kokonutz

Wow. So that's a thing, eh?

Christ, we do live in a weird freaking world, don't we!?

cruisr

Seriously! That is pretty crazy.

techgirl

Gives new meaning to "mile high club"....

nsx

Who has the high honor of being member number 2?

84fiero

Personally, I think this will be more than just a passing movement...it could even turn explosive given enough exposure.

dhammer53

Sorry. I posted the cabbie link to the NY forum. Must not have updated.

The punchline is at the end, but I suggest you watch the entire thing.
https://www.youtube.com/watch?v=F-bsf2x-aeE

dh

lwildernorva

Gary's headline generator came up with this: http://viewfromthewing.boardingarea....-reason-think/.

Except the reasons he cites as being the real ones for FFPs becoming less generous are caused by the reason he says isn't ("It’s an interesting view, although I’m not sure that it’s a correct one."): a reduction in competition. The economy has gotten better, but in a more competitive environment, more flights, not less would be running with more seats available. And, in a time of more competition, capacity discipline would be counterbalanced by airlines running more planes (some, perhaps, with more capacity; i.e., less RJs) to more different destinations.

By the way, I'm not arguing that the lessened competition is pure evil. The reduction in competition, guided by government approvals of mergers, has probably created an environment where it is possible that airlines can make reasonable profits while continuing to provide service (admittedly with seats not as spacious or FAs as attentive as 30 years ago) to an optimum number of cities while still allowing for the possibility of new players in the arena.

Unlike some bloggers, I managed to stay awake during my college econ classes. It's another reason I really don't mind that bloggers concentrate on credit card pushing posts--they're actually writing about something they almost know something about. . .

kokonutz

I wrote a fairly extensive reply to that post. I guess it must have 'gotten stuck in the spam filter' again. So I guess I'll make my point here (more briefly).

Gary's on sound economic ground when it comes to PRICE. It doesn't take a lot of competitors to create price competition over a commodity.

But we are not talking about price or a commodity. We are talking about frequent flyer programs and service. And the fact of the matter is that by growing their companies through mergers and acquisitions rather than by adding routes and planes, airlines are not increasing overall industry supply meaning full planes meaning no need to compete 'on the periphery' with generous FFP rebates.

So, yes, airline growth via mergers instead of airlines trying to grow organically ARE the reason FFPs as well as service are down.

FallenPlat

I'm not sure growth through acquisitions and organic growth are necessarily inconsistent. Here at DFW, for example, AA is adding flights (their whole Asia initiative, for example) and goodness knows the US-AA merger counts as a merger. Mergers happen without cash quite frequently. Other airlines are adding flights -- a lot of flights -- as well. Even setting the Middle East and Spirit aside for a moment, the death throes of the Wright Amendment have set off the aviation competition equivalent of an atomic bomb here. Unless PHL-DFW is your regular run!

There sure is less competition on the FFP front generally, though.

Edit: As a separate point, I meant to ask how anyone could possibly read Million Mile Secrets. The guy's obviously very expert, a popular speaker and extremely successful, but I find the blog dangerously tendentious at every turn and completely unreadable. Everything seems to have a spin, even down to the word "the."

kokonutz

Well I also pondered, in considering the impact of less or more competitors in my lost comment, how domestic carriers would respond on domestic routes if foreign carriers were allowed to operate domestic US routes.

In any case the fact that mergers and severe cutbacks in FFPs have occurred in close succession and in that order is either causation or an amazing serial coincidence. In a way that never occured in the past during economic booms.

lwildernorva

Easier to do at some schools than others. . .

lwildernorva

That's why I feel the government has left open the possibility of competition by new players, even if the new players in some instances may be the existing players moving into new routes (forget monopolies--the airline business is just really expensive to get into even in a highly competitive environment). The current US domestic airline industry is not a monopolistic situation; however, it should be impossible to overlook the reduction in competition from the 80s, shortly after deregulation opened the field to many new players while eventually causing old, inefficient airlines to fold--which leads to better economies of scale for profit purposes while also reducing the incentives of airlines to offer services, including generous FFP benefits.

Canarsie

Some might argue that the current airline industry in the United States is not an oligopolistic situation, either; and another difficult barrier of entry besides cost is the plethora of governmental regulations to which an airline must follow and adhere.

lwildernorva

True, but also true for any business impacting interstate commerce, such as banking or securities or railroads. True free market economies existed only in the days before governments. The genius of the American system has been the balancing of business needs with the rule of law and consumer protection. Keep in mind that most of the business regulation that began in the early twentieth century arose from a desire to rein in the economy that produced the robber barons of the second half of the nineteenth century, eventually impacting workers, consumers, and small business owners in the same field who couldn't compete. That troika of groups was one of the reasons that regulation was as spurred by Republicans like Teddy Roosevelt as by folks on the other side of the aisle.

Much more than that I guess is a discussion better suited for OMNI!

kokonutz

Gary is clearly reading this forum too based on his 'hey I'm a real business traveler' post this morning. ^