Spiff:

I agree that DL historically (at least lately) has shown that they are going to do what they are going to do, but from what I heard in CVG yesterday the natives are REALLY mad over this one. This is much greater than all of the anger I have seen over the last six months concerning DL's latest games with K+ pricing...

Yesterday UA showed that they are in PAX gain mode - and are not going to chase them away. Notwithstanding #11, AA still does what UA does - plus AA already has a Q system - and just introduced comp. upgrades for full-fare tickets for ALL AA elites (not just EXP).

Plus UA & AA also have already (9/02) announced fairly steep increases in the cost/miles of 500 milers effective 1/03...which is exactly (for some reason - ) what DL is pricing their new MSU's at.

BTW (I can't resist) - This price increase is all UA/AA did when the DL rah-rah club was merily predicting that UA/AA would introduce insULT policies just two months ago. Its more than a little funny that DL instead copied UA/AA's 'money losing' program.

I would be VERY surprised to see UA or AA dance with this pig. US still has their fingers burnt from Aug, plus is ALSO bringing their program into line with UA/AA for the alliance.

CO is a wild card...and Gordo has certainly seen fit to play games in the past, but CO's Y is only marginally better than DL's.

NW never even went along on the standby fee, still calls the shots on biggies between CO/NW no matter what Gordo thinks, and has also finished their elite tinkering for next year with faster WP elite qualification on higher fares (basically the AA Q point system again).

I also highly doubt NW is going to do any more to WP elite. Which - BTW - I am already a VERY HAPPY new member of for '03 to replace DL in my triad (I made the decision to jump the last weekend in Nov.).

For some reason, NW seemed to feel that my 160+ segs/120K+/and $30K spent on DL in '02 might be worth something to their bottom line...imagine that.

[This message has been edited by CoMooter (edited 12-13-2002).]

bocastephen, you're certainly entitled to that opinion ... I don't know one way or another whether the DL/CO/NW code-share is likely to be approved (I kinda hope not, because as a UA FF I can use DL as a last resort -- something that would likely go away under that arrangement).

But, when it comes right down to it, there are only two ways to restrict frequent-flyer programs:

(1) Limit how you can earn (and/or qualify), or
(2) Limit how you can burn.

DL was at the forefront of (2) with their LUser / inSULT policy. NW and CO have versions of the same, limited to international flights.

US tried (1), but had to pull back under a firestorm of criticism.

DL is the first airline to try to place some limitations both on (1) and (2).

Will it work? I don't know. What I do know is that the airlines have caught on to one simple fact: The "something for nothing" approach -- a la AA and UA (to a certain extent), and most egregious of all NW and CO domestically -- costs the airlines money. So it will change. Bank on it.

Mook

[This message has been edited by Mook (edited 12-13-2002).]

Do you really believe that? UAL made this change only out of desperation and to get some good media. Bookings at UAL are down and news articles like "70% Chance of Liquidation" aren't helping the situation. UAL was desperate to get some good press....hence the rescind on the $100 change fee.

Andy, it's been a few years since I've been in b-school, but isn't the goal of a company to "maximize shareholder value"? And what does "shareholder value" mean? The Body Shop comes to mind as an outfit that "maximizes shareholder value" even at the expense of profit at times. Ben & Jerry's is another example. Of course, my memory could be faulty... it HAS been a while :-)

And also hence also the reason "UAL is in the PAX gain mode" and is not going to chase them away like another airline that shall remain nameless that seems to be 'desperate' to get some 'bad press' as of late.

I have read these postings for some time. I have flown delta for 2,000,000 miles. Have been Plat. for many years and always fly on K or higher. These new changes will drive me away from Delta. I fly out of SLC so delta would be the main choice of travelers. I even paid the K fare to upgrade at time of booking. With the new changes I might as well change to AA or UAL. At least I will be able to upgrade cheap fares. Anyone who thinks they will beable to upgrade insult fares on Delta same day will be sadly mistaken, they might make it 20% of the time.Delta has managed to once again tell its Plat. members they are not needed. Delta has to learn that customer service does not mean a war with your best customers.

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jimrpa, yes, the goal is to maximize shareholder value. Shareholder value is maximized when profits are maximized. If I own DL stock, I prefer $1B of profit on $2B of sales vs. $50M profit on $10B of sales. If I own DL stock, I don't care about revenue, pax miles flown, or pax segments flown as ends themselves. I only care about them insofar as they drive profit. To date, miles and segments were used as proxies for profit. In truth, revenue is a much better proxy for profit (much higher correlation than miles - though I only speak from intuition). So DL is going to a hybrid of miles and revenue, which is going to more closely approximate customer profitability.

But again, turning to your original point. You are splitting hairs if you want to say that maximizing shareholder value is much, if at all, different from maximizing profit. And I am confident your B-School profs would concur. (Disclaimer: I have not been through business school, but have a decent business education, I think.) With your examples of B&J and Body Shop, I would argue that the companies are not as altruistic as you might believe. B&J does their "2% for charity" or what have you. Call me a cynic, but I think they know that the twofold benefit of this outweighs the cost. The two benefits are:

-Public relations which drive sales
-Decreased pre-tax profit which decreases tax

So I would in fact argue that these charitable actions increase shareholder value because they (perhaps counterintuitively) maximize profits.

Bookings are down? http://biz.yahoo.com/rb/021213/marke...thebell_2.html

mook,

"What I do know is that the airlines have caught on to one simple fact: The "something for nothing" approach - al AA and UA (To a certain extent), and most egregious of all NW and CO domestically - costs the airline money. So it will change" Bank on it."


Correct me if I'm wrong, but don't the frequent flyer programs of most of the larger airlines actually make a profit. And this may be due to the selling of miles (thus the reason there are hundreds of ways to earn miles), but without valued customers wanting those miles for either free tickets or upgrades - won't that change.

As for CO - if they were to change their domestic upgrade policy, what value would their program have? Without the domestic upgrades they offer - their program is usless.


[This message has been edited by jmoreita (edited 12-13-2002).]

I have always been a reader of all the post and have not posted much of the time. This forum has some of the greatest people helping other people.

When I read the changes to the program I was shocked. I always purchase a K or higher fare to get the upgrade. As PM this was the breaker for me to keep DL PM for the past 3 years. Annally I fly over 160K on DL all domestic and being able to sit in first makes the trips bearable. With only being able to at most upgrade 30% of the time, there is no way I will continue to fly DL. I have already cancelled my next 4 trips, (good thing I did purchase refundable) and changed to CO. At least I will have a chance 100% of the time on CO, which I am a Gold level.

DL truly dose not care about PAX and has lost my small peice of the business. It shows loyalty means nothing to them.

Take care a thanks for all the help in the past.
Michael

I took the liberty of bumping this post back up to the top. UDH, does address so many of the questions which have lead to new threads. For anyone not completely familiar with the new medallion changes, the answers will be found here.

Riddle Me This Bruce:

This is the SM that pointed out to you that, as a loyal Delta customer that primarily flies short haul flights within the state of Florida and who generally only buys K fares [i think i bought one u fare in the last 5 mos - could not check beyond that] i will nonetheless probably never even make silver again because i mostly fly around florida but that i am being kicked out of the elite program in spite of my loyalty and my years of k fares and the fact that i could easly spend more on a flight than someone who flies across country yet gets alot more miles. You very astutely responded that i can fly from orlando to fort lauderdale for just over $100 at a K fare. Bruce, that would be fine and dandy IF if flew that route once a week. You also picked the only city in florida that consistently has a cheap fare but you also failed to point out the reason - competition on that route with southwest. That also begs the question, why is the fare to MIA from MCO 200 to 300 dollars more - same plane, same distance really - but also same miles.

however, back to my dilemma - i generally fly mco to ft myers or pensacola - for over a year the fare to ft myers has consistently been $343. I just happen to see a post from someone else mentioning their normal routes, one including LGA - RSW - the fare noted was less than what I pay. SO, I checked a fare between LGA-RSW for a time when I in fact have to be in ft myers in february. My fare, again $343 - givimg me 1,000 at K fare. SURPRISINGLY, the fare between LGA-RSW was $200 at a Q fare [the same multiplier as K fare]. The possiblities are as follows:
LGA-ATL
ATL-RSW
RSW-CVG
CVG-LGA total qualifying miles 2,540

or
LGA-CVG
CVG-MCO
MCO-RSW
RSW-CVG
CVG-LGA total qualifying miles 3,104

[note that these particular flights were picked to accomodate when i would have to be there for business - i did not search around for the cheapest possible combo i could find]

so Bruce, i spend $343 and take up 2 seats on a total of 2 planes and fly 25 mins each way and i get a whopping 1,000 miles which means i have to fly 25 round trip short haul flights to make even SM

however, IF i were flying between NY and RSW, I could spend $200 and get either 2,540 miles or 3,104 miles, take up space on 4 or 5 planes [oh yes and these were upgradeable fares] and alot of time on those planes

- assuming i opted for the flight that gave me the 2,450 miles - that person would be platinum at less cost than it would take me to even make silver

So again Bruce, explain how the 'new and improved' system works to reward those who spend the most at Delta?

I did get another email from Delta yesterday - the silliest response yet - when I pointed out to them for the second time the problem they created for short haul flyers:

Please know that we have been studying the Medallion qualification and
upgrade processes for some time, and that customer loyalty and fiscally
sound operations are more important than ever in todays airline
environment. After careful analysis of the possible outcomes and
opportunities, we feel confident that the new program guidelines will
foster a better and more sustainable loyalty program for our members
and our airline over time. They are designed to identify our best
customers and reward them with a quicker path to Medallion status.
And, the changes will help Delta receive more value for the limited
premium cabin seats that are so very much in demand.

Your business is important to Delta, and we hope that you will consider
transitioning with us to this new program. As we have stated earlier,
most customers can maintain their existing Medallion status by making
some minor adjustments, such as purchasing some higher fare classes,
consolidating more travel with us or choosing more long-haul trips.


Hmm, let's see, I ALREADY PURCHASE THE HIGHEST FARE AVAILABLE so I can't change that. I ALREADY FLY EXCLUSIVELY with Delta, so I can't change that. Oh, it must be the last one where I screwed up - I suppose from now on I must start flying to ft myers via utah. But oh wait - wasn't that one of delta's reasons for getting rid of the segment qualifications - to keep people from taking longer and cheaper connecting flights to make status???

Bruse, please advise your superiors that most people who fly for business are not stupid. Like I said before, I fly Delta even when I don't really need to - I could have driven to most places I go for business but I don't - or make that didn't.

Michael, you should write to Leo & Vicki with the details of your canceled flights. The bottom line is profit, and if you were a buyer of refundable tickets and switched, this is an excellent example of why the new program is terribly flawed.

Thanks again, UDH. As I examine the program changes "from the source" I am increasingly irritated and frustrated.. I am mulling this over and over---stay with DL as a PM, whose benefits are about to be eviscerated or cash in my miles and give up on FF programs....True independence. If our loyalty means squat, why not just fly with the carrier who gets us from point A to point B. I am now trying to figure out how much more I spent on DL because of the incentive to maintain my status....upgrades were a definite incentive...The more I ponder this issue, the more I am inclined to say F****it and take the most convenient carrier from point A to point B. All of this FF/elite/PM, (B.S.) is frankly, sapping my energy.

Obscure2K: you are in LAX, one of the best places in the country to choose programs.

Don't give up on the possibility that someone can do you well. Research. Investigate. While you may conclude that being FF program free is to your advantage, you might not.

Here in LEX there are only 3 or 4 programs that we can use. It's a hard choice. I would think your decision can be based more on promise and less on performance (flight times and availability). Go to it!

If Delta still meets your needs, great! If someone else, fine! If no one, just go with the flow.

Hope to meet you on one of our West Coast trips.... Lex

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