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MQM Valuation Based on Fare Paid Now Showing on Delta.com

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MQM Valuation Based on Fare Paid Now Showing on Delta.com

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Old Sep 7, 2012, 8:16 am
  #526  
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Originally Posted by avidflyer
Unlike most businesses, Airlines cannot add back capacity one seat at a time. It is 100+ or nothing (on longer routes) and that is when they need the FF'ers to fill those airplanes, particularly on business travel days.
Literally one seat at a time, no, not very often, but the Delta fleet fragmentation (for the great majority of routes/flights) makes the increments a heck of a lot smaller than 100 seats. A few selected seat capacities from delta.com:

DC-9-50, 120
737-700, 124
A319, 126
MD-88, 149
A320, 150
737-800 & MD-90, 160

767-300ER (76T), 208
A330-200, 239
767-400ER, 246
777-200ER/LR, 269
A330-300, 298
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Old Sep 7, 2012, 8:26 am
  #527  
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Originally Posted by 3Cforme
Literally one seat at a time, no, not very often, but the Delta fleet fragmentation (for the great majority of routes/flights) makes the increments a heck of a lot smaller than 100 seats. A few selected seat capacities from delta.com:

DC-9-50, 120
737-700, 124
A319, 126
MD-88, 149
A320, 150
737-800 & MD-90, 160

767-300ER (76T), 208
A330-200, 239
767-400ER, 246
777-200ER/LR, 269
A330-300, 298

I agree and when the ability to change gauge that easily becomes real then, like I said, FF programs will be near useless. That said, how often do they change the gauges above on specific routes? Not often because there are lots of other factors including Pilot ac ratings/bases, better utilization on other routes, AC efficiency, and even gate presence capability at certain airports. Your point is completely valid but I do not believe they can yet toggle like to the level above and of course there comes a time when gauge will not be enough..they need to add a new flight/ac and that is the chasm I am talking about.
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Old Sep 7, 2012, 8:43 am
  #528  
 
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Yes, testing the waters and then watching for reaction. Very sad, and if it holds likely move me to United.
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Old Sep 7, 2012, 9:23 am
  #529  
 
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Originally Posted by avidflyer
I agree. The only thing I believe that continues to keep FF programs alive is the very difficult inventory planning task and the balance of maintaining tight inventory control and growing the business. We have been in a downward inventory position for several years now. Under the CURRENT (flat to declining) inventory position the Airlines hold all the cards and the FF program appears to not add a lot of value. Once the economy turns and the Airlines are chasing more share by adding back in capacity/inventory THEN the FF programs are worth their weight in gold. Unlike most businesses, Airlines cannot add back capacity one seat at a time. It is 100+ or nothing (on longer routes) and that is when they need the FF'ers to fill those airplanes, particularly on business travel days. That is the whole idea of these programs but they were designed for a growing business not a declining (top line) one.

I will predict that we have one more cycle of FF program push before they eventually go away. The tools to manage inventory/capacity are getting VERY good (though the growth chasms still need to be crossed) and at some point will get so good at predicting demand (along with a good variety of AC gauge and reach) that the ALs who have the technology/capability to manage inventory will not need it.
This is very nicely said. I'll add that if it is a choice between executive profit-sharing bonuses and a more generous FF program the choice Delta execs make is obvious.

I don't think they'll ever go completely away, just become more like Southwest Rapid Rewards 2.0.
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Old Sep 7, 2012, 9:37 am
  #530  
 
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Originally Posted by Thomas Hudson
Bubbashow... who did you get those S-3b or S-4 passes from again????
I have flown buddy pass (S4) a couple of times with an ex that was a flight attendant. In the end, she thought I was too terse and called it off. Imagine that =-).

I didn't like traveling that way. The unknowns were too great. I have a busy schedule, and can't afford to get stuck somewhere to save a hundred bucks. Buddy passes aren't a tremendous deal.
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Old Sep 7, 2012, 9:39 am
  #531  
 
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Originally Posted by deltabound
Yes, testing the waters and then watching for reaction. Very sad, and if it holds likely move me to United.
Which will follow in turn.

Last edited by bubbashow; Sep 7, 2012 at 9:55 am
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Old Sep 7, 2012, 9:56 am
  #532  
 
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Originally Posted by avidflyer
Originally Posted by 3Cforme
Literally one seat at a time, no, not very often, but the Delta fleet fragmentation (for the great majority of routes/flights) makes the increments a heck of a lot smaller than 100 seats. A few selected seat capacities from delta.com:

DC-9-50, 120
737-700, 124
A319, 126
MD-88, 149
A320, 150
737-800 & MD-90, 160

767-300ER (76T), 208
A330-200, 239
767-400ER, 246
777-200ER/LR, 269
A330-300, 298
I agree and when the ability to change gauge that easily becomes real then, like I said, FF programs will be near useless. That said, how often do they change the gauges above on specific routes? Not often because there are lots of other factors including Pilot ac ratings/bases, better utilization on other routes, AC efficiency, and even gate presence capability at certain airports. Your point is completely valid but I do not believe they can yet toggle like to the level above and of course there comes a time when gauge will not be enough..they need to add a new flight/ac and that is the chasm I am talking about.
While that maybe true, it is not necessarily practiced as you highlighted. An example is flying the 744 to MNL. I am not sure about the revenue from cargo earnings on that route, and it could be the reason for that aircraft flying that route. However, I am pretty certain heavy routes like SIN/HKG-NRT, which is often oversold, could greatly benefit from having the 744, which seats more than an additional 50 paying pax. Just my 2 cents.
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Old Sep 7, 2012, 10:01 am
  #533  
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Originally Posted by bubbashow
In the end, she thought I was too terse and called it off. Imagine that =-).
From dictionary.com . . . . .

terse

abruptly concise; curt; brusque

adjective terser, tersest.

Hmmmmm. . . . .
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Old Sep 7, 2012, 10:49 am
  #534  
 
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Originally Posted by avidflyer
I agree and when the ability to change gauge that easily becomes real then, like I said, FF programs will be near useless. That said, how often do they change the gauges above on specific routes? Not often because there are lots of other factors including Pilot ac ratings/bases, better utilization on other routes, AC efficiency, and even gate presence capability at certain airports. Your point is completely valid but I do not believe they can yet toggle like to the level above and of course there comes a time when gauge will not be enough..they need to add a new flight/ac and that is the chasm I am talking about.
FF programs will not be near useless. They modify customer behavior. I quite recently flew Delta in paid business class to Japan instead of ANA, even though ANA is both better and cheaper for business class, because of the FF program at Delta. My travel to Europe has been modified. I will consider a change of planes on Delta rather than a direct flight on another carrier because I will get an upgrade. Your point is that the plane will be full anyway, but you miss that it will be filled with passengers who pay less than I do. Load is one factor. Route maximization is the other. If Delta is reading this, they need to understand exactly what they say on that darn tape "I have a choice in air travel." I could just as easily take an earlier flight on American, a better flight on Emirates or a cheaper flight on Southwest.
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Old Sep 7, 2012, 11:01 am
  #535  
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Originally Posted by bubbashow
Oh, I hope they go to a reduced earning on LUT. Thin the herd. I just don't think MQMs would be 25% of 25%.
Some math wizard thought 25% plus 25% is 50%.

I know a high school counselor who thinks it is.
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Old Sep 7, 2012, 11:03 am
  #536  
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Originally Posted by TripleD
FF programs will not be near useless. They modify customer behavior. ...
Currently, they modify behavior.

I believe Avid's point is that with enhanced abilities to predict capacity controls, and with more and more airlines moving in the direction of gutting their FF programs (i.e., less emphasis on competing in the FFP arena), we may well reach a point when the major airlines decide that they don't need to induce us to modify our behavior... they can dictate our behavior. Hence, no need for FFPs... at least as we have known them in the past.

For example, the day that DL management can convince themselves that, by reducing FC seats and filling the remaining seats with $10 FCM buy-ups, they can (at least in some spreadsheet) show they are coming out ahead, they won't need a FFP offering FC upgrades. In fact, such a benefit would be a net detriment, in their opinion.

Granted, all it would require for this to fail is for one major carrier to break ranks and emphasize a traditional-type FFP that actually values loyal customers, and treats them honestly and up-front. But, to one degree or another, aren't they all moving away from this paradigm?

At some point, DL management may feel they are in the position to look at your 4th-time DM (or, maybe by then, 5th or 6th time) and ask... "Yeah, but what have you done for us lately?"
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Old Sep 7, 2012, 11:04 am
  #537  
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Originally Posted by TripleD
FF programs will not be near useless. They modify customer behavior. I quite recently flew Delta in paid business class to Japan instead of ANA, even though ANA is both better and cheaper for business class, because of the FF program at Delta. My travel to Europe has been modified. I will consider a change of planes on Delta rather than a direct flight on another carrier because I will get an upgrade. Your point is that the plane will be full anyway, but you miss that it will be filled with passengers who pay less than I do. Load is one factor. Route maximization is the other. If Delta is reading this, they need to understand exactly what they say on that darn tape "I have a choice in air travel." I could just as easily take an earlier flight on American, a better flight on Emirates or a cheaper flight on Southwest.
That is why I said "near" useless. If you believe they will continue as they have been that is just not going to happen. If they are at 95% load factors you decision to fly them as opposed to anyone else is less important.
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Old Sep 7, 2012, 12:15 pm
  #538  
 
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Originally Posted by avidflyer
That is why I said "near" useless. If you believe they will continue as they have been that is just not going to happen. If they are at 95% load factors you decision to fly them as opposed to anyone else is less important.
Every business I know caters to their best customers, even the very best restaurants that sell out 30 or more days in advance. So, I expect that the programs will be far from near useless - and, while you may be right, we simply do not agree. Where I totally agree with you is that as the load factor increases, the rewards decrease. And, the benefits for those who pay lower fares will especially decrease.

Last edited by TripleD; Sep 7, 2012 at 12:39 pm
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Old Sep 7, 2012, 4:33 pm
  #539  
 
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Originally Posted by TripleD
That is actually a useful price point. Platinum for you = $9000. I looked and it appears I reach Diamond at about $12,000-$15,000 (which I often exceed). The cost for Delta is the loss of fees for use of the FF lounge from Amex Platinum and upgrades they might be able to sell (but I say might, as they usually cannot).
You also have to remember one more important thing... a DM or a PM often controls the itinerary for a larger group, be it an entire family or business associates etc.

So if you chase the PM or DM away, that person will take his family to the competition as well.
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Old Sep 7, 2012, 5:04 pm
  #540  
 
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Originally Posted by TripleD
Every business I know caters to their best customers, even the very best restaurants that sell out 30 or more days in advance. So, I expect that the programs will be far from near useless - and, while you may be right, we simply do not agree. Where I totally agree with you is that as the load factor increases, the rewards decrease. And, the benefits for those who pay lower fares will especially decrease.
Not every business has the welfare of C.E. Woolman's desk to think about.
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