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Should status be based more directly on revenue ?

Should status be based more directly on revenue ?

Old Jan 17, 13, 8:30 am
  #1  
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Should status be based more directly on revenue ?

There is some noise over on the DL forum and FT blogs about status being more directly related to how much revenue ($$$) you give the airline. e.g. http://www.flyertalk.com/the-gate/bl...s-in-2014.html

In one sense, this seems to me a 'fairer' way of measuring a customer's value to the airline. However, it is also fraught with problems of measuring and recognising that revenue ... you only have to look at the problems with TPs posting from alliance and codeshare partners, etc.

The DL approach seems to be dipping a toe in the water and setting a minimum revenue achievement for each status level, in addition to existing requirements.

It would certainly upset the applecart and skew things in favour of, for example, domestic and shorthaul 'commuters' who often earn minimal TPs for expensive fares, and against TP runners.

How do people see this in the context of BAEC and oneworld ?

And does BAEC status reasonably reflect one's value to BA ? Assuming 'value' can be related to some measure of revenue or profit.

Or maybe BA just need to make TP earning less arbitrary and more reflective of the revenue contribution ?

How about: status = ((x TPs) + (y BA flights) + (z GBP revenue)) ?

Or are things just fine as they are ?
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Old Jan 17, 13, 8:46 am
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Singapore Airlines does this for their PPS Club. You have to spend equivalent of GBP12.5k per year. It is a higher level than *Gold but it doesn't even give you access to their first lounges (not that they are good anyway).
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Old Jan 17, 13, 8:47 am
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Revenue isnt necessarily value. BA's best customers are those from which it makes most profit. Someone travelling on a loss-leading fare may well contribute to overheads, but isnt that valued a customer.
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Old Jan 17, 13, 9:08 am
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Originally Posted by kryten22uk View Post
Revenue isnt necessarily value. BA's best customers are those from which it makes most profit. Someone travelling on a loss-leading fare may well contribute to overheads, but isnt that valued a customer.
Agree there, I made Gold largely through discounted I class fares, WT+ and CE. Of my 1600TPs, approx 1300 TPs came from such fares and the other 300 (280 to be exact) came from one fully flex J ticket, the cost of which wasn't much less than the cost of all the other flights put together!

Comparing me to say a Gold who got to the same TP balance through 5 - 6 fully flexible J tickets, I am clearly a less profitable customer. Not that I am complaining mind!
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Old Jan 17, 13, 9:29 am
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Originally Posted by dunk View Post
There is some noise over on the DL forum and FT blogs about status being more directly related to how much revenue ($$$) you give the airline. e.g. http://www.flyertalk.com/the-gate/bl...s-in-2014.html

In one sense, this seems to me a 'fairer' way of measuring a customer's value to the airline. However, it is also fraught with problems of measuring and recognising that revenue ... you only have to look at the problems with TPs posting from alliance and codeshare partners, etc.

The DL approach seems to be dipping a toe in the water and setting a minimum revenue achievement for each status level, in addition to existing requirements.

It would certainly upset the applecart and skew things in favour of, for example, domestic and shorthaul 'commuters' who often earn minimal TPs for expensive fares, and against TP runners.

How do people see this in the context of BAEC and oneworld ?

And does BAEC status reasonably reflect one's value to BA ? Assuming 'value' can be related to some measure of revenue or profit.

Or maybe BA just need to make TP earning less arbitrary and more reflective of the revenue contribution ?

How about: status = ((x TPs) + (y BA flights) + (z GBP revenue)) ?

Or are things just fine as they are ?
If BA wished to do this then surely the easiest way would be for the number of tier points allocated to be matched against the revenue generated.
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Old Jan 17, 13, 9:59 am
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Changing the FFP to base status on revenue require careful thought.

Take Club for example:

* Your J paying passenger is on the one hand generating a lot of revenue. But on the other hand, if he is only purchasing seats that would otherwise be sold to someone else then he is of no value as a customer.

* Your I paying passenger is on the one hand not generating nearly as much revenue as the J paying passenger. But they may be occupying seats that would otherwise go unsold and hence every penny that they pay represents revenue that would not otherwise be achieved. Hence these customers are valuable and their loyalty is worthwhile.

If BA were to consider changing the means through which these individuals obtain status it should be done after a careful study and with due care and attention to the necessary facts.

There may of course be a third way - implementing a system offering bonus TPs that cannot be predicted in advance to high fare paying passengers on flights that are lightly loaded.

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Old Jan 17, 13, 10:05 am
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Wouldn't the whole of OneWorld need to agree to this? Then wouldn't that mean the member airlines would have to disclose a lot more information to each other such as levels of corporate discounts etc?

Seems a hassle to me, though it could possibly work as some sort of replacement to the number of ba metal flights required to earn status.
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Old Jan 17, 13, 10:23 am
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take 2 customers - one has a one off honeymoon in CW transatlantic, and the other does 15 flights in CE from LGW - JER. Who is the more loyal customer given they spent the same amount, roughly? Spend seems a rather one dimensional way of rewarding loyalty.
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Old Jan 17, 13, 10:29 am
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My annual spend is very modest in comparison to most here, basically in J/U. However, I remain loyal to BA because they allow me to acquire enough TPs to scrape Silver.

Adjust that to a 'cash based system' and I would undoubtedly lose out - at which point there's little incentive for me to fly BA any more.

Would they care? Perhaps not, but it would take some very careful consideration by BA to calculate that impact globally.
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Old Jan 17, 13, 10:42 am
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Hmm. The issue here is that you would limit status to either uber rich folks, or those who's business travel policy lets them have the most expensive seats.

Loyalty, which is what a FF scheme is all about should not be defined by who has more money to spend.

There are people here who go out of their way to travel on BA, who make S or G by a mix of back of the bus seats for work and perhaps a couple of holiday flights, who are very loyal to BA but cannot afford to buy fully open F or Y tickets.

These people are the ones who will stick with BA through thick and thin. Whereas there are others who do a few flights in 1st and get status easily and like some I know manage to get across two or three alliances and demonstrate no real loyalty to BA.

You only have to look at the regular contributors on here who make S or G by Domestic or the shortest of short haul, where there is a choice and they make a conscious decision to be loyal to BA

Personally speaking I would up the number of flights on BA Metal needed to achieve Gold and further increase for GGL, as this would make it harder to get status by flying on AA or others and getting cheap Tier Points. This actually would not be good for me as I earn cross alliance, and would have to switch some flights to BA to maintain Gold or perhaps even GGL. This would have a Direct BA Revenue correlation and tie revenue to BA

BA could also perhaps to an AA/UA and have an alternate qualification based on number of flights flown on BA Metal as this is another demonstrable form of loyalty and probably brings more revenue than someone who does two flights a year on BA and the rest on AA
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Old Jan 17, 13, 11:37 am
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BA's system of TPs is an attempt to ensure that money spent results in status. The CIV score, as far as we passengers can understand, is even more focused on yield. So is the GGL level (which as far as I can see provides the benefits of Gold circa 2000 AD). Not sure BA has much to learn from Delta on this.
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Old Jan 17, 13, 11:45 am
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Originally Posted by Monk View Post
take 2 customers - one has a one off honeymoon in CW transatlantic, and the other does 15 flights in CE from LGW - JER. Who is the more loyal customer given they spent the same amount, roughly? Spend seems a rather one dimensional way of rewarding loyalty.
The question is how did the customer get back from JER?
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Old Jan 17, 13, 11:49 am
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Originally Posted by joejet View Post
The question is how did the customer get back from JER?
They got enough TP's and flew back with Sleazyjet
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Old Jan 17, 13, 11:58 am
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The requirement to spend $ on DL is easily circumvented by many US members since spending $25k on one of the DL branded credit cards would meet the requirements

As far as tying status and FF point earnings to amount spent, it seems a perfectly sensible concept
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Old Jan 17, 13, 12:07 pm
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I think the opposite is true here - the FF system is designed to engineer loyalty, not to measure it!

By providing thresholds of achievement for customers to reach, the loyalty scheme is designed to manipulate customers behaviour increasing sales on BA.

I have a CIV of 6...and I'm proud
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