I'm not saying it's fine, right or fair. I'm just saying this is how I think it has been during this years and I have accepted it and I am fine with it. I'm not going to hide that when hitting gold I thought I would be upgraded in most of the flights. I learned to not to hope anything but a greeting from the purser. And now I am comfortable with my expectations and I don't expect anything more. But I have to say that every time I have paid more, I have been upgraded. Every time I have paid less, I have been not. I don't book heavily overbooked flights (the routes I usually do aren't). I agree with you: status should be first. The only thing I want to point out is that, in my experience and the routes I fly, the rule has always been: the more you pay the better chances you have. Or maybe that was just for me. I do not fly as much as you or eternaltransit or some others and my point of departure is MAD or BCN. This is just another point of view from less loaded stations.

How can you tell if someone is a non-status pas just by looking at them ?

What a crass statement - backpacker types indeed

Not just looking at them but I overheard their conversation after the upgrade and as explained before the fact they where going back to the desk to ask if they where going to be charged for the upgrade.

And yes, it where two German lady's mid twenties looking like backpackers. Don't understand why that is such a crass statement.

I suspect it would be using the word "types" in a thread about "status" with the implicit (intentional or not) judgement / tone of post given the context.

Standard difficulty conveying tone and tact on the internet though, not confined to FT :D

I think it's more that EK want to change their metric of what "Lifetime Value" is.

Rather than revenue it's clearly more designed to "reward" - not that op-ups are a published benefit - high profits, regardless of card color.

Say you're going Europe-Asia in Y, where savers are around 500-600USD, Flex is 900USD and Flex Plus is 1300USD.

I imagine in reality EK is losing money on the savers, breaking even on the Flex fares and using Flex Plus and premium seats to make any profits, but even if we say the savers are making a bit less than the EK margin (e.g. 2-3%), then you can see that you're only making 10-12 USD profit a ticket.

If you fly 15 times Europe-Asia in Y you're still contributing only 150-180USD to the EK bottom line but you are Gold.

However, a non-status pax buying one or two Flex Plus fares - say with a margin above the EK average of 10-12%, is now contributing 130-156USD per ticket

That person is worth more in profits on just one or two tickets than the Gold saver pax has throughout the whole year.

If you take it on a cost per seat basis and that every Y seat costs the same to provide, then clearly if you are offering Saver at breakeven, then that extra 600-700 USD for a flex plus is pure profit.

imho, it's understandable (if grating), why the change was made. For people who make their status on flying high profit fares (e.g. Flex/Flex Plus only), it's not going to make a difference - they will still be head of the line. For people who are get status through work flying and then buy saver for leisure, the argument from EK is that why should they care about you when you have no choice in flying - it's employer mandated. If you're a hub captive, then you are used to being screwed :D

Unfortunately there are going to be people who fall through the cracks - probably overly represented on this forum - namely people who have influence over a travel budget but not at a large enough scale for EK to care, who can't justify the Flex/Flex Plus fares for every trip (e.g. work), but fights to divert spend to EK in order to benefit from status.

I would say that EK have probably done their homework about their customer base and think this is acceptable - the loss of people who buy the occasional Flex Plus and a load of Savers is a small price to pay in the hopes of encouraging non-status people to fly EK again hopefully on another Flex Plus fare - but then this is EK, so maybe not :D

Does this impact downgrade/offloading?

Would a Full Flex Plus passenger get offloaded/downgraded before or after a Plat on a Saver fare?

Skywards members still are going to be last in the queue for offloads/downgrades...at the moment!

I agree with your maths in principle but we don't know the actual margins. I would also argue that one must consider margins over subsequent years, as status encourages (and requires) multiple years of flying.

I fly Y Flex always because it's the cheapest on my route and am Gold but now am probably behind a once-off backpacker with no status and a Flex Plus fare, and I think EK overestimates the retentive impact it has on non-status pax vs the negative impact on status pax. Status pax are going to be more aware of the change and there will be more status pax not upgraded (even if they never would have been given the prior policy) who will now blame the new policy causing a skewed blame.

Therein lies the rub - is a once-off backpacker (what is it with backpackers on FT!) going to even buy a Flex Plus fare? I suspect not - they are fare sensitive.

EK want to attract the golden geese - fare insensitive pax who might not be part of the programme, and take care of them.

The question again is - why would you want to waste your op-ups on retaining a customer who, yes, may be loyal, but only gives you 150-200 USD a year, when if you play your cards right, a fare insensitive passenger might give you one or two tickets of repeat business that more than makes up for it. Looking at the annual report, the net margin was 8.4% - clearly the cheapest Y fares are going to be much lower than that and premium/full fare will be above this figure. The principle is the same though - there is such an order of magnitude difference in profitability between savers and flex plus that it makes sense to care more about flex plus travellers.

If the business model is predicated on an increase in demand for air travel - which EK depends on - then there is less of a need to fight for sustained revenue: there are always going to be new passengers out there who might (they gamble) pay for Flex Plus, for the forseeable future.

To put it another way, low margin pax are all replaceable - status or not. Better to focus efforts on picking out and pampering the pax who contribute more profit with one ticket than repeat but cheap pax who previously got the rewards, to try and make them the repeat passengers.

When looking at your customer base, would you rather have the same people, all loyal but looking for bargains, or would you rather have high customer turnover but all paying high margins - the cherry on top being that the high margin customers fly you once or twice again afterwards.

If you believe that the world will always deliver you a larger pool of pax to choose from, then I think you'd go for the second (if you want to boost the bottom line quickly).

Whether it's true that EK will have this larger pool of pax to choose from is another matter though!

Of course, it's a kick in the teeth as the harsh reality of the hospitality business is displayed, but understandable.

FF Members Etiquitte.
 

Its fair to say that us FF's are pretty discreet when if it comes to op-ups when on board. Those who have paid to be up front can easily have their flights ruined mentally if they know that some of those around them paid to be further back. When an airline upgrades its FF's it has a good idea of who they are and an expectation that they will be discreet. But when it upgrades others it can be a disaster. Here's a real life example of why. I doubt very much if the person concerned was a FF.

Back on 08 July 2004, which was the last time I flew with EK, I was op-upped DOH-LGW during check in at BKK the previous evening. Shortly after taking my seat at DXB, a woman in the row behind me saw someone she knew at the other side of the cabin, so she shouted rather excitedly across, more than loud enough for all in the cabin to hear, 'did you get upgraded as well?'

I rest my case.

Yes, I agree that is in EK's best interest to reward pax giving the highest profit margin but IMO this logic is flawed. Rewarding non-status pax doesn't necessarily encourage them to fly more with EK, whereas with status pax they feel rewarded for their loyalty towards EK. This is said even with skywards being a crappy program overall. If EK is so concerned over profit maybe they should just switch skywards revenue based to better suit their needs.

I think they need to keep things cosmetically inline with QF so I don't think they'll go to straight revenue just yet, but the most recent changes with the mileage earning with the fare types pretty much did this by offering more tier miles for higher profit fares and less (much less) mileage earning for the discount fares. It's now about a minimum of 25k USD for Platinum and 13-15k USD for Gold iirc.

This is just a continuation of that trend imho.

That depends entirely on route. I can get Gold in 5k USD.

My point is that those non status high margin pax won't necessarily understand that or why they are being rewarded unless op up priority becomes a stated benefit of Flex Plus fares. So the entire thing is not very productive.

Getting Gold for 5k USD is probably another reason why they have done this ;)

Like advertising, it's very difficult to put a definite figure on impact - however, the idea is to make people who are likely to be price-insensitive but not frequent travellers/or knowledgeable enough to sign up to frequent flyer programs (and therefore not care much about loyalty progams etc.) go away with a happy fuzzy feeling of having flown EK.

Giving people a free upgrade for no reason is one way to do that - it's something infrequent travellers would tell their friends etc.

That increases the chance that a price-insensitive customer might give them repeat business, no matter how small it is.

I think there's a very good argument you'd get more incremental profit from giving a high fare paying pax a taste of a higher cabin (and remember they likely have the cash to buy that fare given they've just paid over the odds for a Flex Plus), than giving your op-up to someone who is either already a captive EK customer or who gets their status on a succession of no-profit fares who wouldn't pay for the cabin anyway.

Of course not all Flex Plus customers are going to fly EK again nor are as price-insensitive as they seem, but it's a numbers game and this is entirely about driving incremental profits.

Maybe they'll see a noticeable drop in profits because status pax who are used to buying high fare low mileage tickets stop choosing EK is more than incremental Flex Plus profits, but I doubt it - I think the number of captive/mandated pax exceed the number of people who fight to give EK low-margin business.

I think it's important to remember that non-status pax travelling on Flex plus fares are doing it primarily because they may need to change their travel plans (free changes) or because they are purchasing last minute tickets. This is not the same as status pax purchasing flex plus for the added miles etc. So overall, they are rewarding pax who pay extra for the benefit of free changes and those who book last minute. Which is quite bizarre as they are not rewarding those who regularly fly with the airline