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Parker: "To try to change the program (to revenue based) right now would be foolish."

Parker: "To try to change the program (to revenue based) right now would be foolish."

Old Aug 8, 14, 10:46 am
  #76  
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Originally Posted by dcdavido View Post
What the airlines don't take into account is the cost of customer acquisition. "Fire" a doughnut hole customer and you have to replace something like 20 trips a year. That's the problem UA has and why PRASM is suffering. My $15k in business was replaced by 20 trips and $10k in kayakers - if they are lucky.

I was UA, now AA. But I am running out of places to run to. My next step will to fly whatever airline is cheapest, most convenient, or where I can "buy" a cheap upgrade. No loyalty.
I'm right there with you.

I fly refundable fares for work, but personal travel is leisure fares. Take away my incentive to be loyal and my only loyalty is to my wallet at that point. I'll fly whoever has the best value proposition at the time.

I can fly WN nonstop to a lot of places out of BWI. I don't HAVE to put up with crap from UA, DL, AA or anyone else.
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Old Aug 8, 14, 10:53 am
  #77  
 
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Originally Posted by dml105 View Post
Wow! I had never thought of that being a strong reason to keep mileage-based points, instead of revenue-based points, the latter encouraging corporate fliers to run up the bill. FF programs are supposed to get the employee to steer the employer towards using a particular brand every time. I would not have thought it until you said it that revenue based programs put the employee and employer at odds with each other more than they already are. (Employee probably picks the more expensive flight already when it's on the airline she likes.)
I have a good friend that works for a very large company (that shall remain unnamed) and has to book through their travel website. Everyone there knows how to game the system. Require a direct flight. Put in times where your desired airline is the cheapest choice. Require a connection. Whatever.

However, they can't fly first class or buy a full fare coach ticket to upgrade etc. So the solid Middle Class of airline travel. Not the upper crust paying for First or the kaykers of the world, but frequent travelers who game the system to put all their travel on one airline.

But take that incentive away, and you'll lose those people.

What's interesting, is that United is counting on people to go a step further. If you buy a Y or B ticket, you are pretty much assured of a upgrade (or even a discount FC ticket), but good luck (even as a 1K) of getting a status upgrade. For leisure travel that might be the case (hey, for an extra $100 I can ride in first, why not?), but certainly not for companies. It would be against company policy to buy a more expensive ticket on purpose. But your heaviest frequent flyers are those that mix business and personal travel. It's tough to do 100,000 miles on personal travel alone.

Last edited by dcdavido; Aug 8, 14 at 10:59 am
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Old Aug 8, 14, 11:36 am
  #78  
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Originally Posted by Superguy View Post
I fly refundable fares for work, but personal travel is leisure fares. Take away my incentive to be loyal and my only loyalty is to my wallet at that point.
Most of us are indeed mixed-ticket flyers -- a lesson British Airways learned the hard way when it revamped the Exec Club 10+ years ago to focus on HVFs buying frequent full-fare front-of-plane tickets. It turned out those same HVFs were also found in row 28 on their weeks off, taking their families on holiday, and didn't like getting the back of the airline's hand. (And when the next recession hit they were more and more flying economy on business trips -- which was when BA sheepishly moderated the program to be less exclusionary toward Lower Forms of Life.)
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Old Aug 8, 14, 12:39 pm
  #79  
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So what do people make of the fact that an airline would rather you got 100,000 RDM by using the co-branded credit card than actually flying the airline?

Not kidding. The airlines really do think that.
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Old Aug 8, 14, 1:06 pm
  #80  
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Originally Posted by eponymous_coward View Post
So what do people make of the fact that an airline would rather you got 100,000 RDM by using the co-branded credit card than actually flying the airline?

Not kidding. The airlines really do think that.
Methinks the airlines are becoming credit card companies that happen to fly planes.
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Old Aug 8, 14, 2:29 pm
  #81  
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Originally Posted by Superguy View Post
Methinks the airlines are becoming credit card companies that happen to fly planes.
Well, that, or they want to encourage profitable behavior like any corporation interested in a profit.

Delta gets quite a lot of money from operations.

And OK, so let's imagine eventually all airlines get to a program where everyone is WN/B6/VX, and your RDM kickback for flying is based on what you spend flying, plus the credit card/partner goodies.

That's automatically bad how? WN has spent 40 years not giving people access to Dom and caviar at pennies on the dollar. They seem to know how to do that profitably.
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Old Aug 8, 14, 2:32 pm
  #82  
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Originally Posted by dcdavido View Post
I have a good friend that works for a very large company (that shall remain unnamed) and has to book through their travel website. Everyone there knows how to game the system. Require a direct flight. Put in times where your desired airline is the cheapest choice. Require a connection. Whatever.
That's why at the husband's company EVERY domestic ticket over a set amount and every international ticket over a larger, but still not that large amount is manually reviewed by a person who goes out and searches for fares on the same day without any unreasonable requirements and stops any tickets that don't meet the lowest reasonable fare criteria. Tickets don't go thru until that person reviews them.
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Old Aug 8, 14, 3:02 pm
  #83  
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Originally Posted by eponymous_coward View Post
Well, that, or they want to encourage profitable behavior like any corporation interested in a profit.

Delta gets quite a lot of money from operations.
That was meant as a bit tongue in cheek, but they've gotten really obnoxious about CC pitches (US in particular is guilty there).

And OK, so let's imagine eventually all airlines get to a program where everyone is WN/B6/VX, and your RDM kickback for flying is based on what you spend flying, plus the credit card/partner goodies.

That's automatically bad how? WN has spent 40 years not giving people access to Dom and caviar at pennies on the dollar. They seem to know how to do that profitably.
WN caters to a different group, and has operated differently for years. Dom and caviar were never part of the equation, therefore there's no expectation of such things. They don't sell F or C - you get a straight Y experience. They've never done miles. VX has never done miles either.

The problem with the implementation that UA and DL are doing is that they expect more from their pax while giving them less in return. It's not a reward for being loyal, it's a punishment for not being loyal enough.

The issue isn't with rewarding bigger spenders, it's with as BearX220 has said, with choking off everyone else in the process. Like Gordon Bethune used to say: you can make a pizza so cheap that no one will eat it. Similarly, you can dilute an FFP to the point that no one cares about participating in it any more.

The airlines have complained for years that all people care about is price, and have used that mantra to justify cuts accordingly. Do they think that further cutting is going to change that behavior? DL seems schizophrenic on this issue. On one hand, they're acknowledging they need to be different and better to attract more pax (they're right IMO), but on the other are discouraging them from being loyal with FFP cuts. The only way their model really makes any sense is if the FFP becomes irrelevant. Then people will fly for them for the service rather than other incentives.

So the FFP, in the end, becomes irrelevant. I think it will force the CCs to become irrelevant in the long run.

The Kettles will never come close to an aspirational award - or even that trip to see Grandma or Mickey. They stop caring about miles of any sort and really go for price. Any sway that an FFP may have had is completely gone.

The middle of the curve flyers - the ones most likely to be kept by a good FFP - will stop caring when they see their loyalty is no longer valued. They then decided to become Kayakers and Kettles and book what suits them best at the time. If they happen to earn enough miles to get a trip on some airline, then great, but they long stop caring about chasing miles and status anymore.

The HVF - the ones supposedly rewarded the most - are already buying F and C and likely will need few, if any perks because they're already included in the price of the ticket. They fly based on schedule and need - not so much out of loyalty. Rewarding with tons of miles is probably not a huge lure for many of them as they spend so much time in the air that they don't want to get on another flight to go somewhere. Maybe occasionally take the family on a trip, but it's not like you can get a lot of seats on a premium award at one time anyway.

If this trend continues, it'll be the end of the FFP, probably within the next 10 years. For most people, it'll be like the old AT&T commercials used to say about switching to MCI or Sprint: It's just not worth it.

It's penny wise, pound foolish and will lead to further commoditization of the air travel industry.
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Old Aug 8, 14, 3:34 pm
  #84  
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Originally Posted by Superguy View Post
The issue isn't with rewarding bigger spenders, it's with as BearX220 has said, with choking off everyone else in the process. Like Gordon Bethune used to say: you can make a pizza so cheap that no one will eat it. Similarly, you can dilute an FFP to the point that no one cares about participating in it any more.

The airlines have complained for years that all people care about is price, and have used that mantra to justify cuts accordingly. Do they think that further cutting is going to change that behavior? DL seems schizophrenic on this issue. On one hand, they're acknowledging they need to be different and better to attract more pax (they're right IMO), but on the other are discouraging them from being loyal with FFP cuts. The only way their model really makes any sense is if the FFP becomes irrelevant. Then people will fly for them for the service rather than other incentives.

So the FFP, in the end, becomes irrelevant. I think it will force the CCs to become irrelevant in the long run.

The Kettles will never come close to an aspirational award - or even that trip to see Grandma or Mickey. They stop caring about miles of any sort and really go for price. Any sway that an FFP may have had is completely gone.

The middle of the curve flyers - the ones most likely to be kept by a good FFP - will stop caring when they see their loyalty is no longer valued. They then decided to become Kayakers and Kettles and book what suits them best at the time. If they happen to earn enough miles to get a trip on some airline, then great, but they long stop caring about chasing miles and status anymore.

The HVF - the ones supposedly rewarded the most - are already buying F and C and likely will need few, if any perks because they're already included in the price of the ticket. They fly based on schedule and need - not so much out of loyalty. Rewarding with tons of miles is probably not a huge lure for many of them as they spend so much time in the air that they don't want to get on another flight to go somewhere. Maybe occasionally take the family on a trip, but it's not like you can get a lot of seats on a premium award at one time anyway.
You're making some assumptions here:

- that you can't acquire sufficient FF miles except primarily through flying. A decade ago, there simply weren't 50,000-100,000 mile bonuses for things the way there are now. The tie-ins weren't as strong. So, on balance, a DL flyer that uses their AMEX for spend might well be ahead of where they were a decade ago.

- The typical FTer redemption (Cathay Pacific to Bali in F) is really not how most airline passengers redeem miles.

You notice the ONE award that hasn't been devalued lately? USA domestic coach, still 25K round trip. There's a reason for that.

I really do agree with sbm12 in my link above in his last 3 paragraphs...

The argument is also made that increasing the distribution of CMs increases the value of the program as it means reinvestment based on higher revenues within the program. When they have more money they can spend more on treating the customers better. Of course, there are plenty of customers who believe that they are the most important part of the program’s existence and that’s often based on their flying behavior, not their partner activity. In some cases they might be correct, but the programs have a very different view of the situation as shown from presentations like this one.

Are the mid-fare customers being pushed out of the loyalty market as some have claimed? Maybe they are on a straight earning for flying basis. But the plethora of partner earning options remain. And there are more cash-back options than ever. You can only lose in the game if you’re not paying attention and fail to adapt. Better to understand what is going on and why than simply be pandered to and told that you’re the most important customer and that the programs are screwing you. Especially when you’re not.

Some are choosing to see the recent changes to program earning rates as a negative. I’m looking at it as an opportunity for reevaluation and potential personal benefit. Even if that doesn’t come in the form of heavily discounted first class tickets all the time.
I have my doubts that the sky will fall for airlines as revenue-based frequent-flyer programs take over. It makes sense, it's generally how every other industry works, and there will be plenty of goodies that exist outside of the "here's your kickback for what you flew" scheme.
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Old Aug 8, 14, 7:16 pm
  #85  
 
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Originally Posted by formeraa View Post
+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.
Many hotels still give status based on number of nights / stays. However, for awards itís based on dollars spent. Iíd be fine with that kind of system for AA.
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Old Aug 9, 14, 12:08 am
  #86  
 
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Originally Posted by Xero View Post
Many hotels still give status based on number of nights / stays. However, for awards itís based on dollars spent. Iíd be fine with that kind of system for AA.
Yeah right......until you exit from the company dole...
And fly on your own nickel till the funds run dry...
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Old Aug 9, 14, 11:05 am
  #87  
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Originally Posted by Xero View Post
Many hotels still give status based on number of nights / stays. However, for awards it’s based on dollars spent. I’d be fine with that kind of system for AA.
Not true! Only the base hotel points are always based on dollars spend, but in many programs the bonus points are based on nights or stays, and the bonus points way outweigh the base points.

If you "follow the promos" to choose which hotel program to stay in for which stays, it can become close to irrelevant how much you're paying relative to how much you're earning, because those night- or stay-based promos will be the main part of what you earn in the end.

At Marriott, I routinely earn 45k to 50k on 25 nights, even when paying only $70/night.

At Choice, I routinely earn 8k on 2 nights (2 one-night stays), even when paying only $60/night.

At IHG, when I do earn with them, I tend to do earn 75k or so for about 5 nights, because I only stay with them (paid) to the point of their targeted promos (like the Big Win).

Similarly, if you earn airline miles mostly from credit card signup bonuses, it's once again not particularly proportional to dollar spent.

I earn oodles of miles and points every year not proportional to dollar spent, and it's majority of the total miles and points I earn every year. (I have to explain that I have zero work-paid travel and zero business expenses most years, so it's all personal travel and personal spending.)

If you're not doing so, perhaps you aren't chasing promos hard enough?


Anyhow, I wouldn't affect me that much if AA changed to a scheme like UA and DL, simply because too few of my miles come from paid flights (now that there's no more triple EQM promos ), and also I'm Lifetime Platinum (in large part due to credit card bonuses with at AA were big enough a decade ago) so I'd have one of the not-so-bad multipliers if they did multipliers the exact same way as DL and UA.

Last edited by sdsearch; Aug 9, 14 at 11:10 am
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Old Aug 9, 14, 12:37 pm
  #88  
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Originally Posted by eponymous_coward View Post
Anyone who's flying monthly intercontinental trips (or more) probably wants more free travel like a hole in the head; acquiring a million+ RDM a year when you're on the road a ton already almost certainly means the airlines will get some "breakage".
On one level, I agree with you. Who in their right mind wants a busman's holiday?

But several posts above yours are two self-described "big spenders" (presumably spending OPM) who claim that UA and/or DL will attract all of their big-dollar premium cabin fares next year because of the huge sum of RDM they will garner.

Whether or not they actually redeem the miles in the future doesn't matter. What matters is whether UA and DL can shift revenue away from AA by rewarding the purchase of premium cabin fares with gazillions of RDM.

If the strategy works, then Parker would be brain-dead to stick with the current program.

If UA and DL don't increase their share of premium cabin fares, then what rationale exists for AA to join UA or DL?
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Old Aug 9, 14, 12:53 pm
  #89  
 
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Originally Posted by Superguy View Post
That was meant as a bit tongue in cheek, but they've gotten really obnoxious about CC pitches (US in particular is guilty there).



WN caters to a different group, and has operated differently for years. Dom and caviar were never part of the equation, therefore there's no expectation of such things. They don't sell F or C - you get a straight Y experience. They've never done miles. VX has never done miles either.

The problem with the implementation that UA and DL are doing is that they expect more from their pax while giving them less in return. It's not a reward for being loyal, it's a punishment for not being loyal enough.

The issue isn't with rewarding bigger spenders, it's with as BearX220 has said, with choking off everyone else in the process. Like Gordon Bethune used to say: you can make a pizza so cheap that no one will eat it. Similarly, you can dilute an FFP to the point that no one cares about participating in it any more.

The airlines have complained for years that all people care about is price, and have used that mantra to justify cuts accordingly. Do they think that further cutting is going to change that behavior? DL seems schizophrenic on this issue. On one hand, they're acknowledging they need to be different and better to attract more pax (they're right IMO), but on the other are discouraging them from being loyal with FFP cuts. The only way their model really makes any sense is if the FFP becomes irrelevant. Then people will fly for them for the service rather than other incentives.

So the FFP, in the end, becomes irrelevant. I think it will force the CCs to become irrelevant in the long run.

The Kettles will never come close to an aspirational award - or even that trip to see Grandma or Mickey. They stop caring about miles of any sort and really go for price. Any sway that an FFP may have had is completely gone.

The middle of the curve flyers - the ones most likely to be kept by a good FFP - will stop caring when they see their loyalty is no longer valued. They then decided to become Kayakers and Kettles and book what suits them best at the time. If they happen to earn enough miles to get a trip on some airline, then great, but they long stop caring about chasing miles and status anymore.

The HVF - the ones supposedly rewarded the most - are already buying F and C and likely will need few, if any perks because they're already included in the price of the ticket. They fly based on schedule and need - not so much out of loyalty. Rewarding with tons of miles is probably not a huge lure for many of them as they spend so much time in the air that they don't want to get on another flight to go somewhere. Maybe occasionally take the family on a trip, but it's not like you can get a lot of seats on a premium award at one time anyway.

If this trend continues, it'll be the end of the FFP, probably within the next 10 years. For most people, it'll be like the old AT&T commercials used to say about switching to MCI or Sprint: It's just not worth it.

It's penny wise, pound foolish and will lead to further commoditization of the air travel industry.


US legacy airlines offer far better benefits with easier qualification levels than their european/asian contemporaries.
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Old Aug 10, 14, 12:33 pm
  #90  
 
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I've done this for years...if I am purchasing last minute then I fly WN because they reward me accordingly...if I am flying cheap fares I fly US because I get rewarded better. For example RT from PHX to ELP on WN last minute I'll get over 16k points right now (I'm A-List preferred and they have a double points bonus going on as well) same flight on US I net 1.5k (I'm US Gold)... but a cheap fair I get about 1.5k on either...what's more valuable...I would happily switch everything to US/AA if they rewarded me for the $'s spent but until then they will keep getting inexpensive fares and WN will get my high $ fares...anyone who is
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