PaulInTheSky

There are only TATL competitors on this route, not TPAC. I don't think any Asian/Oceania carriers are going to even think about competing. To go to the Far East, however, Basically all the international carriers (In Northern Hemisphere) are competing. KL/AF/AY/ME3 are doing whatever they can to steal the business from US to Asia(SIN/HKG/TPE,NRT,MLE,India)

Fanjet

What exactly do you expect to happen? The airlines are in a MUCH better financial shape going into the next recession than they ever have been in the past. The profits they earn now will provide for a wonderful cushion when that eventually occurs. And one way they can mitigate the possible losses is to reduce capacity. Such as an accelerated retirement of older aircraft from the fleet. And making daily frequencies 6X or 5X weekly.

Making their FF programs more generous is not going to bring in that anticipated extra revenue. Businesses won't be allowing their employees to make additional work trips because the airlines are being more generous with their FF programs. The "occasional" flier is interested in the cheapest fare. Not more FF miles. The FTer who would do a mileage run because of it makes up a sliver of 1% of the flying public. And really not worth chasing after.

If anything, look to see the airlines target the high-spend flier. As that is a more fixed part of the "flying pie". So their efforts will be to try and get a bigger slice of that market segment for themselves. Just look at the current bonus for travel to/from Europe: 25K bonus miles for F/J cabins; 15K for W and full-fare Y; 2K bonus miles for the cheap Y seats. Back in the past, they just would have done a "double miles to Europe" promo. But even now, a "double miles" promo also has basically the same concept. As that would mean an extra 5 miles per dollar spent. So people paying for higher fares would be getting more miles than those paying cheap fares. Even though both groups will be receiving double miles.

sapguy

^ +1

Could not have said it better! The FTers who make up that 1% and who are mileage runners are understandably angry, but they need to get over it.

Over at UA, we had this same deja Vu scenario a few years back, and life goes on!

havoc29

Then why would you expect a non-trivial number of high-spend fliers to be swayed by a bonus miles promo?

And if FF programs don't bring in extra revenue, why do these programs even exist?

MiamiAirport Formerly NY George

The industry is down to four major domestic carriers which means controlling capacity will be much easier, far few competitors that are on an individual route. FF programs are never going back to where they were. FF have become and will be about additional revenue generation, not loyalty. And with now four airlines, three Internationally, FF are more tied to a hub flyer. If you are flying for work you are not going to fly MIA/MCO/DFW/LAX to get to LAX (and the miles therein), not unless you want to keep your job.

Unless things change for me next year will be my last EXP for me, and once they go to YTD EQS next year far fewer upgrades. Life will go on. I will spend more time in a MCE seat with no free food and drink. That is assuming I continue to fly as I am now. All things come to an end. I've been on FT long enough to know that FF come and go as their lives change.

Jacobin777

Costs are going up, revenues and yields are decreasing. Aviation is a very cyclical industry with a lot of high fixed costs and expenses. A lot of "booms and busts" happen. While the carriers are certainly better than they were a few years ago they aren't immune to recessions either. I expect profit margins to decrease substantially the next few quarters.

While there are the "Big 3", there is still a lot of (domestic) competition with WN, a larger AS as well as B6, NK. There are many international carriers who the Big 3 are trying to compete with-especially carriers such as Norwegian Airlines, Qatar, Hainan, Air China, etc.

Fares in all classes to Europe as well as Asia (especially China) have come down the past few quarters. I expect the low-fare trend to continue.

I'm not saying FTers and other FF's are going to make carriers profitable (or less loss-making) during a recession but they are somewhat (more) reliable than the "average Joe" or even businesses who have no problems cutting flying (be it more video conferencing, allowing less flights in J, etc.).

That's funny, DL's management have stated that "the business traveler isn't doing as well as it should".

"Hauenstein said many corporate travelers have been paying “stubbornly low business fares” mainly sold within one month of travel. He said the relative weakness of that side of the business came as a surprise to Delta."

https://skift.com/2016/07/14/delta-a...-higher-fares/

DL's revenues and yields for domestic/Atlantic/Pacific/Latin America all were down 4%-7% Y-O-Y. In other words all types of flyers are spending less.


True life goes on..as I've mentioned elsewhere these changes at AA really no longer affect me as I've switched to BAEC and for the rest of my travels have become a "free agent".

I do like to debate/discuss the changes however.

Fanjet

Many of those "high-spend" fliers are doing so on another person's dime. Like their client or employer. So those extra bonus miles are something of value to them for their personal travel. @:-)
These programs came right after deregulation. As a way to compete for the business flier amongst an industry which had around two dozen major carriers. The evolved programs we now see today are probably how the airlines always wanted them to be, but couldn't because there were too many carriers. Making it easier for one or more of them to "go rogue".

Just look at what happened in 1992 when NW went rogue and slashed it's fares in half. Giving us the $99 transcons and causing all of the other carriers to match. That was done right after AA introduced its SimpliFares (or whatever it was called). Which basically had 4 different fare types IIRC, and was much more based upon distance traveled.

Fanjet

Everybody's costs are rising. Southwest's costs are rising. Alaska's costs will rise significantly as it absorbs Virgin America. And these FF programs have a cost as well. The airlines make a lot more money selling FF miles to the big banks than they do in handing them out to people paying the lowest fares. As for the Big 3's competition on the international front. Just look at what happend with the FF programs at the major European carriers with the rise of easyJet and Ryanair. They became much less generous. How does 125 miles for a DCA-BOS flight sound to you? It sounds much worse to me than 5 FF miles per dollar spent. And can I remind you that WN was the first of the Big Four to go to a revenue-based FF program. And that was after B6 and VX were already there. AS is the only "hold-out" left. We'll see how long that remains the case.I think you greatly overestimate how much of the flying public is made up of the FT FFer who is willing to fly more when more FF miles are being handed out.

Jacobin777

Certainly all carriers costs are rising - which isn't good overall for the industry as it decreases/lowers the amount of pax flying as well as spending.

That being said, some carriers costs are rising than others and some carriers won't be (as) profitable compared to others in a "difficult operating environment". IMHO carriers such as NK and even WN will fair better than the legacies.

Probably why the carriers have devalued so much.

There was no reason to essentially "copy and paste". The carriers (at least AA) have been profitable even with the current FF program. IMHO I don't see AA generating too much more revenue with their changes. I also see the "risk-reward" ratio as skewed more towards the risk side.

Of course, this is my opinion only.

I've been on a few AA flights (B738) where literally 1/4-1/5 of the pax were FTer's.

I guess we'll see what happens the next 1-3 years.

Global321

(deleted)

havoc29

AA's service and punctuality stack up unfavorably to the competition's. For any experienced flyer who has business to attend to, that's probably a dealbreaker that won't be overcome by a bonus miles promo.

But if what you're saying is true, that AA thinks the key to its success is market share among uninformed high-spend flyers whose decisions hinge on things like bonus miles promotions, well:

AAExPlat

You guys are trying to logically look at consumer buying behavior. IMO, that's where you are going wrong. The genius of the old programs (and why they made so much money even at times when the rest of the airline was failing) was that it SUSPENDED or severely IMPAIRED logical decision making. Most people didn't know if the number of miles they would get would offset the extra so and so much they assumed they may pay to fly AA...but they assumed it did. It caused them to choose AA when it objectively didn't make sense and it caused them to take extra trips/flights they would have otherwise not taken.

What is happening here is that since the programs are now both a rebate program and far more stingy (to the extent that they will not be worthwhile for many to keep pursuing if they earn mostly through flying) consumers now finally do what makes sense because they assume the miles they earn are either too complicated to track or not worthwhile earning.

The result will be less usage of cobranded cards, lower issuance of the same, greater emphasis on service quality and operational excellence and evaporation of excess demand. In AA's case, rational consumer behavior will cause damage. It did/does so for the far better DL and marginally better UA. But I expect AA to get crushed. It's a brave new world....

travelgeek1197

At the risk of sounding aloof, I find these changes to be less disturbing than most. To be frank, I find all of the changes to the AAdvantage Program to be in my favor. As someone who does a ton of long haul flying in J & F, clearly the new rules do not hurt me, and in reality seem to be the same in their effect on me as before when they did cabin bonuses for EQPs. The big plus for me is having UPGRADES go by spend in each class. There are so many EXPs that the new program will DEFINITELY reward those who spend a ton of money by pretty much making ones upgrades automatic. I would say the partner calculations for EQD seem fair all things considering.

With all of that being said, my biggest concern as far as where I spend my dollars is quality of product and I have noticed a recent trend of CX flights to HKG selling for 20% less than AA's options (especially DFW). While I'm sure we all have different opinions on the quality of service that AA provides on her 77w vs. CX on her 77w, I think its fair to assume that few if any would be willing to pay 20% more to fly AA. Why do I bring this up? Because the new AAdvantage changes make loyalty for most, even many who purchase J seats, a useless act-----thus turning the seats (regardless of class) into a commodity, thus making pricing and quality a much larger part of the NEW equation used by customers to determine the provider of said commodity.

As I see it, all of these changes bring us right back to where we were when Crandal and his team created the first loyalty program EVER (not just first airline loyalty program): the problem of differentiating your airline from the rest when what you sell is viewed as a commodity by your potential clients. Ironic if you ask me and the single biggest change that all of the consolidation over the last 10 years has brought us.

TravellingMan

Very succinctly put. We already see United handing out statuses not even 2 years into the new world. American will also be in this state by 2018.

Delta will find even more creative ways to do this so that UA and AA can copy/paste.

Fanjet

Then that is the area of improvement AA needs to focus on. Not making their FF program more acceptable to the members of FT. @:-)