kop84

I don't think the yard stick will be DL as much as analyst expectations and the industry as a whole. And not a lot of CEO's get 8 Quarters of missing their targets and get to keep their job.

I think that you over estimate the percentage of people that choose their airline based on FFP's.

For the majority of people it's a combination of schedule, price, corporate policy, customer service and reliability.

WN, B6 are already revenue based FFP. AS has a wide variety of partners and earning potential but in and of itself is limited in scope.

Even if AA decided to keep its FFP distanced based the increase they are going to see is the people who buy $300 T-CON tickets who also want an upgrade. Or $800 TATL tickets and want to sit up front for an extra nickle.

As for DL making the mistake of a lifetime...AA has $17 billion in long term debt and rising to DL's $7 Billion and falling. If the economy goes bad and demand shrinks, DL can add back in FF benefits if it needs to and park already paid for planes at next to no cost. AA has the bill for all of those shiny new planes due one way or the other. So AA will either park the planes and lose money or keep them flying and tank PRASM's.

LaserSailor

I suspect the FT monitors take routine benefits from injuries from ROTFL...

baccarat_king

I am quite envious of your 90% figure. That would be impossible for many. Even more so, if one does not always travel solo.

Move to AMS, you won't have a choice.

Personally, I am going "free agent," next year. This is the final year I will qualify for Diamond Medallion. But, I will be "gifted-spouse" Platinum Status on FlyingBlue so I won't be without SkyTeam status which is "sort of" a necessity ex-AMS.

GRALISTAIR

I am bookmarking this one. I will check back in 1,2,3,4 and 5 years.

jediwho

I also have it in my Google calendar with repeat scheduled every year for five occurrences. Mistake defined as either DL reversing course (most likely), or foreign carriers, AA/WN/B6, et al gaining market share at the expense of DL/UA. Worst case, KLM or some other big foreign airline breaking away from SkyTeam.

747kona

I'm curious to find out if AA were to devalue their program, and everybody purchased based on price, how screwed the legacy carriers would be. I think that's a scary bet Delta/United are making... If the industry becomes even more price driven, PRASM will drop and LCCs will thrive. Especially JetBlue, if recent numbers + Mint is any indicator.

It's a very unique problem the airlines are facing. You want to have a large base of customers that you've tricked into being less price sensitive when purchasing airfare (due to the perceived value of the customer using perks and earning airfare currency/miles) but at the same time, you need to make sure you're taking good care of the ultra high spenders too.

I think instead of devaluing AA's program... AA should be focused on how it can improve its CK level. What about increased saver availability, or more redeemable miles (125-150%?)... What about bumping EXPs down to 6 SWUs and giving CKs 10? What about publicly defining the CK program and perhaps only allow qualification by EQPs... Perhaps of 200-300k?

Side note, with some bias, I'm not sure how United is going to be in business in the future with their awful on time performance, worse product than AA/DL... No appeal to average joes and no appealing flyer program. Outside of lowest fare, why are people flying them when there are very viable alternatives at 3 of their hubs (SFO/ORD/NYC)?

avidflyer

I don't see them getting out of the #3 position any time in the foreseeable future. I went over to UA the year before the merger and I squeezed the last "good" year as a 1K out. As SOON as they started to make moves to follow DL I bailed to AA completely. Delta has the product and performance to "lead" the pack down but UA has neither. AA is in an interesting position and they could enhance the FF program and as you point out, specifically the CK program and potentially get the best of both worlds. Time will tell but if I were calling the shots the FF program could be the differentiator between 2 airlines with similar CS and product. They are both good in their own ways but if the FF program were healthy at AA it could be enough to grab market share and make the DL decision to go to rev based earnings "the biggest mistake they could make" as another poster said.

ATOBTTR

You do realize that WN and B6 already use a revenue based earning system (like DL and now UA)? And I don't know about B6 (I think they do), but WN uses a revenue based redemption system.

Did B6 and WN make "mistakes of a lifetime" when they went to revenue-based earning and redemption?

avidflyer

Like I said: AA is in a unique and potentially very enviable situation given the jump to rev based systems. Maybe/maybe not we will see...

jediwho

Read the post (just above yours) by "lakersown81". Legacy carriers cannot compete with point to point and LCCs on revenue based model. It's like comparing Amex Platinum with Capital One cards. If MR was devalued to one cent, could they compete with Capital One cards?

DiverDave

I expect at some point the more valuable customers will leave as they finally realize that Delta gives them more miles, but that miles are worth far less than on another airline.

I used to value DL miles at about 60% of UA/AA miles. That value is way down as a results of changes implemented or announced so far this year.

David

Navig8R

Later

jediwho

That is precisely my point -- Legacy carriers can't compete with LCC on pricing and still cater to premium customers just like how Amex Platinum cannot come flat out and say that their MR would be 1 cent going forward and compete with Barclays Arrival and Capital One cards!

ATOBTTR

You state that like it's fact, and it's not a fact. It's a theory at best and more likely your (unsupported) opinion. Your theory/opinion that legacies can't compete with discounts on revenue based is disproven by the hotel industry. All major hotel brands have revenue based earning systems. Yet Marriott and other nicer hotel chains seem to compete just fine at filling rooms over Motel 6 and Super 8. Your theory/opinion also discounts the fact that, while probably shocking to many FTers like yourself, plenty of flyers have reasons other than the FF program for selecting the airline that they do when they fly, with everything from service (or lack thereof), to schedule, to total travel time, to the airline network, and other factors as well.

EDITED TO ADD: What your theory also discounts is that there are plenty of elite FFers who don't rank mileage earning and redemption as one of their top priorities in a FF system too.

pbarnette

B6 definitely uses a revenue-based system. Basically, it works out to about a penny and a half per point. It isn't terribly rewarding, and I think Mosaic is a pretty weak elite program, but it isn't awful, assuming that you are happy enough redeeming points primarily for domestic flights in Y.