That's completely fair and equitable, agreed. But that's not what we are discussing, nor was it my question, of course. And in this example of yours, the customer is spending more miles for more value in return (premium vs economy), while in the one-way award scheme there is zero marginal value compared to the similar roundtrip award.

While I may not be excited about EasyPass, this is also fair and equitable because the company has a right to limit the inventory at each redemption tier.

But the premium for EasyPass is not comparable to the so-called one-way award, because the one-way award is the same cost whether at the discounted tier or at the inflated tier.

In other words, if I can book a SaverPass award, then the one-way SaverPass award will cost the same amount of miles as a roundtrip SaverPass award, while, if I can only find an EasyPass award, again I will have to spend this increased cost for only a one-way EasyPass award compared to a roundtrip EasyPass award.

It's half the award for the full price, regardless of the award tier.

There is never any marginal value or incentive. There are no savings whatsoever to the customer, no chance of a higher class service, etc. Since the roundtrip award is readily available at precisely the same price, who wouldn't opt for that and then at least retain the control over the value of the return portion of the trip? If the customer elects not to return, at least it's their choice, and if they decide to return, they have retained the value.

But in the one-way award scheme, the customer willingly forfeits this value up front with no incentive or margnial value.

Who would do that? Even if you don't want to take the return leg, anyone in their right mind would book a roundtrip and either forego the return or just keep rebooking as long as possible in case they ever use it.

All the one-way award does is remove that potential value element to the customer up front at zero incentive.

Understood. But that's quite irrelevant. The fact that they would even attempt a scheme of this type is indicative of the tone-deaf quality of the management at HQ. The sad fact is that if they put in even a slight discount, there would likely be many more takers and CO would benefit because they would reduce the value of the miles, which is always in the interest of the "house." If you have zero incentive to the customer, the likelihood that a customer will act with no regard to his or own self interest is virtually nil.

We're talking about some pretty basic common sense. Of course, I can't speak for you, and I agree that value is not linear, but there should always be at least a little marginal value to act as an incentive. If not, as I wrote above, it will actually not only reduce the value of this award to the customer to beyond nil, but therefore also to the company.

Let's say the one-way award cost 75% of the roundtrip award. Given the basic nature of demand, there would be many more people using these awards and CO would have effectively reduced the value of the miles by half in those cases, which means more value to the "house." The higher the surcharge, the greater the value to the house, but the lesser the demand. Until you get to the point where there is zero marginal value and thus zero incentive, and just about zero demand (except for the dupes, of course).

Any reasonable customer will simply book a roundtrip award and thus reduce the value of the scheme to Continental.

In the case of the hotel example, whatever you do is pretty irrelevant since you cannot rebook the second night of the award. But with an airline award ticket, you can rebook the return so that there is a far greater incentive to the consumer to retain that portion of his or her value in the first place.

The notion that customers will completely willingly forfeit that value up front for no reason whatsoever is beyond baffling.

And it's bad business for Continental as well.

Fair enough, but with an airline award ticket, you have the option of rebooking your return portion.

So, if there is no incentive to acquire a one-way award ticket vs. the roundtrip, any reasonable consumer will opt for the roundtrip award and retain the value poriton of the return leg.

Then he or she either has the choice to not use the return or to keep rebooking it as long as possible in order to retain its value.

With the one-way award scheme that has zero marginal value and incentive, the company is asking consumers to willingly forego their value up front for no benefit.

Only the dupes would ever select that option.

Awfully insulting to the folks who just need a one-way trip and consciously go in to the transaction knowing that is what they are getting.

It doesn't have value to you. That's fair. They don't have value to me, either. I like to come home eventually.

But to suggest that no one will ever see value in such a reward and if they do they are a fool is casting a very wide range of judgment across a whole bunch of people.

The "incremental value" may be that the customer doesn't have to troll through the inventory to find a return seat, saving them time and effort. It may be that they don't have to pay taxes on the return segment. It may be something else. Sure, the value proposition could be better for the customer but it isn't. That doesn't mean that it is part of a scheme to abuse OnePass customers.

As for the "common sense" argument you make about the multiple night hotel booking, it is simply a bad analogy for any number of reasons. When you know that the rules offer one night or two at the same price you can decide if you want to book one or two. You can deal with finding two consecutive days available and hope that they are there versus just finding one. The taxes implication of hotel stays are somewhat different though if you're at a resort not having to pay the resort fees could be considered analogous. Would you willingly choose to spend that extra cash just to show the hotel how much smarter than them you are? How you aren't going to be duped into losing the value of your points?

One way awards at 50% of roundtrip pricing is so very important. I value BA, AA, BD miles so much higher because of this feature.

sbm12 said earlier that AA's one-way awards do not allow open jaws, which of course is not logical. A to B at 50%, C to A at 50% = 1 open-jaw award at 100%.

AA offers a free domestic segment for every international redemption for those of us living in international gateways. LHR-LAX-JFK - talk about bang for the buck!

One need not pay the full roundtrip pricing for one-way CO first class redemptions. For instance, you want LAX-FRA in LH F one-way. The LAX-FRA roundtrip F award price in 135,000 -- 50% would be 67,5000. You should book LAX-FRA in LH F and FRA-LAX in LH Y for 95,000 -- 70% of the roundtrip price. Not too bad.

Having the option for trip planning across so many carriers is just brilliant. BD miles for NH LAX-NRT-HKG with NRT stopover. Home HKG-LAX nonstop on CX in F via AA with a free one-way LAX-JFK in AA762 F anytime in the next year!

Miles for one-way LAX to SE Asia like KUL or CMB where you then buy a cheap cheap premium ticket back to North America.

The sad thing is that it is not a question of who is a dupe or who is not, it's a basic economic principle.

Is there a value to not having to book a return leg if you don't need to? Sure. But is it worth 100% of the roundtrip cost? Perhaps to a tiny cadre of customers. But since this award in only bookable on the phone, any potential benefit in time spent booking the award is lost anyway.

However, if you build in a reasonable incentive, such as 75% of the roundtrip award, then your argument makes a lot more sense, and--more significantly--is likely to attract more takers.

The funny thing, of course, is that were CAL to allow one-way awards at exactly 50% of their roundtrip awards, it would not reduce the value of the miles to CAL in any way.

This is all about the house being as greedy as it can get away with. And, this case, it's completely overstepping even its own best interest.

Ultimately, the entity most hurt by a policy like this is Continental itself, because the lack of marginal value or incentive will reduce the takers for such a scheme to virtually nil.

Build in a reasonable incentive and people will start to spend their miles at a higher redemption cost and thus CAL will have reduced the value of the miles in a far more effective manner.

Sadly, it's indicative of a pattern of tone-deaf policies that have permeated this Larry Kellner tenure.

As far as your points about the hotel example, I agree with all of them, but they are beside the point about the basic economic principle.

So there is value but not to enough people to meet some threshold that you've determined?

And clearly CO doesn't want that or they'd have already done it, right?

Actually it significantly decreases the value of the program to CO. Making it easier to redeem rewards makes the points more valuable to the customers which translates to less valuable to the carrier. It should come as no surprise that they will do what they can to keep the edge in their favor, just like they do with revenue tickets, ancillary fees and just about everything else they do. After all, they're in business to make money, not to operate as a non-profit.

I'm glad that you see the value in my points about the hotel analogy, one that you brought up as relevant. I guess it no longer is since I have a reasonable counter to your claims?
Actually I said that it wasn't as relevant because of the one-ways. The lack of stopovers on foreign soil is a significant devaluation that AA imposed in exchange for the one-way option. And AA is more generous than many of the others that offer one-way rewards; many offer no stopovers at all.

Getting caught up on one particular aspect of the reward program and obsessing over how it specifically is good or bad for the customer without taking into account the whole of the program doesn't make much sense. That's why I keep pointing out that there is more to it than only the one-way rewards. And that's after taking into account that there are actually ways to derive real value from them either through lowered points required for a premium cabin or by not paying r/t taxes, a benefit that can actually be of significant real money value depending on the market in question.

I think every program feature either adds or subtracts value individually to the customer.

One-way awards are of value to any customer who requires them. But CO does not have one-way awards, only a semantic fallacy, that is a roundtrip award where you can book only half the value.

Second, regarding your point of one-way awards reducing the value to CO because they make it easier for customers to redeem miles, I do not agree. Sure, this has been the accepted wisdom in the industry for a long time, but the fact is that every one-way award represents, in of itself, a redemption for that segment at full value.

Of course, on the surface, the value to the company is reduced because the company didn't oblige the customer to redeem the full value of his or her roundtrip miles.

But let's not forget that award inventory in highly limited. Every time a customer takes a one-way award seat out of this inventory, he or she has asymettrically upset the apple cart. Now there is one seat gone that could have represented one of the two segments on a roundtrip redemption. Thus, each one-way redemption represents, in effect, an additional restriction on a full roundtrip redemption.

In effect, therefore, allowing one-way redemption, even at 50% of the rt value, would increase the difficullty, in the macro sense, of customers to redeem their miles, and thus reduce the effective value of their miles, especially since we can reasonably estimate that the vast majority of customers will want to book roundtrip award tickets.

Finally, regarding your point about the hotel example, the economic principle is still completely relevant, but the irrelevant sidebar is still irrelevant.

Actually, the irrelevant sidebar in fact only supports the basic economic principle, which is one regarding the nature of demand and the behavior of markets, namely that consumers will not act against their own best self-interest.

Of course. And it is worth considering all of them. Just not in a vacuum.

No. Because if the rewards are now at one-way prices there is no requirement for r/t redemptions and there is no asymmetry. And it doesn't increase the difficulty of redeeming.

The inventory is already limited. The airlines control that and let's assume that doesn't change. Making it possible for customers to pick CO one direction and a different carrier in the other direction (e.g. AA, B6, WN, etc.) or to just purchase the return as a revenue segment means that the overall difficulty of finding a trip that allows a customer to go on a trip and get home has decreased. Essentially you have hugely expanded the number of carriers that can be booked on for a trip, assuming that the accrual of points has happened. So redemption is easier. Sure, more people will be able to redeem so the chances of me personally getting a reward seat might go down but we are supposedly talking about the macro effect, right? If it is easier for anyone to redeem then the value to the consumer goes up and the value to the airline goes down.

I still don't know what part of my analysis of the hotel analogy you think is irrelevant. You're the one that introduced the analogy; I'm just pointing out that it isn't what you think it is.

Let's set up a very simple example, just for argument's sake.

Let's assume 1 award seat per flight.

Let's assume 2 customers. One booking a one-way award (at 50%) and one booking a roundtrip (at 100%, obviously). Thus, the total value of the miles in this case is 150%.

If the customer booking the roundtrip gets the seat first, CO has had to give up 100% of the 150% available award miles in this case.

If the customer booking the one-way trip gets the seat first, then the customer needing the roundtrip is shut out of his or her entire trip (the asymmetry) and CO has only needed to redeem 50% of the 150% available award miles in this case.

Clearly, there will be other choices for the roundtrip redeemer, but the point is, every one-way redemption, because of its asymmetry, has the effect of reducing overall roundtrip inventory. Thus, its effect on overall roundtrip inventory reduction is a factor of two.

This model only works if we can reasonably assume that there wil be more roundtrip redeemers than one-way redeemers, something we can, of course, reasonably assume, with a comfortable margin.

In fact, as long as one-way redeemers are one passenger below 50% of all award ticket redeemers, this model will have the macro effect of reducing roundtrip award inventory, thus increasing the value of the miles to CAL.

Well the example is ridiculously over-simplified and it attributes 100% of the reward miles to half the travel in the round trip scenario. Moreover, since one-way rewards would be available the implication is that all rewards are such. So there is no more round trip and the math no longer applies.

In other words, come up with something else that actually isn't so flawed as an argument. This one is a joke.

I suppose you just don't understand the principle involved, since your objections have no bearing on the simple example I posted.

I did not attribute 100% of the reward miles to half the travel in the round trip scenario, I attriributed 100% of the reward miles to 100% of the travel.

Perhaps it would be easier to understand like this:

Again, a simple example, just for argument's sake, to explain the principle.

1 award seat available.

1 passenger using a one-way award at 12,500 miles
1 passenger using a roundtrip award at 25,000 miles

Total miles in this universe: 37,500.

If the roundtrip redeemer gets the seat, CAL has given up 25,000 of the 37,500 miles available.

But if the one-way redeemer gets there first, CAL only gives up 12,500 miles and the roundtrip redeemer cannot redeen his 25,000, meaning that an asymmetry has been established and CAL has only given up 12,500 miles.

This has the net effect, in the macro sense, of reducing the seat inventory for round trip redeemers who, by definition require two seats (symmetry) to redeem their awards.

Yes, somewhere, somhow the roundtrip redeemer will be able to get his or her award, but not without leaving at least one seat unreedemed in the system.

Since there will always be more roundtrip redeemers than one-way redeemers, this has the effect of increasing CAL's value in the miles.

?????

No, because you cannot reasonably assume that the return segment is also not used for reward travel. In the universe there are two flights in question, each worth - in you most recent "example" - 12,500 miles. Either one person buys both of them at 25K total or two people buy them for 12,500 each. Same total miles used.

By providing one-way rewards - something that YOU have claimed offer more flexibility and value for the customer - the value of the round trip would necessarily go to zero. There is no requirement for it so we cannot assume that everyone is booking them. In fact we'd have to assume that everyone is booking one-way rewards though some people will book one and some will book two. The total number of seats doesn't change and the total number of bookings doesn't change. Just who uses them does. From a macro perspective the who is irrelevant.

But I appreciate you using small words and treating me like an idiot.

Sure. It was answered in post two, long before the tirade against CO management and their efforts to abuse and manipulate their customers came out of the shadows.

My point exactly.

I'm sorry but you still aren't getting it.

In the example, there is a total "universe" of 37,500 miles. They are stocked up by customers.

We both agree that it is in the company's best interest to make these miles as hard to use as possible, in other words, to keep as many of them in customers' accounts, not used in actual reward travel.

In the example where the roundtrip redeemer uses his miles, 25,000 of the 37,500 miles have been used, leaving a stock of unused miles of only 12,500 miles.

In the other example, the one-way redeemer uses 12,500 miles and as a result the roundtrip redeemder is shut out because of the asymmetry and now there is an unused stock of 25,000 miles (double).

That is very much in the company's interest.

As far as your point that, as a result, there would be no more roundtrip rewards. First, this is clearly the system B6 has adopted and, in acutality, it has had virtually no impact on redemption behavior.

Why?

Because people, as you have correctly pointed out, don't tend to really go one way.

So, in the B6 model, people are in effect buying rouund trip awards split into two. The only effective difference is that is provides customers the flexibility not to book their return when they book their outbound. This is ultimately just as much in the airline's interest, as it makes the actual award inventory more transparent.

Otherwise, there is no downside to the airline. The roundtrip awards cost the same amount, inventory is just as controlled, etc.

In fact, the vast majority of TrueBlue award users book the return when they book the outbound, precisely because they don't want to get stranded.

The fact is that the incidence of true one-way redeemers is actually very low and so would have no impact on the viability of the roundtrip award. Also, as I have detailed a few times, the only true effect of these one-way redeemers is to effectively reduce the "symmetric" inventory availability, so, if anything, their value to the airline is greater than roundtrip awards.

One important caveat ot this whole, long discussion: Clearly, no matter what, the impact of one-way awards on the system would be minimal. I'm not sure what the airlines are so worried about, but they should all allow true one-way awards, either at 50% of the rt, or for a small surcharge, and they will all find that it will actually improve their upper hand on the system.

Of course, if, instead of charging 50% for a one-way award, the company charged 100%, then the principle of the viability of one-way awards should be magnified. Asymmetry would remain, obviously, and the customer will have spent not 12,500 but 25,000 miles. That would be the PowerBall Lotto victory of frequent flyer programs for the company. The problem, of course, is that without any marginal value or incentive, the likely demand for this type of award would be close to nil so that its effect on the system would be lesser. That's why it's actually in the company's interest to keep the award redemption cost at a level that provides it with reasonable marginal value vis-a-vis the roundtrip award.

Finally, regarding your comment about my view on your intelligence. We may certainly be having a spirited disagreement, but I have nothing but respect for your intellect and knoweldge. I have said this before, and I mean if from the bottom of my heart, you are profoundly knowledgeable about these frequent flyer programs in a way that I could never possibly aspire to.

So, while I may not agree with you, I certainly hold you in the highest esteem. Nothing less.