ContinentalFan

I am very familiar with the history of OnePass. It actually went from "worst to first" in the 90's, as it was about to go into Chapter 11 for the third time�it narrowly escaped that fate! Bethune helped turn the airline around. However, I don't know if it's clear that the Elite program drew in passengers--it undoubtedly had an influence. One other factor is that the economy started to boom. Having hubs at both EWR and IAH helps a lot�two key cities. Moving aggressively into Europe also had an impact on drawing traffic to the carrier.

I certainly don't agree that the move to reduce EQM's or lowering the FC availability degraded the OP program. I don't see any evidence for that. I know that Delta did reverse itself on the 50% EQM; I am not sure if the situations of the two carriers are directly comparable. I don't think what I am suggesting is all that radical. It's simply a tweaking of the program.

The 'uber traveler' suggestion doesn't really capture what I am suggestion. I am basically saying that Continental should stop rewarding travelers that don't reward the airline. Only give full EQM's for fares at perhaps U and above. I certainly agree that BF is not first class. I would go as far as to say it's really good! IMHO it has deteriorate since the 90's; the service has declined. The product is old and needs to be revamped--it's overpriced for what's offered.

I suggest that the airline stop giving Elite status to people that flyer at a rate that is lower than the break-even point of the airline. It's simply a crazy situation. As it stands, Continental has already moved in this direction, and I haven't seen any serious pushback. Revenues are up and the airline is moving to profitability. I am suggesting that Continental tighten up some more.

ContinentalFan

I'd say that the $2k+ Y fare of the 90's was a bit of an abberation. I agree that now that LUV has invaded the east coast, those high fares won't return too quickly. I also think that Continental blundered in not getting into Burbank before JetBlue. It's paying a bit of a price for that error in the LAX/EWR market.

ContinentalFan

You've definitely managed to mischaracterize what I was saying--nicely done.

ContinentalFan

Hey, I'd listen to you even if you weren't a shareholder.

Competition definitely reduces costs to the consumer--and often raises quality. I am not sure why a low-fare customer would expect special treatment. The only reason that I can think of is that he or she got that treatment in the past--changing is difficult. Continental has taken one step in the direction it needs to go.

The program is definitely for me.

vincom

Have I my friend? It's hard to tell what people mean sometimes - (I'm not getting nasty or anything I'm just saying) often times somethings come across one way or slightly bit different than we intended. It just seemed to me your intention was to rreward higher fare passeenger to try and draw more of them and not reward riff raff who end up providing minimal profit.

-Vincent

vincom

Of course you would - everyone loves the enlightenment of vincom

I'd glad you feel the program is for you... We like you having in the OnePass.

-Vincent

BigPoppaCO

true

pmaddock

Continental Fan,
I have the distinct impression that either your idea is being misinterpreted or that you are focusing on the idea rather than the potential reaction from CO's customers. I seriously doubt I could try to characterize the entire audience here but in general terms its very likely that they are mostly frequent or semi-frequent travelers and many of them face cost contraints at various points in their lives. Therefore it is very likely that they will not be willing or able to pay any more than the lowest possible price. When looking at such people holisitically its more than likely that the fare classes will be mixed.

I'm going to assume that your proposal is to further discount EQM based on some sort of formula evaluating Fare paid against the operating cost of the flight. Although I'm sure some airline analysts will delight in using the information to determine CO's operating costs I believe that this line of logic is going to create a lot of dissonance. In fact I wonder if its even feasible to fully implement such an idea since the breakeven point is a moving target (especially with fuel). At the very least you've just made ticket purchasing decisions more complex. Its not like Orbitz, Travelocity, and even Co.com default to searching for fare that will make CO money - they search for the lowest possible fare to get from point A to point B. Getting the 'right' ticket would add yet another aspect to the 'game' on a regular basis which would create confusion.

So for many customers they are going to go from a simple you fly it you earn it mode to scenarios where they have to chase some sort of target that might have to vary over time. In many cases they won't be able to meet the target because of cost constraints. As a result many customers will experience a loss of EQM and will therefore get the message that their business is worth less to CO (now they feel like the 'riff raff' mentioned by other posters). Given today's competitive marketplace many of these customers will look around and see that there are alternatives out there and jump to another carrier that will treat them the way CO used to (e.g. NW - speaking from experience NW is treating me more like CO did 3 years ago than CO would today if I had stuck with them).

To your point - CO moved a little in this direction and has benefitted from it. I think that its worked for CO because they thought through the whole picture and set up a good balance. DL implemented 50 EQM across the board and found themselves with a lot of rebellious frequent flyers. CO implemented it with the CO.com loophole - mitigating the impact. Taken in combination with CO's policy of keeping simple amenities in coach and their comparative economic conditions it works. However, if CO were to tighten the screws on EQM in any sigfnificant way then I think they'll be where DL was a couple of years ago. It would make the competitors programs too attractive.

vincom

The last thing we want is a Delta repeat.

-Vincent

ContinentalFan

I would definitely be concerned about the reaction of flyers to any change in the Elite program. I think that change has to be made, but the change would have to be finessed in a way to create a minimum backlash.

I don't think that the group here is representative of Continental customers, but I do agree that people face a price squeeze at various times. I am one of those. I freely admit that I have flown for two or three years on Continental on highly discounted fares. I traipsed back and forth across the US on 777's and 767's (sadly, they've gone) and quite often on 757's, enjoying a variety of BF at an extremely discounted price. I frankly felt like a shoplifter getting rewarded with frequent shopper points I actually didn't feel like that, but I probably should have. I did think that the situation was ludicrous. I didn't like the EQM change that was made because it had the potential to hurt me; I also wonder what the heck took the airline so long in fixing the Elite program.

The assumption seems correct; however, I don't know what the details would be--I have ideas. If the change were pinned to some revenue per mile, it could be tied to a break-even point at some point in time. Having a moving target wouldn't make sense.

I wrote Continental a long document back in 2002 explaining my experience with corporate travel and CFO's. I explained what I thought they had to do to make my life easier. I need to be able to search online with fare basis as a search criterion. I also need to know when the deeply discounted fares disappear, so that I can make my corporate travel plans. In summary, I want Continental to help me give them money. They have created in interesting animal in the Elite program; they could monetize it better if they thought it through.

From my perspective, if a person is flying repeatedly on highly discounted fares (like I have done), then they are clearly worth less to Continental compared to someone who only flies full fare. The only passengers that are likely to leave are those that are low revenue/mile. As someone pointed out, they contribute to the marginal profitability of the carrier--I am not sure why they should be rewarded for this. A person that spends $5,000 on a BF ticket to Europe contributes more to Continental's bottom line than a passenger spending the same amount of money flying 75,000 miles to earn Platinum. If anyone is to be rewarded (and neither should), it should be the first person.

Maybe my suggestion should mimic the CoStar system in that it's not transparent. Continental could track customers on a 12 or 24-month rolling revenue/mile basis and assign privileges based on that result. Higher revenue passengers get upgraded first--even might be upgrade gratis periodically on a discounted international ticket. Perhaps the CoStar idea is unfair--that is not having public recognition of the program. If the airline wants to come clean, then they could announce the new program. Continental doesn't even have to replace what's happening now: they could add in this new program and give people the option to register. Those in the new program would have better access to Elite privileges.

I too think that Continental has benefited from the shift; I don't have figures to back this statement up. I am just surmising from the quarterly numbers that the company has been reporting. I also think that they did finesse the introduction well. I was mad initially (for purely selfish reasons), but realized that nothing had changed. If I continued doing what I had done in the past, I would hit platinum regardless of how much I paid to fly. I think Continental could go further. If the airline thinks it will get backlash, then they need to finesse the introduction of any "enhancements" to the program that "better serve business travelers." I am in favor of such enhancements.

ContinentalFan

I know that BA is pretty entrenched, but it seems to me that air travel within Europe is changing rapidly. There are formidable barriers to entry in the industry, but the indefinite future is a long time and things seem to change quickly in the airline industry. Once we have open skies between the US and UK, all bets are off. I don't know what the shape of air travel will be, but I think it will precipitate change.

ContinentalFan

I don't really like the term riff raff, but you have captured what I have suggest: more capitalist, less welfare I never said that there are some FF's who provide minimal profit, I said that they fly at a loss to the airline. That's the kind of customer I wouldn't reward. I think I make a very reasonable request here.

vincom

Would you prefer those seats fly empty - call it a wild hunce Continental would rather fly a a slight loss for now to help ensure long term profit instead of those seats fly empty.

-Vincent

CO 1E

Why are you such a self-loathing, lite elite? Why is it ludicrous to get upgraded into a F/BF seat that nobody purchased prior to departure?

As others have said, I think the majority of travelers are mixed fare pax. Most of your analysis seems to be focused on the impact of elites on domestic upgrades and the purported cost to CO of too many upgrades for non-deserving, lower-fare pax. Many executives and others are permitted to purchase premium cabin travel, however, the vast majority of business travelers still are required to purchase coach fares and make the choice based on loyalty, schedule, and availability. One trip, a plat might buy a U fare, a Y/YUP on another, a Z that happens to be cheaper than a Y, and an X on yet another.

Under the current OnePass rules, an elite knows that they can buy a Z or YUP for a relatively reasonable price (especially on last-minute travel) and have a shot at EUA or battlefield if traveling on a mid-range econ fare. They also will have a sense of what their upgrade chances are when buying a ticket (ie, a gold on T fare on a peak day/route should not expect an EUA). This consistency of CO's frequent flyer program and knowledge (through objective criteria and past experience) of mileage accrual and upgrade procedures is what will keep elites buying CO tickets when they aren't buying Y, Z, or A. If I've interpreted you correctly, you propose a ranking of each individual member based on spending habits and 'value' to CO. If CO implemented an exceedingly complex new scheme such as the one you have proposed, CO likely would be left with a handful on high-spending type elites and hub-dwellers, but would lose a large portion of its regular flyers (who generate plenty of revenue) to airlines like NW (for easier upgrade chances/simpler elite rules) or UA (E+ if cannot upgrade). I think that at the end of the day, while CO would be serving a "preferred" customer base, they would lose money unless they downsized the fleet. There are just too many variables involved to make your system achieve what you want it to achieve.

ContinentalFan

I love it when words are put in my mouth I didn't suggest flying emoty seats in first. I do suggest tightening up the upgrade policy focusing on the most profitable customers.