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-   Delta Air Lines | SkyMiles (https://www.flyertalk.com/forum/delta-air-lines-skymiles-665/)
-   -   First Class Monetization, or FCM: The Definitive Thread (https://www.flyertalk.com/forum/delta-air-lines-skymiles/1230437-first-class-monetization-fcm-definitive-thread.html)

lsugolfer Dec 21, 2011 10:54 am


The FFP program itself is usually far more profitable than the airline itself.
Exactly. So why is DL removing benefits from its FFP?

But a guy with an MBA told us it would!!!!!

Global_Hi_Flyer Dec 21, 2011 10:55 am


Originally Posted by jsmith50 (Post 17667918)
Who is more inclined to pay, say $75 for a gate UG, a DM flying several times per week or the casual 1-2 times per year flyer who may have never sat in F before and wants the experience? ........

The long term consequence, however, of then having top tier elites who are not getting UGs is that they begin looking for another airline who can provide the benefits they seek. But since we know that the airline industry is a race to the bottom for who can provide the poorest benefits in their FF program, this just may be the end of FF programs as we know them!

Which really would suit DL just fine unless they can find more ways of extracting revenue from loyal/captive flyers. The AmEx cards & benefits thereof (and the devaluation of FO) proves that they're trying to further monetize SkyMiles (which is the only reason to keep SM).

Not that they haven't tried in the past - witness the exorbitant fares that they got in CVG after they drove competitors out... a recent survey showed CVG and MEM STILL being the highest average fares in the US.


Originally Posted by lsugolfer (Post 17668004)
In that same article, DL says its the frequent flyer that is more likely to pay.

And that is completely opposite to the argument made by the Virginia DOT and the private contractor in Virgina that is adding toll lanes to the DC Beltway. They argue that they don't expect the "frequent traveler"' to pay for using the toll lanes - they expect regular commuters to pay only in "rare" circumstances (which would undermine the premise for building the lanes in the first place, but I digress). And those statements are made even as the contractor reconfigures the remaining "free" lanes in a manner that raises more impediments to traffic flow.

The equation for toll lanes that parallel free lanes is almost the same as monetized upgrades. The occasional traveler that doesn't want to deal with the traffic (or hadn't planned on it) will pay up for a "nicer" ride. Under that premise, either DL has a flawed analysis (or is snookering the public), or the toll contractor is using a flawed analysis (or is snookering the public). I'd put my money on something in the middle.

blug Dec 21, 2011 11:01 am


Originally Posted by 3Cforme (Post 17667246)
This shows you really don't grasp the concept of monetization. It means charging for something that used to be free. Delta can offer a purchased upgrade to F - but they can't make people pay. If people don't pay the inventory continues to be given away.

Sure, Delta can lower the incremental price to boost the fraction of F seats sold, but that's not necessarily an improvement to profit. Further, lots of people might find the proposition of a confirmed seat in F attractive at a nominal surcharge. That's successful product differentiation: Southwest and JetBlue aren't selling any F seats...

It's fatally flawed business logic - and an insufferable sense of entitlement - to expect any vendor not to try to sell its best product.

Nobody said DL CAN'T do FCM and we SHOULD get F for free. All we are saying is that we are disappointed by this. Are we allowed to be disappointed? Please, 3Cforme, allow us to express our disappointment, thank you very much.

jsmith50 Dec 21, 2011 11:15 am


Originally Posted by Global_Hi_Flyer (Post 17668470)
Which really would suit DL just fine unless they can find more ways of extracting revenue from loyal/captive flyers. The AmEx cards & benefits thereof (and the devaluation of FO) proves that they're trying to further monetize SkyMiles (which is the only reason to keep SM).

Which is clearly addressed in another thread about the SCs. DL freely admits that you can't increase benefits on the plane so you have to compete with better benefits on the ground, which they claim that the SC is.

jsmith50 Dec 21, 2011 11:17 am


Originally Posted by lsugolfer (Post 17668435)
Except it is reality according to Delta. Most of the upsells to F on P fares are from Medallions.

but DL's reality isn't necessarily the reality to the rest of the world. Plus, most of those upsells to F from P fares are, most likely, business travellers (read as medallion). The average Joe Traveller out there isn't buying a P fare, they're buying LUT fares and, I think, would be more likely to shell out the $75 for an UG at the gate when DL hangs a pretty wall banner there advertising that they too can enjoy the perks of sitting in F.

bcj1949 Dec 21, 2011 11:26 am

Yep the future
 

Originally Posted by avidflyer (Post 17667133)
Yup I saw this. What this really comes down to is the reduction/near elimination of free upgrades for FO/GM and to some extent Plat. last year when this started I said "slippery slope"....Get out your sled folks. If you are not top tier upgrades will soon be a thing of the past. This will not impact me yet when I said it people jumped in to say that it was just a minor adjustment to what they have been doing for a long time. Next year at this time I would be surprised if GMs hit 25% UGs and FO's maybe 10%. Think I am kidding? Wait and see. BTW, this is not just DL...generally upgrades for free are going away unless you are a 100k+ flyer.

Fully agree and just posted a similar post on another thread. This is true on all legacies. Fewer UG"s unless you are top tier. Fewer seats and more buy-ups. My new thinking is first check F fares to where I want to go with UA, AA and DL. See if something looks good/reasonable. Then check DL my currently used most used airline. I'm PM and am at 50% UG this year. I expect to be about the same next year. I've used UA more as some fares in F out of MSP have beat DL coach! For me that may be the future! Everyone has their own priorities etc but for me this is the direction I probably will take next year. By the way....SWU's etc worthless or near worthless.

fti Dec 21, 2011 11:37 am


Originally Posted by lsugolfer (Post 17668262)
FTR, I'm including time/convenience into price. I don't expect someone to fly WN LAX-LAS-PHX-BNA-TPA-ISP to save $43.

Sorry, I read your statement "solely on price" to mean "solely on price." Silly me :D

lsugolfer Dec 21, 2011 11:43 am


Sorry, I read your statement "solely on price" to mean "solely on price." Silly me
Eh, I factor the "total cost of travel" into the "price" of the ticket.

oh912flyer Dec 21, 2011 11:48 am

Wake up people
 

Originally Posted by jsmith50 (Post 17668644)
but DL's reality isn't necessarily the reality to the rest of the world. Plus, most of those upsells to F from P fares are, most likely, business travellers (read as medallion). The average Joe Traveller out there isn't buying a P fare, they're buying LUT fares and, I think, would be more likely to shell out the $75 for an UG at the gate when DL hangs a pretty wall banner there advertising that they too can enjoy the perks of sitting in F.

My turn to rant.

Here's the problem with your post. If you read other posts, particularly those dealing with DL's new website in 2012, it should be pretty clear that there aren't going to be any $75 "at the gate" upgrades; they'll all be sold online before the day of sale.

A LOT of us buy tickets 7-10 days out. We're already paying M class fares, and for me, the price of a P fare has ranged from $0 more to $150 more. Given that all of my flights are 2-legged, and one is usually more than 4 hrs, it's worth it. And I've bought a lot of them. Even since becoming a DM.

Let that sink in. I am a DM on a M class fare, and I am still paying for the guaranteed F seat.

Why? Because it's worth it to me.

Now, for those of you working for companies with inflexible travel policies who are all claiming "I'll just move to XYZ airline" you are forgetting something. If you all do that, XYZ airline will run out of space, and ... raise their prices.

With all these threads I come to the same three conclusions:

1. Too much "entitlement" mentality around here. Just cuz you are a DM, doesn't mean you get an upgrade. Deal with it.

2. Some of you think you're worth more to DL than you really are. FTers are fun, and there's a lot of knowledge here, and for some unknown reason, some really HVCs actually spend time here. (Thank you!) But there's a lot more non-FTers out there. I have yet to meet anyone on any flight when I am sat up front that has even heard of FT, let alone is a regular poster!

3. Some of you fail basic marketing. To claim Joe Schmoe's are more likely to pay for upgrades when DLs own data clearly shows otherwise, just because you think it's more likely, is, well, pretty arrogant. DL is a multi-billion dollar company with data mining systems that provide them with REAL DATA, not just supposition. If DL does something that the data indicates will be a good thing, you can bet your salary that it will be beneficial for DL even if you think it will cause you to jump ship. (Do you REALLY think other airlines aren't doing just the same thing???)

Look, I don't necessarily agree with everything DL does. But I am a capitalist. And I want them to be successful and deliver a good product. Almost all of the time, that's what I get. (I rarely fly J so don't go there.) I am happy to pay more for my flight to get the service I expect. And if that means a few extra $$ for my flight, I'm happy to pay it.

Oh, and I pay for my own flights, unlike many of you on here...

End rant.

Vuelos Dec 21, 2011 11:48 am


Originally Posted by 3Cforme (Post 17667246)
This shows you really don't grasp the concept of monetization. It means charging for something that used to be free. Delta can offer a purchased upgrade to F - but they can't make people pay. If people don't pay the inventory continues to be given away.

Sure, Delta can lower the incremental price to boost the fraction of F seats sold, but that's not necessarily an improvement to profit.

If they are able to get an extra $250 from someone for the F seat, there's a profit increase.


Originally Posted by florin (Post 17667609)
"fork up $100 for a guaranteed seat in F or play the battlefield game". There will be some takers,

Myself included. The couple sitting behind me in F today said "it was only $150 each way extra to sit in First so we did it.

As a DM I'm seeing significant tightening of upgrade space. Where before I'd clear my typical routes at the window I'm clearing at the gate.


Originally Posted by lsugolfer (Post 17668102)
It wasn't a consultant. It was their own data. Basically DL was saying that a GM booking a MIA-ATL-SEA trip 4 days out on a M fare was more likely to spend the extra $X than a non-status flying pax to ensure he/she was sitting in F than to wait out for the upgrade.

The problem is they've ....ed the equation up and, typically, in your example they'll be selling the P fare for cheaper than that M fare close in. That's where you're seeing the seat creep. Instead of pricing last minute F fares above the last minute coach fares P is becoming the cheaper last-minute purchase.

oh912flyer Dec 21, 2011 11:52 am


Originally Posted by Vuelos (Post 17668898)
The problem is they've ....ed the equation up and, typically, in your example they'll be selling the P fare for cheaper than that M fare close in. That's where you're seeing the seat creep. Instead of pricing last minute F fares above the last minute coach fares P is becoming the cheaper last-minute purchase.

Actually, over the past couple of weeks I've noticed that's no longer the case. P is now increasing with M. Gone are the days of the $0 and $4 P upgrade it seems. (Of course, it could be just because of the time of year...)

Vuelos Dec 21, 2011 12:01 pm


Originally Posted by oh912flyer (Post 17668936)
Actually, over the past couple of weeks I've noticed that's no longer the case. P is now increasing with M. Gone are the days of the $0 and $4 P upgrade it seems. (Of course, it could be just because of the time of year...)


Could be time of year or they got smarter... Doubt both though ;)

The goal is to sell X% of the F seats so... they will... no matter the way. My thought is that P should expire at X days (4 or 5) and have only high fares for last minute... like the competitors.

mnredfox Dec 21, 2011 12:06 pm

My old FFP used to give me 1K miles if I didn't get an UG, now as DM I'm going to see my UG % go down further because of FCM? My how times have changed...

dchen2 Dec 21, 2011 12:21 pm


Originally Posted by jsmith50 (Post 17668644)
but DL's reality isn't necessarily the reality to the rest of the world. Plus, most of those upsells to F from P fares are, most likely, business travellers (read as medallion). The average Joe Traveller out there isn't buying a P fare, they're buying LUT fares and, I think, would be more likely to shell out the $75 for an UG at the gate when DL hangs a pretty wall banner there advertising that they too can enjoy the perks of sitting in F.

The difference is Delta is targeting the last minute H/M/B/Y fare coach buying business travelers for the incremental upsell.

An vacation traveler who booked their sLUT ticket for $300 an month ahead of time is not likely to pay $300-400 more for a Y-up/P while an SM/GM/PM or even DM business traveler needing to be productive on a 3-5 hour flight who is already paying $700-900 for their ticket could be induced pay $40-70 more to get that assured F seat.

oh912flyer Dec 21, 2011 12:22 pm


Originally Posted by Vuelos (Post 17669003)
Could be time of year or they got smarter... Doubt both though ;)

The goal is to sell X% of the F seats so... they will... no matter the way. My thought is that P should expire at X days (4 or 5) and have only high fares for last minute... like the competitors.

That wouldn't work. I know some folks are upping to a P fare a couple of days out if they didn't clear their UG window. Basically, they're refusing to pay the gate lottery. If DL's data shows this pattern it means several of the passengers are probably those that would have gotten the UG anyway. (I'm guilty of doing this once; it was a long week, I knew how tired I'd be by Friday pm...)

If you limit to F only 4-5 days out, these pax wont buy it and DL loses $$$.


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