When FCM was first rolled out (I haven't checked lately) the P fare was often only 30 to 40% of the F fare. To get their incremental $50, DL management was, in effect, conceding that a FC ticket was really only worth about 30 to 40% of the asserted value.

There are many occasions where FFers buy tickets where DL is "cheaper" than the competition. I have no reason to believe that those things don't even out. I also have no reason to believe that the high priced seat won't sell to a non-elite, which renders your point moot.

^^^ my point exactly

In any market where a competitor is pricing below DL, you could assert that every DL elite on the plane is paying a "loyalty premium" equal to the fare difference. Considering the inflation of the elite ranks, and the 20 to 50 deep UG wait lists, I thinks its a safe assumption that, more often than not, the number of elites paying the "loyalty premium" exceeds the number of folks (elite or non-elite) opting for the FCM buy-up. Obviously, this is not a factor in markets where the airlines have collectively managed to stifle competition.

But, the question remains, how many folks are going to continue to be willing to pay a "loyalty premium" for benefits that are becoming increasingly illusory.

A few points:

1) DL is posting some of the biggest revenue increases in the industry right now. It's not all due to FC monetization, but it doesn't appear that FC monetization is hurting.

2) Other carriers are following DL's lead and monetizing their FC cabins too.

3) The industry is shrinking/consolidating meaning business travelers will have fewer and fewer options.

4) Eventually, those who want F will either pay for it or be an extremely valuable customer (DM on high fares). Much like in real-life, the high-mileage sLUTs will take a back seat..or maybe at least Economy Comfort:p

Except they don't pay above-market rates over any extended period. The only way for this to be possible would be for DL (or another airline) to fill the entire plane (or at least a sizeable portion of it) with elites.

I'll give you an example. Someone needs to fly JFK-LAX, leaving 21 March and returning 28 March. Delta is the cheapest nonstop option. There is no elite surcharge that I can find. Please reconcile this with the argument that elites pay a premium.

Elites may pay a bit more or a bit less for any particular purchase, but that is not the same as saying they don't pay market rates. DL's pricing is set by the market, not by elite behavior.

They don't always. Sometimes DL is tied with other carriers or is cheaper. But when DL is more expensive, assuming similar flight characteristics, the question is how many people buy the DL ticket anyway. And the next question is how many of those people would continue to do so if the elite upgrade benefit becomes, practically speaking, a thing of the past, and whether or not DL is able to sell those seats to someone else. It's this revenue that needs to be weighed against what they pull in through FCM.

Horsecaca... first of all, your logic is flawed by stating that flying is a commodity market. It is not. Tourist class so to speak is price driven, but you are just not being honest with yourself if you think the scores of biz travellers treat it as such.

How many P fares do they have to sell to make up for the savings made by a guy who was going to buy an F fare anyhoo? Perhaps they are making more $ off it short term, but it is misleading to assume they are making the price difference from a B or Y to a P.

As far as the last 20 years goes, the F pricing structure was about #450 on the list of issues. It was a lot more about legacy airlines that were built during the days of Regulated fares and low fuel costs having to adjust to a new market that was more global and that was unable to continue based on its labour model among things. oh, and I will add two nasty dips in the economy and some bad guys who flew airplanes into buildings.

As I have said before. Biz travelers are not a fixed number. If flying and customer service to FFers treats them as a commodity, then they will fly less overall. It is already happening.

I don't dispute 1) thru 3)... although, in 2), I not sure who is following whom in the typical airline industry game of "monkey see, monkey do,"

However, I suspect that is only a matter of time before one of the airlines "breaks ranks." One airline will get overly optimistic about a perceived economic recovery, and will try to be the "first out of the gate" to add capacity and reduce fares in order to capture greater market fare. Then, it will be "every man (or airline) for himself, and the devil take the hindmost."

(not bad, three metaphors in the same paragraph ;))

DL, and perhaps a few other airlines, are making a profit right now because the industry is in an unstable equilibrium.

When the industry returns to its more normal state of chaos (and/or when oil hits $200 per bbl), DL may yet miss the loyal elites that it alienated.

Let's consider the relative numbers...

For many of DL's planes there are, at most, 16 opportunities for a FCM buy-up (i.e., 16 FC seats.)

Based on posts here on FT relating to the length of FC UG lists and the masses of folks in Zone 1 (the old non-monetized Zone 1) boardings, it's easy to infer that sizeable portions of many planes are already filled with elites.

Explain to me how that "evens out"....

Good question.

The seat is cheaper on DL, and the loyal elite buys a ticket. At worst, DL gets the same revenue from the elite as it would have received from a non-elite buying the same seat. At best, DL sells a seat to an elite that might have gone unsold.

The seat is more expensive on DL, and the loyal elite buys a ticket. At worst, everyone flocks to the lower cost carrier. At best, DL sells a seat to an elite that might have gone unsold.

How is this "evening out"?

Count me as one who will not. Upgrades have become so few and far between for me that they really are no longer much of a benefit. I have flown Delta exclusively, oftentimes paying higher prices or flying at less convenient times, because the upgrades made the price of loyalty worth the benefit. That is no longer the case. I accept that the grass is probably no greener elsewhere. Therefore, I will not be loyal to any particular airline. If Delta has the best price and schedule, I will fly Delta. If not, then I will use another airline.

I was not planning to jump in, but I will now...
 

I think that the problem is far greater than FCM. It's called "nickle and dime". Everything has a price. It's just that not everything should be put out for sale, when you are handling your loyal clients. FCM of $50 five days before flight, is one of them. Don't 'milk' $50 from your repeating loyal clients, it would cost you alot more.

Here is another example-- last week, I bought a BE tkt to SYD. The following day, I've receivedan email from delta titled " A Travel Visa Is Required For Your Trip To Australia" directing me to apply for ETA or visa. So far, not a problem. But, instead of sending me to the official australian government website for ETA, they sent me to a third-party website (visacenter.com). That meant extra $60+ any fees for an ETA by the australian government, which are not even required for all pax. Then, they've made it look like an official notice, with the delta logo on top.
Now, let's be honest-- I have no doubts they get a 'kickback' from the third party vendor (visacenter again, please write it down to ensure you put them on your 'shame on you' list). But, don't make false claims such as- through the third party vendor you can apply for a visa 24/7. It can be done on ETA website as well. For the record, the official website is simple, easy to follow and charges only $20 for the same service (directly from the Australian government), and--just like the third-party vendor- again, is available 24/7.

I know that it was some MBA/bean counter idea- let's sell more services (!) more 'kickback'! better bottom line! But, it was a very dirty trick, and put the record of loyal passengers at a risk of being transferred to a third party without reason. OK, one reason- delta may have received up to $60 extra if they get the entire fee as 'kickback'.

I emailed and got an insufficient reply and template apology. So, I did what sometimes one has to do--

I cancelled the ticket. So, here you go- instead of keeping clients happy, I cancelled a BE ticket to SYD which makes more different than extra fees.

The same applies to FCM, the same applies to 'premium SC drinks', the same applies to boarding zone purchases. One shall not nickle and dime clients that bring in more than a nickle and a dime.

It's the way delta believes it should treat loyal pax. I do not think they had a macro-economist looking at that, just micro bean counters trying to 'milk' more at each station of the process.

Rant over, go on

Mass produced MBAs are a big part to blame for the "Ham-Sandiwching" of things like this today. They come fresh out of school only knowing how to churn numbers, and ideas to make a quick buck and no care or understanding of longer term effects on customers, employees, or the company. No concept of intangibles as well.

Here is a tip:
Just because your spreadsheet says its good, doesn't mean it is.

That is too strong a statement and incorrect. I am not insulted and would probably buy the P fare vs the Y fare as I don't need the flexiblity of a Y fare.

It seems to me that the one's playing the "buy Y" game are the most irritated because what use to be a sure thing isn't anymore, you are still #1 for battlefied at the gate you just don't get to pick your seat.

Does it suck, yes. The game rules have changed so either adapt or move on.