eponymous_coward

VX has 24 planes and no interior service NOW- but ORD is being rolled out this fall, and they plan on being in things for the long haul (whether or not they stay in it is another story).

Also...

If Mileage Plan changes have no impact on AS's profit, then why doesn't AS make it MORE generous, as opposed to less so? One would think that if you had an award winning mileage plan that was arguably the best in the industry, and were going to have to jack up fares because of expensive oil, you might as well sweeten the pot for frequent flyers, especially if any enhancements or takeaways don't really change the bottom line. At least you could make some customers happier (and note the new intra-state award, which is a good example of that, I think).

See, I see the MP changes as being inflationary (they devalue the value of existing miles)- ergo the "debts" AS has become lessened by taking away from MP, so yes, it DOES help profit (because AS still gets a bunch of money selling miles, but they don't have to hand out as much for the expenses)...

EIPremier

I agree, in that devaluation of the existing mileage "currency" was inevitable due to the addition of more mileage earning partners to the AS program, increased issuance of AS Visa credit cards, and even the increase in the average distance of AS flights (all those new transcons and Hawaii routes). This exacerbated the general tendency for people not to redeem miles as quickly as they earn them. For the company, this translates into an increase in outstanding mileage liability, while seat capacity (particularly domestic) was staying the same, if not shrinking. Basically, you end up with the classic inflationary scenario: too much currency chasing too few goods, except here the case is too many miles chasing too few seats. If the inventory of miles increases while you hold award seat inventory and award redemption levels the same, then it follows that the frequency of award redemption will decrease, and you end up with frustrated customers who can't use their miles (and more mileage liability on the balance sheet). AS evidently doesn't feel it can get away with allocating more award inventory in today's economic climate, so the solution to reduce competition for award seats was to increase redemption levels. Mileage plan also has to pay the partner airlines more for seats on their metal than MP would pay for seats on AS metal, so obviously that played into the decision to charge a $25 fee on partner award tickets.

The other approach would have been to try and reduce the number of miles earned by customers, through measures such as 1/2 eqms on discount fares, eliminating 500 mi minimums, eliminating elite bonuses. AS does not seem to have taken this route so far, apart from fairly minor stuff like the change to the AS50 eqm earning, and maybe a year or so back reducing the time period for mileage account expiration due to inactivity (which other carriers did as well).

Seattlenerd

Don't forget the cost part of the equation, which adds additional pressure: The underlying cost of providing that award seat has skyrocketed in terms of fuel in the past year. Since miles redeemed are a lagging indicator to miles earned (as you note), this is also a factor for higher award redemption rates. But not the only one.

We are (including me), of course, getting OT from the layoffs.

beckoa

deelmakur

What's this cost of free seats? They control inventory. You don't get it unless they are pretty sure they can't sell it. They have been getting extremely tough, especially on popular routes, and particularly with upgrade inventory on long haul (like none, maybe). According to a recent USA Today piece, comparing various carriers, Alaska charges people $275 per 10,000 miles purchased as extra (they sell them to round out required mileage for awards). Having established that as currrency. let's go back to my pet peeve, the AS50. Meant to be 50% off, but capped at $250 , any fare above 500 bucks proportionately reduces that 50%, so it's kind of a misnomer to start. Let's now deconstruct an example of that one. They've raised the SEA to east coast fares in First to almost $1600. For this, using a pair of AS50's (2 one ways, to make a roundtrip), they wll get around a thousand bucks in cash, and a total of 30,000 miles (15K each way for the "discount"), which, if you use their valuation, is an additiional $825. I was never good in math, but I make that nearly $1900, and even with that,they originally wanted to eliminate mileage credit for those. It has now been restored, but at 50%. All this, while some guy in coach is getting full mileage credit for a $400 ticket. It's a good tihng this airline flies to Alaska, because their specialty seems to be giving away ice in the winter. Keep telling them how much you appreciate alll those changes. They will continue to find more for you.

johnp012001

Well, there has to be SOME cost. There is an incremental cost to transport an additional person.


One way AS50's are 7500 miles, and get you up to $125 off the value of the ticket.

deelmakur

How do you figure extra cost? The plane was leaving, whether the seat was filled, or not. There's almost never a meal involved. As well, they didn't just give out those miles. You paid for them when you bought your ticket. In much the same way Nordstrom charges a cash buyer the same as a credit card buyer, even though they will kick a couple of percentage points back to the card company, that is surely part of the pricing paradigm. You can buy one way, First Class fares, and put them together to make a roundtrip. By using 15K on each, you can get the max credit of $500. With full fares, the base price for two one ways, combined, is no different that when it is bought as a RT. By the way, I never used an AS 50 until recently, when F fares skyrocketed.

eponymous_coward

Keep in mind AS's mileage plan allows for the "if you spend a crapload of miles, yes, you can get a seat on ANY flight, as long as there is one available for us to sell" class of FF award- so yes, you can get a seat that AS would likely be able to sell.

Please also note that the cost of that award jumped from 40K to 55K in coach, and from 80K to 100K in F.

And yes, I agree that only getting 75% mileage credit on AS50 F fares (1.5*.5), while coach passengers flying on a super cheap fare get 100% is dumb. I would probably tweak the AS50 mileage credit to at least equity with coach if it's used to buy an F ticket.