Originally Posted by vincom

What is enough? Continental is already no longer the Freedie Winner - a title they used to be very very proud. Developing a program to just reward only high spending elites will alienate a significant part of thier customer base. I may qualify as a high spending elite, but I would leave a program that doesnt value all customers who fly X miles a year - that riff raff Platinum throws a devil of alot more business that the ocassiona customer who buys one first class ticket a year.

Originally Posted by vincom

Continents is not flying people at a loss, they are working hard to balance the type of fares sold to attract as many people as they can to fill thier planes. The US market is MUCH more competitive than those abroad. We don't have just a few carriers - we have DOZENS of carriers - often with many different airlines competing on similar routes. I also hate to say - that a Platinum who spends 5k a year would LEAVE when he knows another program would reward him better than Continental does, loyatly programs have an odd way of making people sway in thyis country. We want the most we can get for free.

Originally Posted by vincom

Custometr Loyalty is what drives profit in the long run. Any business owner will tell you they've taken a loss once or twice to keep a customer loyal because of the long term benefit.

Originally Posted by vincom

Not everything is about driving profit. Wake up and smell the reality there is a fine mix between humanity and business - loss sight of this and you've lost all ability to run a successful and profitable business. Continental is working hard to find that mix - and right now they've got a pretty darn good mix, it;s not perfect but as recent financials have reported, it is working.

Originally Posted by vincom

Things have changed - by rewarding people to use a lower cost channel of ticket booking, they increase the profit fromt hose cheaper fares. BTW, even the cheap fares aren't so cheap anymore.

Originally Posted by vincom

They've already done that, but the way it seems you want to cut out any low profit customers from being rewarded. I happen to disagree and think the current method is sufficent.

My Point: Not everthing is going to be about increasing profit, doing so removes the human factor - doing so would be like a repeat of Frank Lorenzo, but this time it would be pulling a Lorenzo over on the customer not the employees.

Originally Posted by BearX220

I just wanted to chime in here with a point about the British Airways program, whose US arm I belonged to until the revenue-focus revamp in 2003.

The essential error I think BA made for the US market was in failing to see a loyal customer as one who can be a full-fare premium cabin flyer one week, a discount Economy customer the next, etc., and who judges the airline on all those experiences. The BA program is explicitly not for anyone who doesn't buy a lot of full-fare tickets (there's no "riff-raff elite", or at least it's extremely difficult to become one). I believe it may be the only major FF program that rejects membership applications (you have to buy a full-fare ticket, Y or better, to join).

This may work in Europe where business flying is culturally and economically more distinct from leisure flying. The alternatives in Europe are a robust train network and, more recently, EasyJet/Ryanair/etc., which are totally different animals from the premium carriers. And there is no "second BA" in Britain providing level competition ex-London; bmi is the closest. So perhaps BA can afford to rebuff customers who want some loyalty reward for repeated discount purchases (although I don't fly BA anymore and have cashed in all my BAEC miles).

In the US, I don't think any airline can afford to do that. They all have more mixed traffic (there are plenty of businesspeople on Southwest and plenty of vacationers on CO). There is vigorous competition. If they alienate the Platinum who is buying a discount ticket, he can bolt and take all his full-fare revenue to any of half a dozen other airlines. CO is testing the limits with 50% EQM, but the other majors have pointedly not followed suit. And a typical CO flight is the equivalent of BA Club Europe and Ryanair in one airplane. With the margins they're running on, they cannot turn their backs on the cheap-and-cheerful crowd the way BA has. BA is a very unusual duck, making most of its money on US-UK premium cabin services, and CO is nothing like it.

Airline loyalty programs are essentially retention programs, and anyone who consults in, say, the telecom business knows that if a fraction of the effort spent on customer acquisition were diverted to retention, the business would be much healthier. Retaining customers spares you the cost of acquiring new ones. As such retention investment (I think this was Channa's point above) is often rational -- if in the short term you absorb a cost in excess of realized revenue in support of greater customer lifetime value, it's smart.

Originally Posted by pmaddock

I'm curious - do you think there are that many full fare customers that are always full fare customers? In my experience as a corporate traveler I'm seeing an almost relentless push to cost control - e.g. pushing towards the lowest possible fare at all times. Vacation travelers are even more motivated by pocketbook considerations. As such it seems to me that that many full fare customers are paying full fare because they have to (e.g. short notice) and will likekly be buying discount more often than not. Therefore its likely that many full fare customers on a given flight are actually 'mixed fare' customers overall.

As a 'mixed fare' customer I can tell you that my particular behavior is more like a discount fare flyer. I'm more interested in what an airline will do for me all the time as opposed to what they will only do for me when I buy full fare. Its the total package that counts.

So, I would submit its likely that typically only a customer that always flys full-fare is going to respond in the manner you're describing and that these customers are a rare and dying breed.

In my opinion Continental is already pushing the envelope with 50% EQM. It makes CO stand out like a sore-thumb in its own alliance. It think its already chasing some corporate travelers (e.g. ones that can't use CO.com because of corporate travel agent policies) away.

Originally Posted by ContinentalFan

With regard to Frank Lorenzo, nice try There are ways to run a profitable company without going to that extreme.

Originally Posted by ContinentalFan

I am not sure if business travelers (full fare) are a dying breed. As the economy improves, you'll see more of such travelers.

Originally Posted by BearX220

But I think the walk-up $2300 transcon Y fare is dead for good. I can't imagine returning to that stick-it-to-'em cost structure, any more than I can imagine again paying $400 for a VCR. The change is structural and permanent. (Bethune to customers, once upon a time: "If you have to go to San Francisco tomorrow and I say the fare is $1500, you're going." Customers to Bethune: Southwest has set the maximum value of a walk-up coach ticket at $299. Nice try.)

If and when the economy does improve we are stuck with what looks like permanent instability in the energy markets... and enough chaotic competition to keep the old, $2k+ transcons that CO used to bank on dead and buried.

Originally Posted by HeathrowGuy

IMHO, CO has struck the best balance of interests in its FFP of any major US airline. CO will not go int he direction of BA's FFP because USA flyers aren't as captive as British flyers -- 20 years after privatization, BA is STILL the only "omnibus" airline in the UK, and that can not and will not change for the indefinite future.

Originally Posted by ContinentalFan

Take a wiff of reality first Any airline must focus on generating a profit; it's how business works. Lest anyone be under any delusion: Continental hasn't been profitable recently; it did manage a profit in '03; it looks set to be profitable this quarter; however, profitability hasn't been the norm recently. Its return on equity hasn't been stellar.

Originally Posted by vincom

Further changes to the Elite Program to that emphazie on high revenue, would be moving toward Frank Lorenzo style management of the the OnePass Program. I will make sure my vocal voice is heard in that they dont further ruin the program. I will also lead the campaign to boycott Continental if they do.

-Vincent

Originally Posted by ContinentalFan

You love playing that Frank Lorenzo card Heck, I would support anything that Continental does that makes it a better and more profitable airline. I have benefited personally from Continental's generosity: getting upgrades that I don't really deserve, getting preferential treatment over other passengers, etc. I believe that the direction I suggest would improve the airline and the program. I think that the airline should implement changes, but be cognizant of the political ramifications. I have some ideas, but in this case, I might send them directly to Continental--I don't want to give your boycott a head start.

Originally Posted by ContinentalFan

I am not sure if business travelers (full fare) are a dying breed. As the economy improves, you'll see more of such travelers.

Like you, when the fare comes out of my pocket, I buy the lowest fare. Business travel is different.

You raise a good point on the total package issue; I still contend that the Elite program is too generous, rewarding equally both full-fare and people that flight at discount fares all the time.

We clearly differ on the EQM issue!

Originally Posted by pmaddock

Perhaps I'm off base but basically what I think you're proposing is for CO to draw in the "uber-traveler" - someone who is willing to pay full price all the time.

Originally Posted by sushibear

Is it like TYPING IN ALL CAPS?