead, to limit AC costs. If more airlines continue with that route, alliances lose value.

I do not dispute that most likely, the fraud issue was considerable and that something had to be done about it. I regret mostly the solution they chose instead of address verification that banks do for example, which would have avoided losing high paying J customers. While I am disappointed with the decision, I am not in possession of the data to criticize the decision. It looks like they came to the conclusion that they did not want to make efforts for address verification and were better off accepting that they will lose customers, unfortunately.

They will not only lose customers to far-away independent airlines like EK. Closer to home, they will probably lose to AA, even possibly lose to UA as some folks will no longer target SE100K renewal and therefore will book more UA flights when they would have otherwise booked the more expensive AC flight.

YOWgary

Well, not really. They're losing the lowest-spending members at each tier, and that's assuming everyone affected is so angry they stop flying AC.

As Adam pointed out, some of the affected people won't even know this has happened until they fail to qualify at the end of 2022. Others will know, and keep flying but drop down to a tier their spending supports.

Some will certainly stop flying AC, but as you say, there's simply no way this decision was made without a mountain of data with which AC is apparently comfortable.

escape4

In real life nothing is ever black & white. When I said they will lose top paying J customers, to be more precise, I should say they will lose a share of such customers. Personally I will not stop flying AC just because this change in unfavorable. There are circumstances where I will continue booking the AC flight (and credit to another program) because AC might be convenient, might have a decent price, and/or simply because AC is a better airline than many others. That said, the bar will move. I might have been willing to pay $1k more for AC over BA or AA in the past, going forward perhaps that bar drops to $200, for example. So two things are likely to happen: my share of AC flights within *A will drop maybe from 30% to 15%, and the overall pie for my *A flights relative to OW and others will drop. Both will affect AC negatively. But I will certainly not make the illogical decision to throw AC completely out the door as a result. It is rather Aeroplan which will be thrown out - AC is simply reduced.