Klm is Dead - Long Live KLM

I wanted to enter the new and surprisingly empty KLM lounge at Schiphol with 2 colleagues last week, flying together on Skyteam partner Alitalia. Was informed in a very snitty way that only one of my guests could enter on my card, whereupon we flashed a second Platinum card. My colleagues went to scrounge for some breakfast while I decided to strike up a conversation with Miss. Congeniality's Mother.

I explained that the introduction of Flying Blue has been a great disappointment and that as a former loyal KLM customer, I have been taking my custom elsewhere. She answered with some studied lines about how the program is actually an improvement with more earning opportunities on more airlines with cheaper redemption levels for awards, etc. When she saw I wasn't buying it, I brought up the new upgrade policy and particularly the non and low, 25% earning on those fares which are somewhat competitive.

She then admitted that the desk has actually been swamped by angry, soon-to-be-ex KL customers and that the transition has been difficult. Then she proceeded to tell me about the recent training she had received on FB's plans to further abandon the miles concept and work towards tracking customer profitability, including moving to a Super Platinum or internal VIP level such as CO*.

"We only want to reward those customers we make the most profit on. If you only use our best fares, you shouldn't be rewarded for flying us. We will be treating award miles more like stamps at the supermarket - you can choose to pay less or get the stamps."

Why don't they just put that on the website?

johan rebel

An interesting idea. KL is way too large for its home market, and depends on transit pax for some 60 or 70% of its business. With an in-flight product that is poor to mediocre, it has to compete primarily on price, both in economy and business class, to convince pax to fly via AMS. Schiphol's reputation is another factor, as was until recently the FD program.

For as long as I can remember, KL has had the highest load factors of any major full-service airline, usually by a considerable margin. They are very good at filling seats, but on the other hand yield has never been impressive, for the reason given above.

So here we have an airline with far more low-yield pax than the competition (try counting the number of business class seats in KL's aircraft, and compare the results to the number of seats the other majors offer. And how many years ago was Royal Class discontinued?), who "only want to reward those customers we make the most profit on". Well, at least there will be plenty of room in the lounges!

If, by the way, all of this is true, then a lifetime PE card will be worth its weight in platinum, so to speak.

Johan

MumbaiDan

now we know....

Papa Hotel

So if I get this right it's something like the various hotels programs? One receives the amount spent multiplied by a factor X in points?

Internaut

A special "invitation only" level based on a hard nosed revenue calculation makes sense (BA, LH and Swiss do it) and doesn't necessarily need to be a threat to exising gold and plat customers. LH has achieved this with separate lounges (and even a separate terminal) while BA does it with what BA tries to do best; in other words "the little things".

Of course, KLM,AF could go all LH on us in which case you can "kiss that gold goodbye" unless you fly a lot of full fare economy/ with them.

BTW, when that happens, the lower far traveler has nowhere else to go .

Edited to add: If the worst happens, how many customers shout "screw you, I'm moving to BA; at least I get great service while earning poor miles with them."

chrissxb

it does exist. Club2000. only high profit flyers get that card/level.

as Johan said - Lifetime Plat will be worth its weight in platinum, if the plat benefits stay the same

texas gold

If KLM has plans to implement this type of program, or even more in tune with LH, then it is clear that a jump to CO is necessary. I doubt they would reduce their Level/Award earnings on base fares, or economy fares: as that would put them in stark contrast to the rest of the US market.

I suppose I will be paying for that cheap wine in Y class soon!!!

Threy

Johan has summed it up very nicely.

In theory it is certainly always a dream for any airline not to give anything in return after people chose to fly them....

The reality is different as long as other airlines do offer a FFP.

In the last years though there are several studies that FFP do not have the importance everybody is granting them, at least not for the airlines which own a certain catchment area....

So in this context, could work for AF at CDG, will never ever work for KLM with AMS !!!

miles4all

About this point I need to make a small comment; the reason why KL has been achieving astronomical load factors since the merger (even higher then the ones johan mentioned) is because KL new does have a home market, being France. The extra seats are taken up by french people being routed through AMS.

So I think it can work for the AF/KL combi on both their hubs.

However, the point threy makes is quite a good one. FFP have a value for an airline to make someone come to them who wouldnt normally come and to make them come back. So someone living in AMS who saves airmiles on FB is a waste of money to AF/KL. This is an old and well known fact.

All we read here about people leaving FB because they dont like it, is just the savvy miles collectors. The large majority will stick with what they got from FB.

For FB to switch to a profitability marker on each FF and treat them according to the money AF/KL make on them is of course an excellent idea for them, but not for the savvy milage runner.

So if they do that, it will probably be good for the company, but the negative comments here will only increase.

BTW:
Isnt rewarding pax on the profitability they bring in on KL just a return to the courtesy club?

Threy

Does anyone know the quantity of flights between AMS and CDG before the merger ?

In generel a high load factor does not necessarily turn into profits, especially in the US the yield is so low, that airlines are not even able to turn 83 % loads into profits...

ajamieson

KL has high load factors and a large amont of low/mid-yield traffic long before the merger with AF. I don't think the AF issue is relevant. As johan observes, it has lower O&D traffic than many, if not most carriers.

If mostly-low-yield travellers like me are forced to choose between a range of carriers that offer crap miles-earning, they'll go for the one that also offers a good product. And that won't be any SkyTeam carrier, for sure.

erik123

In the pre-FD days they provided frequent travellers with a courtesy card (inivtation only) based on the profitability of the customer - which was almost the same as high number of flights because cheap flight where few and far between. Spouses would get the same status automatically. Not to long ago FD provided triple points for c class - which in some ways based the number of points on the value iof your ticket.

NickB

If that is so, all that AF would have achieved by acquiring KL would have been to cannibalise their own market, not exactly the smartest of moves.

The real test is how KL is doing in the UK or Scandinavia rather than France.

Johan got it exactly right. AF and KL are not in the same position.

It might make sense for KL to reward the most profitable pax better, but not at the same level as AF. From a FFP perspective as for everything else, AF and KL are situated differently on the market and what works for one does not necessarily work for the other. It seems to me that it would have made far more sense to keep two separate FFPs and different strategies taking into account their positioning, strengths and weaknesses. The one size-fits-all approach apparently adopted by AF management puzzles me.

Emma65

I don't think that is true. I've never made gold on miles but get there on segments. I know a lot of people hang around just for that. I have enough for a RTW ticket and may use it at some point and when I do it wil just about empty my miles account. (however - I think the tax on a RTW ticket won't be worth doing it)

The levels and whatever benefits you get from them have been worth it for me.

At the same time I am BD gold via a status match. I'm waiting to see what my new FB card will say. If it says I'm gold through 2007 (as it has for some) then I will use that year to start collecting miles and segments with another airline, like CO. Or see where I can get with SAS or *A partner. Hey, I might even move to BA (despite their intermittent strikes) and start collecting on them. What I do know is that by doing that I'd save a bundle.

The reason for flying KLM has been convenience. I'm miles away from BRS and hubbing via Schiphol isn't a problem. From LHR I can get a flight to ARN for half the price. Add trains to LHR and I still come out with a savings compared to what I do with BRS as my only way of getting there is by car and extortiante parking rates or a £35 (one way) taxi ride. It's just inconvenient to get to LHR.

A typical ticket to Scanidnavia + 3rd party transport to get to BRS easily sets me back up to £250. From LHR I could get away with £150 including trains.

Using BMI to fly in UK wouldn't happen anyway. They don't fly from BRS. BA, AIr southwest sort me out fine.

Or I could always use Easyjet to most places, book via expedia and buy a lounge access voucher.

I'm also tempted to go for a full priority pass membership and not have to worry about which airline I fly to collect for lounge access. Especially as you get lounge access on international flights only. At least with Flying B*llsh*t.

KLM is a great airline and their flight crew is amazing. The FFP is gradually going down hill fast.

/E

Internaut

If you are considering a Priority Pass, the most cost effective way to do this would be via an American Express Platinum card which includes the unlimited version of the Priority Pass. It has paid for itelf for me on lounge access per segment basis over the last two years.

I've had a think about the "international only" bit of lounge access in FB. For someone living in the UK, it isn't that bad unless you regularly fly into AMS or CDG and then onto another destination in The Netherlands or France respectively. It will be a pain if travelling inside the US though. It almost sounds like a US designed programme, at least with respect to lounge access.