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Speculation: New American AAdvantage FF Program Features (Discussion)

Speculation: New American AAdvantage FF Program Features (Discussion)

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Old Dec 1, 14, 10:53 pm   -   Wikipost
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Whatís next

We plan to bring current Dividend Miles accounts into the AAdvantage program in 2015
(date as yet unspecified - JD). That means we will combine your award mileage balances, your Million Milerô balances, and your elite-qualifying activity from both programs. In the meantime, continue to book travel and earn miles as you normally would. We will follow up with you when we begin the process of integrating accounts, but rest assured your miles and elite status are safe as we work to combine the two programs.

It will take some time to fully integrate our loyalty programs, including everything from the systems that support them to bringing our terms and conditions in line with one another. We will be sure to keep you updated as changes occur
.
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Old Jun 14, 14, 2:37 pm
  #766  
 
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Originally Posted by Shareholder View Post
Isn't that the whole point of the changes at UA and DL? Not to mention the tens of millions saved since UA doesn't have to "buy" as many miles from MP (book transfer or no, it shows up as a cost savings and thus a contributor to profits in accountant speak).
Obviously it's a cost savings; that's the airline's only driver. I'm just trying to quantify the devaluation.

No one is going to go from spending 10k to 18k just to earn the same number of RDMs, though.

Originally Posted by BoeingBoy View Post
But what percentage of elites will pay a premium if it's their money? Probably a relatively small percentage. The rest have employer/client restrictions to deal with.
I think you'd be surprised, and I also think this is a huge missed opportunity for the airlines. Why is it they're willing to sell an F seat at a $200 premium, but make you jump through hoops to do it anytime after purchase?

There are plenty of times when I'd happily pay the fare difference out of pocket on a long work trip, but I'm not going to pay a change fee for the privilege of giving the airline more money. And I need a Y receipt for reimbursement.

Lots of work travelers also buy premium fares for leisure travel.

Originally Posted by BoeingBoy View Post
It's also interesting that the BTS puts our lists, one of which gives the largest by market share and lowest average fare for city pairs. Every airline is the lowest fare in some markets and not in others. So the idea that elites always pay a premium to fly a particular carrier is myth.
You're looking at it backwards. Sure, any given carrier is going to be cheapest some of the time. But if you choose to fly one carrier all the time -- as elites typically do -- then you're paying a premium the rest of the time.
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Old Jun 14, 14, 2:56 pm
  #767  
 
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Originally Posted by GUWonder View Post
Frequently -- not always -- pay a premium. But your second paragraph above has a conclusion that is not explained by the two sentences preceding it.

A lot of elites -- a majority -- pay some premium to fly the airline on which they have elite status instead of defaulting to the cheapest ticket out there, even when the trip is out of their own pocket. Why? Because there is some marginal value perceived (by the majority of elites) as arising from familiarity with the airline and from some of the benefits of elite status with the airline: upgrade chances, preferred check-in, priority screening, preferred seating, fee waivers/discounts, improved handling/possibilities when dealing with IRROPs, bonus miles, etc.
I work for myself and frequently buy premium tickets so I can absolutely work on planes. When flying leisure with Mrs. 110pgl, I pay for premium as well.

As a general rule, I stick with one alliance with all miles crediting to a single airline. (Right now, AA.) If someone else is significantly cheaper in premium, I will consider it and sometimes choose the lower fare. But even then, if the price is 10% higher with AA and I can use my upgrades to get into first, I will still buy AA.

As I think about a new AA program, I hope they do not change much. Right now, premium fares are rewarded fairly, as our premium flyers.

No one has mentioned a higher tier, but I actually wish they had one tier higher - 125,000 or 150,000, with added benefits. I already have over 100,000 miles / 125k + points - so I could in theory fly any airline for the rest of the year, especially if I am buying premium tickets.
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Old Jun 14, 14, 3:27 pm
  #768  
 
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So we've got 3 elites so far that pay a premium all/most of the time. What does that work out to - a few hundredth or thousandths of a percent? With "premium" defined as "not the lowest fare?"

Originally Posted by GUWonder View Post
But your second paragraph above has a conclusion that is not explained by the two sentences preceding it.
The BTS just gives conclusions unless you want to dig into the extremely large 10k% ticket sample databases. No airline is cheapest or most expensive all the time, based on actual fares paid between a city pair for a given period - monthly IIRC.

Jim
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Old Jun 14, 14, 4:03 pm
  #769  
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Originally Posted by BoeingBoy View Post


The BTS just gives conclusions unless you want to dig into the extremely large 10k% ticket sample databases. No airline is cheapest or most expensive all the time, based on actual fares paid between a city pair for a given period - monthly IIRC.
The BTS numbers conclude that elites in the main aren't often paying even a minimum premium to fly their preferred carrier to get some of the benefits I mentioned above? No.

When it comes to the BTS data you are mentioning, those numbers indicate nothing useful about the difference in purchase behavior habits of customers with elite status vs the purchase behavior habits of non-elite status -- rather BTS numbers mask the purchase prices paid by elite by co-mingling them with the purchase prices paid by the huge proportion of passengers with no elite status.

A stance that claims elites generally aren't paying at least some premium to fly the carrier on which they have elite status is a stance that defies reality. It is this reality (of a willingness and ability and incidence rate of elites paying a premium) which has the cartel kingpin airlines playing the FFP elite status games in the US and which has them not eliminating elite status earned from flying as much as eliminating the earning of (redeemable) miles from flying.

Last edited by GUWonder; Jun 14, 14 at 4:15 pm
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Old Jun 14, 14, 8:17 pm
  #770  
 
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Originally Posted by GUWonder View Post
The BTS numbers conclude that elites in the main aren't often paying even a minimum premium to fly their preferred carrier to get some of the benefits I mentioned above? No.
No, they say nothing about how much a specific passenger is paying. At least the numbers I'm talking about don't - they merely give the name of the carrier with the biggest share of the market for a given city-pair (thus capturing both non-stop and connecting traffic) and the carrier with the lowest average fare as paid by every passenger carried by that carrier (paid traffic only). The only reason I even mentioned that data is because it shows that no carrier is more expensive (charges a premium) all the time.

A stance that claims elites generally aren't paying at least some premium to fly the carrier on which they have elite status is a stance that defies reality.
As long as there's been FF programs miles flown has been the big criteria for rewards. Now that the airlines are adding a minimum spend there is plenty of complaining among elites. Why are so many apparently unhappy with spend requirements if most pay a premium to start with? The minimum spend requirements, so far, are below break-even for the carriers and plenty of elites seem to think that's unfair - why?

I'm not denying that some elites don't pay more than they have to to fly a particular carrier. Likewise, some elites will even drive a couple of hours to get a lower fare on their preferred carrier. Elites are not a homogenous block of passengers. Nobody can say all elites behave the same way and why I said that only a percentage of elites pay a premium (defined as paying more than the least expensive ticket offered by the carrier).

Jim
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Old Jun 15, 14, 8:28 am
  #771  
 
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Originally Posted by BoeingBoy View Post
I'm not denying that some elites don't pay more than they have to to fly a particular carrier. Likewise, some elites will even drive a couple of hours to get a lower fare on their preferred carrier. Elites are not a homogenous block of passengers. Nobody can say all elites behave the same way and why I said that only a percentage of elites pay a premium (defined as paying more than the least expensive ticket offered by the carrier).

Jim
I would feel very confident saying ALL elites at the upper tiers (50,000 miles and above) pay a premium (as defined above) for at least some flights every year. I cannot imagine a market where you could get the lowest price on every flight out. Even Southwest and JetBlue are not always the cheapest on a given route on a given day.
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Old Jun 15, 14, 8:48 am
  #772  
 
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That is a valid point but I'd point out that you said "for at least some flights every year." So again, of the number of total flights that elites take in a year they (as a group) don't pay a premium on 100% of them. Which is what I said to start with.

Jim
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Old Jun 15, 14, 12:30 pm
  #773  
 
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Originally Posted by BoeingBoy View Post
That is a valid point but I'd point out that you said "for at least some flights every year." So again, of the number of total flights that elites take in a year they (as a group) don't pay a premium on 100% of them. Which is what I said to start with.

Jim
As defined as 'premium', I agree 100%. And the opposite of what I said would be true... I doubt very few Elites would stay with an airline if EVERY time they had to pay a premium.
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Old Jun 15, 14, 5:25 pm
  #774  
 
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"Premium" is one of those words that doesn't really have a set definition in this context. On some routes the lowest fare can be high enough to be called "premium" while on others the highest fare doesn't have much "premium". "Business" traveler is more standardized - someone paying at least full coach fare (Y&B).

Jim
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Old Jun 16, 14, 6:11 am
  #775  
 
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Originally Posted by BoeingBoy View Post
"Premium" is one of those words that doesn't really have a set definition in this context. On some routes the lowest fare can be high enough to be called "premium" while on others the highest fare doesn't have much "premium". "Business" traveler is more standardized - someone paying at least full coach fare (Y&B).

Jim
IMHO -

Business traveler is more standardized... anyone traveling on business. And in today's world, I would venture to say the vast majority of business travelers are traveling in something less than full coach. And I think most business travelers are likely to be traveling on the least expensive coach ticket, with a large percentage of these having little or no say in which airline they fly.

Your previous definition is probably more accurate for this discussion -

Premium flyer (or loyal flyer or program flyer) - anyone who pays a premium to fly a given airline.

If AA wants to keep these guys, right now AA is in a pretty good spot. With the other programs lowering benefits and raising requirements, AA has a chance to keep and gain in this group.
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Old Jun 16, 14, 11:24 am
  #776  
 
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[QUOTE=110pgl;23041484]IMHO -

Business traveler is more standardized... anyone traveling on business.

Actually even the government (DOT's BTS division) uses the definition I gave - paying full Y/B fare. Now in reality anyone traveling on business is by definition traveling for business purposes but it's not the standard definition.

And in today's world, I would venture to say the vast majority of business travelers are traveling in something less than full coach. And I think most business travelers are likely to be traveling on the least expensive coach ticket, with a large percentage of these having little or no say in which airline they fly.
Which was part of my point. Add in the purely leisure travel elite and those whose employer has a corporate discount which could result in at least some fares being less than the lowest published fare, and the result is that not every eliite pays a premium every time.

Not being an elite, I don't have a feel for what it would take to keep or lose enough elites to make a difference. Obviously those at one extreme - paying lowest fare all the time - are a bigger drain on AA than the non-elite leisure traveler given the upgrades, waived fees, etc the elite gets. Contributing to load factor and PRASM are the only benefit an airline gets from these flyers. Keeping them, but as non-elites would be the ideal answer for these flyers.

At the other end, the HVF generally contributes a lot to an airline's bottom line, some of which can be return in perks while still getting a significant benefit from having them as customers.

Somewhere between the two extremes is the crossover point - money paid for tickets (to the airline, not total ticket price) minus money lost by free FC, waived fees, etc equals a small profit - but I can't say where it is. But it is why I strongly believe that one day the FF programs will be profitability based. Not next year, not in 5 years, but somewhere in the future.

Jim
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Old Jun 16, 14, 4:01 pm
  #777  
 
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Originally Posted by BoeingBoy View Post
So we've got 3 elites so far that pay a premium all/most of the time. What does that work out to - a few hundredth or thousandths of a percent? With "premium" defined as "not the lowest fare?"
I probably pay a premium of $300-500 or so (since we're arguing over the definition, i.e., over the lowest available) per year to fly my airline and have done so for the last five years. I just paid a premium of $120 r.t. on a transcon to fly AA. So four elites.

It's worth noting that, unless we're talking about international business/first class (where the RDMs can be substantial), I pay this premium entirely to enjoy my current elite benefits and to earn the EQMs to renew; RDMs on domestic flights, even with an elite bonus, pale in comparison to credit card earnings, so I don't consider them.
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Old Jun 16, 14, 10:02 pm
  #778  
 
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Yeah - I was being facetious with the counting. Most elites undoubtedly pay some premium some/most/all of the time to fly their favorite airline. But every elite doesn't pay a premium 100% of the time, which was my original point.

Jim
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Old Jun 17, 14, 4:04 am
  #779  
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Originally Posted by BoeingBoy View Post
Yeah - I was being facetious with the counting. Most elites undoubtedly pay some premium some/most/all of the time to fly their favorite airline. But every elite doesn't pay a premium 100% of the time, which was my original point.

Jim
Your original point claimed that it was just a relatively small percentage of elites who pay any premium to fly on their preferred carrier?

These were the words: "But what percentage of elites will pay a premium if it's their money? Probably a relatively small percentage."

It's definitely not single digit percentages; and in the aggregate, the elites definitely pay a premium to fly on their preferred carrier with which they have elite status.

I would be shocked if a majority of elites have never paid a premium to fly on their preferred carrier with which they have elite status. Do you still believe that it's just a relatively small percentage of elites who pay a premium if it's their money? I expect it would be a majority of the elites, while you think it to be a relatively small percentage, that (ever?) pay a premium to fly their preferred carrier with which they have elite status. It probably doesn't matter what we think, but the airlines certainly behave as if elite status gets customers to be way more likely to pay them a premium.

Last edited by GUWonder; Jun 17, 14 at 4:25 am
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Old Jun 17, 14, 6:30 am
  #780  
 
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Originally Posted by BoeingBoy View Post
Actually even the government (DOT's BTS division) uses the definition I gave - paying full Y/B fare. Now in reality anyone traveling on business is by definition traveling for business purposes but it's not the standard definition.
This "standard" is about as useful as DOT's definition of "low cost carrier" as "any carrier offering interstate service after deregulation." It's based in a reality that is long gone.

A B fare BOS-LAX (on AA) is $2,422 r/t; the lowest Y fare is $2,812, and full Y is $15,324 (!).

However, AA will sell me a fully refundable M fare for $1,314 r/t, for departure today.

I know many corporate contracts book into Y/B -- but those are almost certainly at a much lower price. Booking directly, why would anyone sane book Y or B fares, in regular practice?

If that is the "standard" for business travelers, we might as well only count people taking trains.
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