Ambraciot

Of course, but it's still terrible for AA, which is why my first reaction was to finally admit that the current management is incompetent and will bankrupt the company.

brp

You know this how, exactly?

I agree with this. My guess is that they decided to roll this out without doing any analysis of the positive and negative impacts just because they wanted to be nice to folks in some locations, without regard for the bottom line. Idiots!

Cheers.

nall

Read a little further back -- it was a response to a previous post where he somehow derived "4x miles" from "they double the EQMs"

Oops! Typo on my part. Thanks.

Ambraciot

This is hard to explain in words, (it uses a lot of almost true statements that would look great as solid lines on a chart).

The demand created by this promotion is for low and medium fares, because demand and loads on these routes have been relatively heavy without the promo we can conclude these fares would sell out with or without the promo. The demand for the higher fares that will buy up the last few confirmed seats is essentially unaffected by the offer (EQP vs. EQM, high $/RDM ratio...).

The extra passengers and revenue generated by the promo merely displaces other low to medium fare passengers who will end up on other carriers or routes. Furthermore the passengers being displaced are more likely to be connecting at LAX, ORD or DFW to other higher margin AA flights, suggesting the promo may reduce overall network revenue.

AA should not get a statistically significant revenue bump from the promo and may suffer a drop in revenue. The cost of the benefits virtually insures a net loss from the promo.

igopogo

It's very likely that the miles will post in 2012, but it doesn't matter. If the miles are earned in 2011, they will count in 2011. As soon as they post, you get bumped up to the appropriate status as if you earned them this year.

Flyer_70

:-:

Xero

Of course if AA ran a promotion that only allowed members of certain race, ethnicities, religion, gender and other protected statuses, then it will be illegal.

But discriminating based on region is not protected. But this promo is a *bit* less restrictive. Illinois residents can, for example, to the SFO-DFW-SFO promo.

I'm lucky to benefit from this promo. But I do feel it should be open to everyone.

econometrics

I see what you're trying to posture here with the calculations, and they are sound calculations. However, I don't find them very valid on the whole.

1. The true costs of the benefits to AA is very, very low.
2. Let's use an example... say there's someone who's been PLT all year and are 7K miles short of hitting PLT for the current year. They've already been "exhausting" AA for their PLT benefits in 2011. So they are thinking "I'm not going to plan some trip just for the heck of it - too costly." Then, boom, this DEQM shows up. They shell out $200 for a R/T ticket in 1-2 days traveling and are back as PLT the next year. They are buying stickers, using stickers, using miles+copays for upgrades, flying AA more than others.

So in this specific instance, are the "benefits" AA is giving up to this individual for staying PLT really more than $200? I doubt it.

mathlete

A lot of armchair executives on here...

While many of the arguments sound plausible, the fact is that this is now the second time AA has run this same promotion. One can imagine two possibilities: (A) that it didn't work the first time and AA is so completely unimaginative (admittedly not impossible) that they keep trying the same thing or (B) it was successful and therefore merits being run again. The fact that AA has been running different DEQM promotions for a few years now suggests that they've figured out how best to utilize them.

mathlete

More importantly, having and maintaining status breeds loyalty. Maybe some people have been flirting with Virgin (or have had a drop in business travel), and are at risk now of losing their status and dropping out of AA's ecosphere forever, because Virgin is in fact quite competitive for non-status travelers. This will allow them to keep their status, and thus stick with AA for many years to come.

But regardless of the logic behind it all, I imagine at this point, AA knows what they are doing here.

alhcfp

Would gig-jfk-dfw-sfo-dfw-gig qualify?

SFO777

The DFW-SFO-DFW segments would.

SuperBuck27

WRONG AGAIN -- I booked two business trips for the next 4 weeks that could have easily just been video calls. $1,500 NET NEW revenue to AA this year from this end user. I fully expected to take a "pass" on trying to make it to EXP this year after falling to PLAT in 2011 for the first time in 7 years. This PROMO rang all the right bells for me and I am going to sneak across the 100k BIS miles threshold SOLELY as a result of this promo.

Your situation is only your situation. Please do not speak for the rest of us who found this offer very, very attractive, are changing actual travel behaviors as result and will be delivering addition net new revenue to AA this quarter (and next year! see below) as result.

Additionally, by "making it" to EXP this year, that means my 2011 travel plans will almost ALWAYS prefer AA as my carrier. Why? The EXP complimentary upgrades and 8 eVIP segments. That is likely going to mean $10,000 of net new revenue to AA in 2012 where I would have been otherwise tempted to fly VIX and/or Southwest on many of the same routes. That is not going to happen in 2012.

Do you better understand now why they do this?

econometrics

Yes. E.g. if you are going to be shy of status by 5K and need to make a flight to SFO from DFW in Q4, you would have incentive to give VX a try for such cheap prices. Now that AA has released this offer, however, you are going AA hands down.

Getting status (whether PLT or EXP) only makes you want to keep that status - which is a strong definition of loyalty. ^

Ambraciot

First learn to read, second learn how to post. You are not the entire AA customer base thus you are not discusing "NET" anything. If you read the prior posts and create a coherant response I am willing to respond to it in more detail.

To other posters:

The portion of the promotion running through March 2012 should reduce 2012 mileage runs cancelling the effect of the part in 2011.

I have given AA management the benefit of the doubt up until now, but their recent promotions and route cancellations have been completely uncoordinated.