avidflyer

I will take that bet.

bubbashow

I am one that thinks it is a good idea. The Elite ranks (in my opinion, and we are all entitled to one) are way too full. By eliminating MQM qualification of cheaper fares, many people will be eliminated. That makes an Elite program elite. I think this is a great move by DL, if it indeed turns out to be true. Sitting on a T fare back and forth to SYD on an off-season special three and four times (and you can find MANY examples of that on this board) does not make you anything close to profitable to DL, it doesn't make you a "high end" customer. It just makes you a gamer that has found a loophole in the system.

Please, DL....thin the ranks.

kicker

Well, in my defense, Delta's website has been incorrectly calculating MQMs for a while now. I noticed it when I booked, but I didn't think anything of it because of all the other problems going on with the website.

zedthedeadpoet

I think you're missing the point. Skymiles is supposed to be a frequent flyer program. They should reward their frequent flyers - even those why fly on the cheapest fare. I don't think DL, or any of us for that matter, should be concerned about the infrequent flyer who attains status with four trips a year to SYD. If they aren't a frequent flyer - then they aren't going to be a burden on DL or interfere with any of my upgrades. Delta should, as should we, be concerned about the pax that do weekly commutes between ATL and PIT, but has a corporate travel policy requiring the cheapest fare. The weekly PIT customer is MUCH more valuable to DL than a quarterly SYD customer.

sbm12

Yes, and it happens in many industries - including the airline industry - all the time. The phrase you're looking for is "loss leader" and it has a habit of working more than you'd think.

Personally it would mean giving a potential new customer a discount on my services for the initial chunk of work with future hours billed at the normal rate. This lets them decide if they think I'm worth continuing to work with going forward and I get the opportunity to add another customer to my portfolio.
This view grossly misses the point on what the loyalty programs actually are and what their purpose is.

The point of the programs is to drive revenue to the company. Period. They do this by offering rewards to customers who spend more money with the company, generally at some ratio that ensures the company keeps most of that revenue. Rewarding the customer who only flies on the cheapest fares is not the purpose of the programs. Even in volume (a "frequent" flier) that customer is likely costing more money than they're bringing in. The company puts up with them because they have lots of others who they actually generate positive cash flow from and changing the rules to exclude El Cheapo would have a larger negative impact than they want. But that doesn't mean that they're happy about the cheap seats customer.

When 2-3% of your customers are responsible for 25%+ of the revenue you take care of those folks.

avidflyer

That was my point in mentioning it. I figured it was a mistake too until every CS rep I spoke to told me the fare would not earn miles.

A couple interesting things to note:

The use of the phrase "will be" as in not yet meant to be released?

and "they are working on the messaging"

Whoever said trial balloon may have nailed it.

kicker

I don't necessarily think that having a fare class that earns 0 miles is a bad idea, as long as they make that clear. There was no announcement, they just snuck this crap in there, and I apparently am one of the first victims, booking my flight on Friday.

Winkdaddy

Not necessarily. Back when Jeff Robertson used to post he had some pretty interesting insights:

"Given the financials of the airline industry, the cost of fuel, labor, pricing and similar, and excluding the frequent flyer miles we giveaway, we generally don’t make money on LUT fares. In turn, we only profit on Business Class, First Class and higher coach fares. Thus, an L fare for $329 from ATL-LAX generally not only doesn’t make money, we give away 2,000 base miles, and then give another 2,000 bonus miles for our Platinum and Gold Medallions. On the other hand, a $589 H fare from ATL-LGA earns 750 miles and 750 bonus miles. For simplification purposes, if you assume the cost of a frequent flyer mile is 1 cent, I just added another $40 on to the cost of the L fare, and another $15 on to the cost of the H fare, making the ATL-LAX customer even more unprofitable and the ATL-LGA only slightly less profitable (but still profitable). Thus, if a Medallion earns Platinum status by flying back and forth to LAX every week on an LUT fare, no matter how often they fly and our loyal to us, I lose money – and to be blunt – more and more money the more and more they fly."
http://www.flyertalk.com/forum/delta...itability.html

avidflyer

+1

In the airline industry it is less about component margin contribution and more about aggregated contribution. So it is very possible to lose money on many tickets if you have sold enough premium high margin tickets to make the flight as a whole profitable. It takes both top line revenue AND high margin business to keep the asset generating income.

bubbashow

I agree with you on that....it should be transparent.

bubbashow

Agree.....but should the loss be rewarded? I think not.

Guys...this whole site is about how to maximize frequent flier programs. At its core is the maximization of loopholes. They are closing....it is business. Fly and be profitable, or deal with what you are - an unprofitable customer that will not be part of Elite programs in the future. These programs are designed to reward the most-loyal. Loyalty and profitability go hand in hand.

The airlines are responsible for creating the idea of value...and those $99 ow fares across America NEVER were profitable. In the same vein, I think they are rapidly trying to move away from that where possible and re-train.

avidflyer

No I do not think it should be rewarded and I never said that. If given the choice, for instance, on this E fare I would have gone with the price vs the MQMs because I have no real need for the miles or the MQMs. That is my situation and I understand others needs are very different. If I was not swimming in both I would make a completely different decision BUT..either way I do NOT want to have changes, good or bad, slipped in and I certainly do not want to book something without knowing explicitly what the terms of the deal are. Delta had at least 5 opportunities to make me feel like I KNEW what this deal (E fare) was and they could not do it because they do not know themselves.

mrredskin

and you figure that how, exactly?

if DL isn't going to reward ALL of those who fly and reach certain thresholds then customers will find other airlines that will.

TTT

My prediction: in the next couple of years there will be fewer airlines that reward "volume" and more that reward revenue/profitability.

HongKonger

The sLUT fares originating in HK are minimum $1200 and usually more like $1400. This is for connecting via NRT to MSP/DTW. DL introduced a direct HKG<-->DTW flight which is usually about $100 more. This flight uses a more fuel efficient plane that those connecting via NRT (777-200LR vs 744 on both legs via NRT), but has only 43 BE seats as opposed to 65 on the 744. This is the one I normally take.

I understand that to ensure volume airlines sometimes sell fares that make them little or no money. However DL was doing a strong business in HKG forcing people to connect via NRT, so they would not be expanding service to HKG with a direct flight containing fewer BE seats if it didn't make them money.

Also, twice a year I buy M fares to use my SWUs.

I am also an Amex gold card member.

I understand this is not conclusive proof that my business is profitable to DL but given those facts it is a reasonable assumption.