ContinentalFan

A rhetorical question: what would people think if Continental started to tighten up on giving out Elite Status.

I have been reading the postings on this site--and running some numbers on Continental. I don't know how they came up with this Elite Status idea--it's a great concept--but they desperately need to tighten it up. I ran some random flights and, not surprisingly, it's quite easy to reach Silver, Gold or Platinum flying on tickets that are priced lower than the cost (per passenger mile) of the airline. [To accounting types out there, I realize that the measurement isn�t GAAP, but it seems to be a good proxy for what�s really going on.] Frankly, the more I think about it, this situation is absurd. Why is the airline giving preferential treatment to passengers that it flies at a loss? I bet if the Elite concept had been instituted after the development of useful IT systems, this bizarre situation wouldn't occur.

I am not sure if Continental (or the others in the SkyTeam world) can do anything about this problem: they've created a monster. I imagine that if they try to change it, they will meet with resistance. They would all have to agree too�though maybe not. If I were Continental, I�d probably be glad if those traveling on discounted tickets earned their status on NW or DL: I would want to pull the K,H,Y-type fares, giving FF�s an even better chance of upgrades or other perks.

By my calculation, if a Platinum tries to buy a discounted ticket on Continental, the airline would be better off giving him or her a $50 voucher to go an fly on a competitor. From a business point of view, the airline needs to cull the Elite program and base it on something that's related to profitability. How that could be done bloodlessly, I have no idea!!

I checked my past flying and there have been years when I have flown under cost: one year at close to 10 cents, another year at the absurd figure of 7 cents. The more I think of it, this situation is simply crazy. I have no idea how the airline can fix it, but unless they do, I don't see service improving.

I would suggest that the airline stop giving EQM's for discounted fares. I'd also suggest that they have a carryover provision for EQM's. If you made Silver but didn't hit Gold, the balance carries forward, etc. Now that I have heard about this Co-Star thing, I think that the airline needs to (gingerly) figure out a way to reward travelers that pay higher fares.

EmailKid

They already have - 50% EQM on lower price fares unless they are booked on CO.com.

EmailKid

vincom

This topic has been discussed more than we like to think about. Mainly when Continental introduced reduced EQM on tickets purchased at other channels than thier own continental.com.

All fares U fare and higher earn 100% and up to 150% EQM based on that fare purchased no matter the channel from which it was purchased. Lower than U fares recieve 50% EQM if the ticket is purchased any other place than continental.com; if purchased at continental.com the ticket recieves full EQM.

This was done to drive lower fare buyers to continental.com where the cost of sales was cheaper; obviously its more expensive to sell through travel agents and telephone agents.

Some airlines like British Airways only reward those who buy higher fares - Continental could do this, but has not - I believe thier compromise was this 50% EQM on none continental.com purchased cheap fares. The American market is much different, screw us once you've lost a customer base for ever. There are many people who buy lower fares and get Platinum, and they are reward accordingly.


This is why EUAs are done by fare class within thier own Elite Level. Continental reward those who fly most and pay most more. just because someone buy high fare, and flies 50k a year doesnt mean they are more important then someone who buys cheap fares and flies 75k a year. Obviously someone else spent more time butt in seat, but that person should be rewarded after those who fly similar amounts but paid more.

I have found myself buying more FC seats and Higher Fare Class tickets lately - because of my travel patterns. This works for me and Continental reward me in an H fare as a Platinum before a Platinum on a Q fare - seems fair to me.

Seems to me:

1. Continental has figured out a way to thin its ranks. [although they claim the change hasnt been much at all]

2. They already know how to reward thier higher fare paying customer.

and

3. Continental knows a revenue based method of Eliteness would not work.

Continental STAR program is an internal tracking method and should not be discussed as a method of loyalty rewardment at all.

I perosnally hate revenue based Elite Programs - for BA it works, but not for an American Carrier.

BTW: I think you would have found this was discussed at great great length before, a search would most likely have yieided some results.
I'd also suggest a more descriptive title for your thread. Next time try directing business propoals directly to Continental - they'll be more recptive I'm sure. As someone who knows many people who make elite on cheap fares I wouldn't be in favor of any change to the Elite Program Qualifcation method at all.


-Vincent

iriefrank

I believe there are negative tax consequences for a revenue-based program. At least some of us have something intelligent to say in reponse to this post.

The notion that a search would have yielded this same discussion is silly. The OP makes at least a few novel points. If you don't want to discuss them, then ignore the thread. Seems pretty easy to me, easier than constructing a scathing 466 word post.

Edited to add: The tax consequences would be by and large negative for us, the memebrs, than the company, is my understanding. I'll let you guys know after I take Tax class!

vincom

I have actually found the follwing threads that contain relation to the topic at hand.

http://www.flyertalk.com/forum/showt...ight=50%25+EQM

http://www.flyertalk.com/forum/showt...ight=50%25+EQM

http://www.flyertalk.com/forum/showt...ight=50%25+EQM

http://www.flyertalk.com/forum/showt...ight=50%25+EQM

http://www.flyertalk.com/forum/showt...ight=50%25+EQM

http://www.flyertalk.com/forum/showt...ight=50%25+EQM

http://www.flyertalk.com/forum/showt...ight=50%25+EQM

http://www.flyertalk.com/forum/showt...ight=50%25+EQM

-Vincent

iriefrank

I'm not going to insult you and parse the OP here. I don't get off by insulting people on messageboards. But if you read it thoughtfully, you'd see that it's asking for fresh ideas about how to change elite status, both in terms of qualificaion and benefits. Those threads you unfortunately dug up are all moaning and complaining about 50% EQM.

Let's have a thoughtful discussion about this. Feel free to ignore it, Vinny, if it's so blas� to you. It's our board too.

ijgordon

Yes, but what do any of them really have to do with CO? The OP could be asking about any US FF program, the issues are practically identical. Maybe the thread should be moved to MilesBuzz or whatever.

iriefrank

That's some refeshing, fair constructive criticism. ^

It could be moved to the moribund SkyTeam forum. But it could stay here, CO's program differs from many US programs in that there are "unlimited" upgrades to even lower-tier elites, while the others have a certificate/sticker based system. There are some problems in this setting that don't appear in many other non-ST programs. Talking about such changes in MilesBuzz may be unwieldy.

vincom

Cost between Coach and First Class I would place somewhere between 10 to 15 dollars domestically. [e.g. upgraded food, hot towels, nuts, soda, drinks, and headsets] I understand your are hypothesizing with the 50 dollar figure, but I'm just saying the cost of rewarding a Platinum with an upgrade is really minimal.

Don't forget when looking at one customer - you are not just looking at one person. I as a customer influence many different people who fly - where do I point them? Continental. Several of my clients ask me to handle travel for them, as a result who gets the business? Continental. You see keeping even a cheap Elite happy benefits, because that cheap Elite supports often times various revenue streams.

Cheap Elite = [at the very least] free word of mouth advertising.
Cut off Cheap Elite= no more free word of mouth advertising.

Never forget the human factor - this was frank Lorenzo's one flaw - he knows number great (actully was quite the financial wizard), but he doesn't know how to deal and understand the human factor.

-Vincent

oopsz

There are other airlines which have a more strict revenue-based elite program (BA and CX come to mind.) The problem is if CO makes it hard to become an elite, people will just credit their flights to NW or DL instead...

777-DCA

How about a real business propoal: better availability of award flights.

If someone flies CO religiously and they want to use miles for an award they usually have to fly on partners. For example, doing a quick search yesterday for a friend (an award in either first or business) I noticed that if one wanted to redeem miles from DEN (or LAX) to CDG or LGW/LHR one would have to either fly NW, VS, or use 250,000 miles.

WearyBizTrvlr

Nitpicking mode engaged: BA's program isn't really revenue-based, it's a more extreme version of what you find on CO. That is to say, if you buy a cheap I-class business class ticket, you get the same amount of tier points (needed for elite qualification) as when you buy a J-class one. Not only that, since the tier point thresholds are based on mileage, you could buy a cheap $300 I-class fare and get 40 tier points for a short hop like LGW-AMS. Equally, you get only 40 tier points for a four-hour, expensive J-class from London to IST. The difference in fare could be ten-fold. Where the revenue aspect kicks in is that the cheap economy fares do not earn any tier points, WHY-like fares get 20, and business get 40 (for short-haul). You can actually get more tier points on a cheap I-fare than on a fully flexibly Y-fare in the extreme case.

Vulcan

Larry alluded to the real reason that CO cannot go more to a revenue based program at Do #1.

CO cannot afford to give its corporate customers the impression that it will reward thier travellers if they spend more money. The corporate customers would immediately bolt, knowing that their people would find a way to spend more money.

The closest CO has been willing to go to revenue based rewards is the Upgrade Policy on the day of travel at the airport:

"Full Economy (Y) Fares - Upgrades for Elites traveling on a full Economy (Y) class fare will be based on Elite status and time of check in.
Discount Fares - Upgrades for Elites traveling on fares other than a full Economy (Y) fare will be based on Elite status, then fare class and finally time of check in. "

Syzygies

Cost per mile is the simplest model that can be entered into a conversation. It's useful for comparing airlines to each other, but not routes within an airline. The next simplest model is fixed cost/variable cost, which would better explain the less expensive per mile domestic long hauls.

Also, a price war is like any war: Inflict harm on oneself, hoping to inflict greater harm on one's enemy. If you don't like wars, please tell my government that every civilization that starts wars comes to ruin.

Ever see the words dimensional weight when shipping UPS? You can't be serious with this estimate!

vincom

Capital costs (i.e. airplane seats) aside, how much do you really thinkk it costs Continental for the food they serve upfront? Alcohol and Soda is CHEAP - they reuse the towels (they are washed and reused). and those head sets don't cost more than 50 cents.

Imagine how little they pay when they buy in the HUGE amounts they do... there is an increased cost for first class - yes - but its not exactly a huge cost difference - when refering to the literal cost.

-Vincent