Nicc HK

Quote:

Originally Posted by d00t

I'm working on a data science project currently along these lines. One of the insights extracted so far is that CX clearly did NOT have market model validation.

If you are able to share the results of your analysis, it would be fascinating to see them. One of the reasons I am most interested in this thread is partly because as a (now ex-) DM it impacted me but also because of the business decisions that led to the event as this is relevant to my work.

For instance, my clients are now marrying predictive analytics to FinTech and the Cloud. It is simply amazing what comes out with a quite stunning degree of accuracy.

From what I can tell (without specific evidence, only anecdotal feedback) CX/MPCs models were straight out of the Stone Age using static inputs for their ‘What if?’ scenarios and even worse set their assumptions to meet pre-planned objectives. Any market validation CX conducted may have been selective to provide data to meet those pre-planned objectives. Many companies do this, but why?

So, if the objectives are:

1. Cull PEY/Y DMs and Golds, mission successful.
   Swap long term PEY/Y DMs with short term C DMs. Hard to say.
2. Reduce PEY/Y DMs in First Class lounges and access to premium check-in, pre-boarding and other benefits, which I believe was due to pressure on CX management by C and F MPC members, don’t know.

If the assumptions were:

1. Most MPC PEY/Ys DMs would live with dropping down to lower tiers because of previous loyalty. Arrogant presumption and probably wrong. These formerly ‘sticky’ flyers paying premium rates either switch to other airlines or just buy the cheap tickets. Lose-Lose.
2. Those that leave will be replaced by equally high spending mainland Chinese and others, probably bad call as it seems those Chinese are flying their own airlines as they expand. Anecdotal reports MPC are maintaining status for those members just short on renewal seems also to support this. However beware for these members, CX did this in the past (SARS & GFC come to mind) but as soon as things normalised enforced the rules.

Collateral damage. An acquaintance in advertising recently told me that airlines can link their advertising rates to the number of premium frequent flyer programme members as this is an indicator of individual members’ value. Therefore drop offs in DMs and Golds have other consequences.

d00t

Some media outlets in Hong Kong have expressed interest in my study too. I publish all my work on my blog www.traveldatadaily.com.

My sources tell me MPO were working on changes since late 2013/early 2014, and that the direction for a new program came from top-down. In other words - the changes were not initially lead by Marco Polo themselves, but rather from higher managers.

I've also heard that MPO did not take on board suggestions from their loyalty consulting agency ICLP - big mistake IMO.

CX has an internal culture of no-risk strategies, which - to be frank, is what you want for an airline, but not necessarily for their loyalty division.

Additionally, CX has management rotations, so folks running MPO now are not necessarily analytical or loyalty professionals, but rather someone who is gaining experience before their next rotation.

Now we're at 12 months since the changes have been live and there have been no changes. This is not what I would consider 'adapting to the mark' or continuing with the theme of #itstimetowin .

What makes it worse is that MPO has real incentives to keep people holding elite status. There are commercial Oneworld guidelines which, if used properly, provide a conduit to drive massive revenues to other areas of the business.

With disparate data science teams (ie: focus on AM), it means MPO is put on the backburner because MPO technically doesn't generate revenue for the airline, whereas AM is the highly-profitable arm. This puts MPO at a disadvantage over other airlines where the loyalty & ffp program operate under the same teams.

In fact, the data science division is so behind that, there is a major competitor in the region which systematically steals clients away from MPO using what I would consider one of the best uses of big data in the travel industry today.

One of the hypotheses I worked on for my study is: "Can the MPO changes be linked to the softening yield, and is the 'pressure from LCC and mainland Chinese carriers' total BS?"

One could make the argument that MPO is not a loyalty program at all (in the airlines eyes), but rather a strategic data-driven business intelligence unit.

But when factoring in all of these issues, the garbage surveys MPO sends out which realistically, can't be providing any tangible value back as insights, and the lack of changes since launch - suggest to me that a few MPO positions may need to be in the 30% management cull coming up next month.

KACommuter

I would like to hear from the major competitor but have not yet been targeted, or perhaps I have been but it hasn't been effective.

Re: your hypothesis, I'm just one data point, but I now redeem much less on CX and also fly much less on CX. So CX only gets ~1/4 of my long haul J business now compared with ~3/4 in the past. If the MPC programme were as attractive as 5 years ago I am sure I would be flying more on CX metal still, as I would be buying tickets and upgrading as I used to. Instead of this, I now buy full redemptions, mostly on other airlines.

The next step is logical - switch out of the MPC. But I need to factor in earning in regional Y flights, and that's where the MPC creates a barrier to switching out.

fakecd

i moved to QF for credit and made OWE with ease for less than what you can earn silver on new CX... i am very pleased with it so far

• flying economy they leave empty seat next to me domestic or international
• flying econony still offered Fastract cards, extra water bottles, amenity, etc... when i.asked for ice cream they ran.out so gave ne biz Lindt pralines
• wanted to redeem J award. absolutely no availability on website. called them asked to relaease award, put on hold 30 seconds and award got confirmed
• flight was delayed by 50min for on syd hkg leg. asked if i can be put on earlier flight even my tix didnt allow change and.qf is strict about it... they happily moved me to earlier one, eventually original flight delayed 3hrs yikes
• last person to check in (moved to earlier flight) but still gave me asile seat... asked for seat where nobody next to me, they then moved me to exit row free of charge
• they block all front nice seats. so last minute booking i can still get nice seat
• they dont release upgrade award to partners and not confirmed.even for.own members. only get confirmed few days.before so as platinum booking 3 days before flight u can clear upgrade
• status credit (CP equivalent) is probably 5x easier.to earn than cx
• u can use domestic business lounge on arrival

i am retarded for sticking to cx so long

QRC3288

fakecd great post, could you mind sharing your flying patterns, class bought, any more details?

percysmith

//wanted to redeem J award. absolutely no availability on website. called them asked to relaease award, put on hold 30 seconds and award got confirmed

Burning QF FF points or Asia Miles?!

fakecd

flying patterns: hkg based. work related travel is infrequent for my line of duty that will be business class anyhow. so i dont count on work related trip for status qualification. rather i do frequent personal regional travels (once a mth average, but if family is away and i enjoy bachelor life would do more). by region i mean Asia including Aus... so in nutshell all my travel is PA (personal account) and i am conscious of value/cost.... have 3 kids so family travel is always in Y, when i fly alone i am flexible. i dont see value in putting 3 kids on 3 J seats.

classes bought: when qf has annual double status promotion i will book a single J trip maximizing SC to coincide with start of new membership year. thats 24k hkd for amost 1.1k SC inclyding QF loyalty bonus (just 100 point short of OWE requalification). then i also travel once J on cx ex tpe to SIN or Japan cost 9k hkd max... so for 33k hkd i have retained OWE within first month of cycle. technically i dont need to do this but i have reccuring ex tpe J ticket for 1year so i use the last segment for repositioning tolling it annually

then for rest of year i buy OW on cheapest econony whenever i want to travel often at short notice. i find best value.using OWE+ cheapest econ fare. QF lounge @ HKG is often generous allowing 1 extra kid in as platinum. i have been to most of NA or Europe touristy destinations, and with 3 kids i have zero desire to travel across timezone. i always make a joke that i pass HKIA more than i go to Causeway Bay... so bunch of these little asia trips.

rare occasion if i really want to travel long haul in comfort alone i buy PEY or bizzo at cheapest fare or use miles or something. now a days PEY of other airlines are as good as J of the past. i am not fussed. when i was younger i used to get Y in redeye and J in day flight to "enjoy" J service... now the opposite, i now get J for redeye and happy to sit econ for day flght


and most cases money i save in airfare i just always stay at 5star hotels.

fakecd

this is using QF miles for QF metal.... i think.in the.past MPC diamonds did similar thing burning asiamiles on.CX metal

funny thing is via QF website i saw lots of CX J redemption availability for days where QF dont want to display J redemption availavility.

QF and CX has different philosophy on J... qantas really protects its J segment, whereas CX treats it as another real estate on its plane... you can see who has been more successful

Cathay Dragon 666

I'm more of a "Free agent" now as I realized since I'm flying just C class, club loyalty doesn't really matter. Most airlines are so watered-down on benefits I get 90% of benefits by the ticket alone.

What I have found is I saved a ton of money (my own company so a penny saved is a penny earned, unlike company-paid FFP most of people here).

Most of the time I get better seat and food (Cathay regional C class seats and food look really bad now, I did not realize how bad they are until I fly others).

I still fly enough Cathay to maintain GO. Because one thing Cathay has done right is the lounges. Other airlines lounges are just awful!

JALPak

What's the point of maintaining GO if all you want is to access CX lounges? If you are flying other oneworld carriers, you can access CX operated lounges without being GO anyway.

Nicc HK

For me this is the point, for all the years I was paying the 'CX Premium' I have found that since moving to AA it just was just not worth it. It took the CX enhancements to the MPC programme to teach me that.

For instance, every Christmas I would automatically buy a CX PEY ticket and then add on for whatever my onward travel is in Europe. This time I shopped around within OW and decided upon BA. Came with a saving. I now find by shopping around I get 2 options. (1) I can save money, or (2) get business class at not much more than CX PEY.

I work with a lot of smaller companies in HK who are in the financial services/technology space, and their owners/staff were loyal to CX until they started seeing the changes for themselves. Few were pro-active, it was only when they started finding their Black/Gold cards being replaced by Silvers the realisation dawned and most now seem to have swapped programmes. These were typical CX PEY/Y high bucket fare travellers.

There is a caveat those whose travel is almost exclusively regional find it harder to switch.

sxc

Given it's only been about 18 months since the changes have been in place, the full effect of the changes is only being noticed now by the "non-proactive"...so the tsunami is only beginning for CX.

Cathay Dragon 666

True. I guess I should make it clear I'm not really trying to maintain GO, but just my preference for OW airlines (except AA hardware) kept me GO so far.

Again, if price and time is within reasonable range, Cathay is still my first choice. But like most people here, I'm no longer going out of my way and paying a hefty mark-up to fly Cathay-only anymore.

fakecd

I think that summarizes it all. Granted, CX, in all fairness is most convenient choice for intra-Asia travels in OW network. But what's happened is element of "paying the hefty extra" for those V/L/M/K fares, or let alone to choose CX over competitor no longer warrants merit.

I was guilty in the past of paying 1k~2k HKD, 20-30% premium for such. It won't happen now. I would think those 'incremental' easy money really contributed to yield in the past.

on the flip-side of coin, take QF as an example. I'm booking a flight now for next week but their 'sale' vs 'saver' fare (say CX "N" vs "V" equivalent) has mere 15% price differential (or, HK$300 a cost of meal...). But for this HK$300 difference, I get 33% extra SC (CP equivalent) and 50% extra poitns (Asiamiles equivalent) It still gets me from point A to B, but i'm willing to give them that extras cuz what they offer in return, is worthwhile to me.

CX30616

I pay for my ticket as they are for my personal travel or going back to my hometown.

I based in SIN and my hometown is FOC.

I traveled at least 5 times FOC-HKG-SIN in I fare, they cost me around 34k cny (~around 5100 usd), and also some regional flight like SIN-BKK in CX, SIN-KUL in MH, and HKG-TYO in CX or JL.

Also, I buy a lot of BA miles for ex-SIN J flight, they are quite cheap IMHO.

I am a CX SL currently, and I got 500 CP last year (I started from GR so I have only 200 now), and someday when I read a thread in FT and I realized QF can give me way more than MPC.

With QF, I can got 1200 SC straight for my FOC-HKG-SIN, and with some more regional flight and 4 sectors 3K qualification flight, I would achieve QF Plat, or OWE way more faster than MPC, and I like the CX F lounge.

I will most likely still choose CX to fly as in this route no other carrier can compete with CX in terms of schedule and aircraft type, MI 738 is not really comfortable and I always want a flat bed to rest.

I have considered BA before, but BA requires me to have 4 BA sectors to qualify, which I couldn't have as the only two routes I have is LHR-SIN of SIN-SYD.

However, the disadvantage to choose QF is that QF miles are mostly useless (or I didn't find a right way use it?) and they expired quickly, but with OWE and my credit card rewards me 1 AM with 0.9 cny spend overseas, that's not big deal.