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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."

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Old Aug 6, 14, 9:43 am
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Post Parker: "To try to change the program (to revenue based) right now would be foolish."

From an interview with Doug Parker in Business Travel News:

Parker was asked whether American would follow Delta and United in moving to frequent-flyer program based on revenue accrued instead of miles flown. Such a move was "not even on the plate right now," he said. "We have to get the two frequent-flyer programs merged first. If it makes sense to make that innovation, we may do that, but to try to change the program now would be foolish."


He's certainly not closing the door on the possibility, but it sounds like it won't happen when they merge the program.

He also said that AAdvantage and Dividend Miles will be merged in the first half of next year.

Here's the article: http://www.businesstravelnews.com/Mo...&cid=eltrDaily
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Old Aug 6, 14, 9:55 am
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Originally Posted by AZ Travels the World View Post
He's certainly not closing the door on the possibility, but it sounds like it won't happen when they merge the program.

Here's the article: http://www.businesstravelnews.com/Mo...&cid=eltrDaily
I'm not sure, I think it could be read to mean they won't do it in advance of merging the programs, but that it is conceivable that it could be done in conjunction with merging them. I guess only time will tell!
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Old Aug 6, 14, 9:57 am
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That's some good news!

For now, at least. I suspect that something like the UA/DL schemes will be enacted eventually, unless DL begins to stumble (UA is still stumbling).
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Old Aug 6, 14, 10:04 am
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Yes, will see if that "innovation" indeed makes sense...
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Old Aug 6, 14, 10:43 am
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Operative words: "right now."

Nonetheless good news, in my opinion.

-FlyerBeek
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Old Aug 6, 14, 11:16 am
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All that quote says is that it would be foolish to do it now

It would indeed seem foolish to do it now whilst there are 2 separate programmes and would make much more sense to do it when they merge

If AA was to change its model, would anyone have expected it now before the merger of the schemes? all I see that was said is that it wouldn't be before the merging
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Old Aug 6, 14, 11:18 am
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I'm almost certainly in a very small minority on FT who feel this way, but I actually think a partially revenue-based program is most appropriate.

Unfortunately, right now, there's little reward for someone who buys some high $$$ tickets and some less expensive ones (other than a few bonus RDM's on first and business class tickets). Therefore, I think EQPs and EQMs should no longer be separate. I also think there should be a bonus for higher-fare elite-qualifying segments (though I also think the segment qualification should be restructured somewhat more broadly).

I am not saying that the program should be entirely revenue based or that many fare classes should only earn 0.5 EQPs/EQMs as long as 25K/50K/100K are required for status, as even pure mileage runners are at least adding some marginal revenue, but there shouldn't be a bunch of people qualifying for EXP with annual spending of $7K.
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Old Aug 6, 14, 12:01 pm
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Originally Posted by Flyer78 View Post
Yes, will see if that "innovation" indeed makes sense...
The fact that he calls it an "innovation" puts no doubt in my mind that we will have a revenue based system in the near future.
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Old Aug 6, 14, 12:21 pm
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Anyone who doesn't think that AA-US will eventually go revenue-based after its merger is completed is kidding themselves. With DL and UA already revenue-based, the only competitive thing to do is match that...or lose revenue opportunity. NOT having a revenue-based rewards program will only get AA-US the lion's share of mileage run hoarders which will LOSE the airline of potential revenue, which is why UA followed DL's lead. Like it or not, revenue-based awards programs are fairer in rewarding those who provide the most revenue for the airline as opposed to those who fly the most; an airline is not in the business of providing mileage but in the business of making money, after all.

Of course, it also makes sense to assuage current AA-US flyers that a switch to revenue-based program won't YET happen...so they don't jump ship any sooner. AA-US is likely benefitting NOW that they are the only legacy carrier without a revenue requirement, but that won't last.
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Old Aug 6, 14, 12:27 pm
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I'm with those who read this as meaning: "it would be foolish to change the model BEFORE merging the two programs."
In other words, he's not really saying much of anything.
Airlines have made a religion out of copying each other's business models. I can't see them making an exception with this and going it alone with a miles-based system.
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Old Aug 6, 14, 12:35 pm
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We have to get the two frequent-flyer programs merged first. If it makes sense to make that innovation, we may do that, but to try to change the program now would be foolish.
So no changes before the merger, but after the FFP merger - anything goes.
I would expect revenue-based earnings to start in 2016.
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Old Aug 6, 14, 12:37 pm
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The transition would be easier when it's one combined program rather than two.
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Old Aug 6, 14, 1:00 pm
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Merging the 2 programs is a HUGE undertaking from an IT perspective. Once that is done, redundant (US, AA) accounts are consolidated, AAL beancounters will be in a better position to run financial simulations, determine the benefits of different program models, allow IT to begin creating the new system. Personally, I would not be surprised to see further changes to the redemption system, consistent with BA, VX, WN.
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Old Aug 6, 14, 1:37 pm
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If AA stops chasing lower-yielding traffic with loss-making fares, that may have the same effect on the bottom line as imposing a revenue requirement.

Just food for thought.
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Old Aug 6, 14, 1:42 pm
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I don't disagree with you entirely - it is fair of the airline to want to reward those customers who spend the most with them. I have two problems with the change, one my own, one with the implementation of the change.

My issue is that my company requires me to purchase the cheapest possible coach fare. This means I get screwed since I fly five plus long-haul (east coast to Asia/Australia) trips per year. Previously those trips would have earned me around 50k miles. Now I will be lucky to get 30k.

My issue with the implementation is the 75k limit. Where is my incentive to purchase an expensive ticket? Anything over ~7k earns no bonus. I'm a HVC if I buy the $16k business class ticket (what a recent J ticket to Sydney priced at) but I don't get the 176k miles only the 75k. I understand 176k miles would be insane but if you want a revenue based system have one.

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