pbd456

AS is giving 100% to 200% for booking in business and first class for many partner airlines.

Is it sustainable? I wouldnt believe the like of CX/JL/BA would be paying more for crediting their flights to AS than to other
airlines.

So, it is AS that is offering the bonus to AS customers. I am guessing it is because many people are redeeming AS miles to CX/BA/JL or other partners.

So AS is giving incentives for passengers to credit their partner booking extra miles to balance out the payment.

Am I out of line?

danielflyer

I don't know the internal numbers but since Alaska's partners are not tied to alliance rules, the partners may very well cover the extra mile credits as a "nudge" for booking. But Alaska does seem to be targeting mileage bankers with its recent transition from a status match to a status challenge that requires flights on Alaska. Wouldn't be surprised to see additional requirements to fly AS metal for all elites in the future.

pbd456

The premium bonus was introduced the end of 2016 when DL ends the tie with AS. it would be hard to imagine that other airlines would suddenly want to pay more to AS for no other reason.

(due to these premium bonus, I have a lot of AS miles as they are so easy to earn on cheap premium fare)

ft543

If I were to guess I'd say that it makes sense for partners to pay for base and maybe class of service bonuses. I wouldn't be shocked if the other bonus was paid for by AS.

For me, the generous bonuses heavily influence my carrier choices, and make up for AS being a mostly regional carrier.

Plus, as long as bonuses draw people in, AS can tell their partners that they helped feed/influence xyz amount of premium pax.

Dominicus

Totally true. I fly AS partners especially because I earn AS miles. I get 75K each year this way

pbd456

I would guess Alaska saves money for not needing to pay for lounge access for Y class elite passengers on a few partners.

Speaking personally, I am not sure if partners really want premium passengers like me. (I am a cheap stake). Paid around 3600 USD for J class ticket and earned almost 250k miles (AS and AA).

I started out in early 2017 with around 50k Alaska miles and now ballon to 1.2M miles via flying either cheap premium partner tickets or Alaska R fare.

eponymous_coward

http://investor.alaskaair.com/static...b-d35567eece88

See pages 17 and 42. The guys who run the airline think it is.

flyingstudent

The MVP bonus and these partner premium bonus are marketing expense. It keeps folks on AS metal domestically and partners internationally, instead of jumping ship to UA/AA/DL.

It works pretty well for me, other than going to YYZ when I've to fly AC/UA.

sfozrhfco

Well, they also confirmed on the earnings call that 5% of CEO pay is based upon credit card revenues and 5% in increased Mileage Plan loyalty. So the more miles churned out, the more the CEO gets paid.

danielflyer

This is interesting-- I'm new to Alaska and did not know about the timing. They likely did need something to make up for the loss of Delta as a partner. My guess is management was thinking about this way ahead of the announcement and wasn't scrambling last minute to negotiate these differences.

The large variance in earning with partners (look at BA compared to Condor) and the very specific bonuses for certain fare classes (especially on BA) leads me to think that these bonuses were negotiated with each airline.

From the perspective of the partner airlines, extra miles give them a way to provide a secret discount to customers from the Pacific NW who would otherwise be connecting on another airline anyway.

_fx

Props to linking to an actual slide deck / financials, but I don't see how this proves your claim ... 17 says credit cards are profitable and frequent fliers spend more. 42 says capex down. How does this show premium cabin bonuses aren't too high? Maybe OP had poor word choice with "sustainable" (answer: yes), but that doesn't mean someone in finance won't evaluate and say cost > benefit.

The more interesting slide (that's certainly exists, but isn't public) is: what % of Mileage Plan plan members generate a profit, and how big are the (outlying) negative numbers? We already know there was a segment of members that cost enough $$ for AS to crack down on buying miles...who knows what's next on the chopping block. Maybe they decide min-maxers racking up miles on partners are next to go.

eponymous_coward

You can’t have a “generous loyalty program” (their words) without, you know, being generous. Unlike other programs there’s no way to get mileage into the program via AMEX/Chase/Citi/Capital One; they actually control their own “currency” better than UA.

Also, you missed where they think they’re going to generate higher profits in out years. They certainly could be wrong. But they don’t seem to think that MP “generosity” is deadweight to be eliminated ala UA/DL/AA. They want to zig and let the majors zag. They could change their minds, but that’s what they’re telling analysts.

_fx

If you're posting financial slide decks, you should know better what AS means by "generosity." They don't mean that they're glad people like you (and other FTers) are min-maxing their award charts. They mean that, compared to legacies, they're offering more miles to the average consumer. They explicitly say this in their slide decks, multiple times. If you buy basic economy on UA/DL/AA, you get peanuts. If you buy on AS, you get miles flown. This is their competitive advantage.

Every company ever tells Wall St they'll make more $$ later. That statement means literally nothing. Doesn't mean AS won't try and cut costs where they can. Does AS give out free alcoholic drinks? No. Free meals? No. Free changes for flights 60+ days out? No. Free upgrades / seats for elites? No (unless you upfare from saver). AS has intentionally cut costs at every chance they've gotten (and proudly boasted about it ... again, in the slide deck...)

The AS advantage is basically, we are less mean and you get more miles. Which is true. But it has nothing to do with OP's original point, which was: will bonus miles go away? And my answer is still, very possibly, because nothing about bonus miles benefits the core AS financial strategy.

eponymous_coward

You’re missing something. Someone flying BA F and crediting AS represents revenue for MP. BA pays AS for the miles.

OP’s original assumption that AS is adding a bonus (which I might add isn’t proven) doesn’t change that.

Presumably AS isn’t doing this for no reason; they want to deliberately have an incentive for people to credit AS so they realize this revenue. Remove the incentive, the revenue goes down. So you can’t just assume it’s a cost.

pbd456

My point is that without the bonus, Alaska members who are redeeming CX is going far more than CX paying passengers to credit CX.

I only notice last week that AY I class do not give 100% bonus.

For BA premium bonus, BA gives the same COS for their member.

Also AY, AA gives COS for D class just like AS

I have a sense that when AA started the new dollar based EQD. They normalize across all partner, but as new update were added, (AY and LA and QF), they give better COS to partner reflecting how much the airlines are paying AA.