bubbashow

I hope so, because one is not necessarily related to the other at all!

WN has done it...they are the industry leader now...I imagine all will follow....rapidly.

Renes Points

Then they need to cut the cord with AMEX. My wife will be PLATINUM with DELTA this year after 1 international flight paid for with bump vouchers, rollover MQM's, the AMEX 25k MQM deal, my sending 30k MQM from my DELTA reserve card.

If DELTA really wants to thin the ranks - just cutting the MQM's on cheap flights will not do it. (not that I mind at all - $900 in fee's for PM is cheap in my book!)

HongKonger

I believe you're right. This is how casinos do it. If casinos can do it by having human pit bosses rate your play on table games then certainly an airline where nearly everything is computerized can do it too.

HongKonger

What is your basis for saying WN is the industry leader now?

TTT

Delta's mainline CASM is around $0.12. If you take your fare (only the part Delta keeps, not the taxes etc) of $1200 and divide it by the miles of HKG-DTW-HKG (15,714) you get $0.076 cents per mile. So Delta is losing about $0.044 per mile flown or about $691. Now that is a very rough estimate (distance used is great circle distance, actual distance flown is more) and does not take into account any ancillary revenue (change fees etc). Your purchased M fares likely push you into the positive territory overall (assuming about $3500 M fare).

For fun I have a spreadsheet where I record all of my flights, miles flown and fare paid and compare it to Delta's mainline CASM to see if I am a green or red customer. So far this year I am green helped greatly by an M fare to SYD booked later this year.

I think you are right - Delta does do strong business in HKG. They likely added a 777 to the HKG-DTW route for a few reasons. First, it can command a premium for both Y and J fares as people pay more for a one-stop itinerary than a two-stop. Second, they can change a premium for the J seats as they are lie-flat (though that advantage will eventually go away). And third, as you pointed out it is a little more efficient and thus costs them less to operate.

TTT

I think they were referring to the changed Rapid Rewards program that gives points based on spending vs. simply miles flown. WN is leading the industry in changing its FF program.

bubbashow

...in profitability.....in customer service surveys, etc., etc. etc.....AND about to become a MAJOR player in ATL.

n301dp

Comparing it to simple mainline CASM would likely not yield very reliable results at all. You would need to look at the individual cost of the airplane you are flying on at that point in time--fuel, lease/ownership, maintenance, staffing, catering, etc. There's no doubt that an M fare is profitable for DL, but for other flights, there are just too many variables at play to give an accurate representation of what is "profitable" or not without looking at specific route information.

bubbashow

Even if it REMOTELY close, many of us are not profitable.

TTT

It is a pretty simple comparison but for someone who flies a mix of Delta aircraft and flights it may not be a bad measure and is really the only way we as outsiders have to actually look at profitability. But you are right, I think it is safe to say that anything booked in M or above is profitable on pretty much any route.

BenA

+1. Thanks for doing this legwork, avidflyer - this is pretty much exactly my perspective; like you, I'm not yet convinced that anyone really knows anything.

I think it's a tossup whether E will earn miles or not; frankly, I expect it will at least in the short to medium term, and I think sbm12's 3:1 odds are about right. But the mass confusion surrounding this is right on the edge of spinning out of control, and the continued official silence from Delta on the issue is deafening.

BenA

The revenue discussion is interesting, but I think it misses the point. Some (most?) days I'm a T class leisure traveler, but other days I'm a business traveler booking wildly expensive fares literally 6 hours before departure. The T flying is the bulk of my business with Delta for now, but the relationship built up as a result is why Delta gets all the last minute flying, too. (And don't discount the documentable viral marketing value of the companions I drag with me on leisure travel, at least three of whom have gone on to become elites themselves.)

You can't separate the complex interdependencies in this relationship. Without a $125 SEA-PWM desperation fire sale fare on NW back in January 2009, I wouldn't have started flying often. Without the status I gained on that fare, I wouldn't have directed a $1000 last minute transcon SEA-RDU ticket to Delta, who had inconvenient timing for the trip. And a colleague who I introduced to Delta wouldn't have booked a last minute $2500+ M fare SEA-AMS. And another colleague might not have considered Delta's new SEA-PEK service for his last minute full business class ticket to China.

Did that original $125 fare lose money? Frankly, it's really hard to quantify and you can make an argument either way. The flights weren't full - so even if NW did lose money from a CASM perspective, they may have lost less upfront with me onboard than not as long as the fare was high enough to cover the marginal fuel and materials to transport me. And without that fare, I wouldn't have made the trip at all. (seriously, Maine in January?)

In short, it's complicated, and while I don't know what Delta will do with E fares, I do know that the entire chain that resulted in that M fare to AMS would never have happened if the original $125 sale fare to Maine was in a non-mileage-earning class of service.

My $0.01...

bennos

I think it's impossible to say if a given ticket or even a given passenger is profitable. The smallest unit you can look at is a flight, and even that is way complicated, and at the end of the day the best you can say is "is the airline profitable?"

For example, if a transcon T fare goes for $99, but the seat otherwise goes empty, is that really a loss? It's incremental revenue on a perishable good. Certainly you can't sell a plane load of $99 fares, but if the market doesn't support the route itself at least breaking even (if you can figure out how to measure that), then the route shouldn't be flown.

Similarly, if exactly one TATL J fare is sold on a flight (we all know how much we complain about Non-Rev parties in J, so this isn't too farfetched, especially on 752s), is that one J passenger profitable? Even if the plane overall is losing money? What if the flight sells out in J on Sundays and Thursdays, but only sells T fares on Fridays -- except for that one J passenger?

HongKonger

Exactly. I THINK I am profitable for Delta, but I'm not sure. Unless you ALWAYS buy YBM or F/J tickets, you don't know that you're profitable and even then you depend on enough other people buying tickets to make it worth flying the plane (a/k/a sLUTs). And nobody knows whether anyone else is profitable either. There are too many variables to consider.

StefanNYC

Well, the calculation likely being true, a trivial question arises nevertheless: Why then do you offer these money-losing fares?
And the answer is of course equally trivial: Because if you don't, the seat will fly out empty, and you'll lose even more money.
[A less trivial variant: Because if you don't, your potential customer will go to your competitor who does; having done that once, he will, with some probability, stay with that competitor going forward, and once again you'll lose even more money.]

Hence, I don't think it would be fair to say that sLUT customers are nothing but a source of loss for the airline.
(Yes, you guessed it -- I am one of them )