TXguy

But not every "cheap" ticket is necessarily loss-making unless they're flying extra planes solely to cart the people paying the cheap fares around.

It costs very little to carry additional passengers if the seats would otherwise be empty.

At the same time, I do favor more rewards for those who spend more. I am somewhat screwed by where I live (DFW) and my travel patterns and am stuck as a bottom-tier elite despite frequently flying multiple trips per month, usually on not so low fares on short hops to mid-cons. If I lived in a non-fortress hub market, my fares would often be lower and I'd easily be Plat. Obviously, it does make more sense to reward those who have more travel options - but I do think there should minimally be some increased reward based on fare if it's even, say, one of the "low" refundable fares. I don't think there should be a complete switch to dollars instead of miles for status or award miles, as selling extra seats at any price is still close to free money for an airline.

Superguy

Scary that he called it an innovation. I'd calling it throwing away a significant advantage AA has over the others.

Superguy

I disagree. AA saw its program as a significant advantage and began to poach DL and UA flyers that were unhappy with the changes made to those programs. Being competitive doesn't mean following your competition to the bottom and copying their moves. It's about offering an advantage over the guy to get people to choose you over the other guy. You don't create that by being the same as the other guy, you do it by being different.

It'd be a waste of money and effort on AA's part to throw away the advantage it used to gain those flyers. If they become the same as the airlines they poached from, where's the incentive to stay?

Oh, those pesky mileage runners. They're such a huge problem that the airlines better cut them off at the knees They're ruining the airline. Please. Mileage runners are a very small minority. You go outside of FT and people will look at you like you're crazy if you talk about mileage running.

Of course the airlines are in the business of providing mileage - they make money off of it. Otherwise, there wouldn't be credit cards offering tons of mileage bonuses and giving miles away like candy for using their cards.



If they're benefiting from it, why would they kill that advantage? If they know that people would jump ship by changing, why on earth would they change? Conversely, how can a change that causes customers to leave and take their money with them (and therefore not in AA's pocket), be good for the company? The two statements aren't compatible.

If a revenue program is really better than sliced bread, then there's no reason not to change to it ASAP.

But your statement confuses me: is a revenue based program great for the airline or will it cause people to jump ship and take their money elsewhere? Which is it?

LSunbury

Surely AA only offers cheap/MR priced tickets because Revenue Management believe they cannot sell those seats at a higher price? Do they really 'chase' low-yield traffic?

I buy cheap tickets and have done pure mileage runs to reach EXP, but the introduction of a revenue based programme will likely end my loyalty to AA, simply because it won't make sense anymore.

Superguy

Better to get something for a seat than nothing at all. I'd rather lose $100 than $200, but hey, that's just me.

I'd rather see bonuses for buying certain types of fares. I buy only refundable tickets for work (today's purchase booked into L), yet I get pretty much the same as buying a cheap ticket - despite the fact that the L fare was about 3x more than the cheap ticket.

AA's already unique in that the EQPs can screw you if you fly on mixed tickets, so I think there's already a penalty revenue component there. Any high EQP earning is offset if you fly on cheaper fares for leisure. It's not bad if you're buying middle of the road buckets or better, So you can be left earning status from of EQMs if you throw leisure fares into the mix. It makes EQPs an all or nothing proposition.

Superguy

I don't think anyone does.

+1, but that also goes for UA and DL too. If my loyalty isn't worth anything to them, then my loyalty goes to my wallet. They all lose.

formeraa

+1 It's going to happen eventually. Just about every other industry has a loyalty program based on how much the customer spends. Under the current system, those who live in "cheaper" airfare cities benefit while those who live in "expensive" airfare cities lose.

formeraa

No, those who do spend alot money with a single airline will actually win (less competition for upgrades, fewer people in the Elite lines, etc.), if people just decide to fly with the cheapest carrier. Plus, you may have to pay for your luggage, economy plus seating, early boarding, etc. So, it may be a net positive for the airlines if there are far fewer elite passengers.

linglingfool

Of course, but there are definitely routes that continually have low PRASMs and little cargo to compensate.

I don't think anyone actively chases it, but there certainly has been a drive to consciously reduce targeting this kind of traffic on highly competitive routes like JFK-LAX and chase premium pax instead. It's possible AA doesn't see any changes being necessary if waging price wars and subsidizing low-yielding routes isn't something they plan on relying upon going forward.

Superguy

Yeah, we've heard that all before. And guess what - it ain't happening on DL or UA. Go read those forums and see how well it's working out for them. It's a means for the airlines to reduce what they have to shell out without actually having to give anything in return. It's naive to think that fewer elites is a benefit to anyone but the airline (and even that assertion is questionable).

If anyone wants to see how well this idea works, look at UA - especially if Dougie's looking at further cuts. I think DL's doing well despite cuts to its FFP due to improvements on the front end (better IFE, improved hard and soft product, etc).

Superguy

I think UA's done it to a degree. UA's focusing on the big spenders and the Kettles, and firing everyone else in between. While they permit access to the elite program at 10 cpm, it's generally not interested in pax if they fly < 18 cpm.

They still have to give people between 10 and 17 cpm some sort of perks.

The Kettles are there to be fleeced. They'll take the cheapo fare, with the hopes of either selling a TOD, Premier Access, or E+. The focus is getting them on the plane and then upselling the crap out of them. They don't get that ancillary revenue out of the "cheaper" elites. The perks they pay out are a cost.

I don't think it's a strategy that's working out too well.

linglingfool

I think in part because, as mentioned upthread, it doesn't really reward those who travel on very high-dollar fares with the cap on RDMs, and because there are a fair number of kettles out there who will be turned off by earning in a program they have no chance of making status in, regardless of whether or not they actually had a chance beforehand.

(And also because SMI/J is still having a hard time living down his over-entitled comment.)

danhunterpost

Maybe a jab at Jeff Smisek too, UA and CO are still not a single airline, yes the FF programs are merged but aside from that they might as well be 2 separate airlines at this time. I even hear pilots still saying thanks for flying CO...

BearX220

And if AA joins UA and DL in providing little to no incentives to non-HVFs, it just propels a very large cohort of mid-tier customers out into the marketplace to choose the lowest price or best service, which hurts AA and all the legacies.

UA has a doughnut-hole problem which is reflected in lagging PRASM: it's held onto a core of HVFs, mostly via sweetheart corporate contracts and hub captivity, and it attracts non-loyal Kayakers with low fares. Those in between don't have much reason to fly UA anymore. I doubt AA wants to replicate the UA situation.

Le sigh. FT is a great community, but it suffers from two collective crises of perspective. One is that an airline only needs super-premium HVFs to prosper, and no other customer segment warrants rewarding. The second is that mileage runners are ruining everything. There aren't enough HVFs to save an airline, and there aren't enough mileage runners to wreck it. Put away the boogeyman dolls.

rasheed

Quite a bit of funny talk here, if AA goes to a revenue system model and we are talking about most flyers who need to travel on an airline similar to AA, this conversation of taking your travel elsewhere...there really would not be other "better"choices. Or I think people meant elsewhere, as in whatever is fare friendly (WN/VX/B6/other legacies).

I don't expect AS will hold up its miles system for those partner accrual whose own system is based on revenue (or you will not get credit unless ticketed via AS sort of thing).

So, I think this mostly means another year (2015) of miles-based elite and accrual processes. Good news.

Still a lot of work out there to convince AA about the importance of not going to a completely revenue based program beyond today's EQPs.

Rasheed