on22cz

FlyeBye

Isn't the whole point of frequent flyer status to getting perks no matter which class you are flying? The day I get turned away from any service of Finnair would certainly be a turning point. I am a revenue J flyer, so I certainly don't have too many extra perks being Lumo despite a few Limo rides. I think Finnair should step up the game by adding more flexibility (until now just an empty promise on their side). Miss the times as LH HON when you were asked the moment you got into the lounge if you are happy with your itinerary or if you would like to hop on an earlier/later flight. Anyway, not considering going back for a second, the captain that took over LH ruined everything for me. But there is a lot Finnair can do to increase their service level for frequent flyers without cutting back any services for frequent flyers flying Y.

kauppias

Very true, but it does not seem they are too motivated.

I think they could make a few tweaks on the positive side that woud not cost them alot but would increase perceived value alot 👍

Unionruler

Philosophically, every FFP is a revenue stream on it's own.

The perks of BA Gold and Lifetime BA Gold don't cost BA a lot. Oneworld lounge access is paid for by the operating carrier, so you have lots of BA Golds going to AA Flagship lounges for example, not on BA's tab. BA happily utilises (*coughs* crowds) its First lounges and CCRs with OWEs because it has to operate them for its F pax anyway. The only perk that actually costs BA a substantial amount to provide are jokers and GUF1s/GUF2s/2-for-1 vouchers in the hands of GGLs, because GGLs can book redemptions into A (First) and D (Business) revenue inventory when BA could potentially have sold the seat close-in for a good amount of cash. But then again how many GGLs are there? Hence, BA is actually running a low cost FFP, with a relatively low value per Avios (due to high fuel surcharges) booked as a liability on its balance sheets, but generates lots of revenue because the easier BA Gold and Lifetime BA Gold are to attain, the more people flying other OW airlines will credit to BAEC, and the more BA will earn from issuing the miles (Medium to High Revenue - Low to Medium Cost = Medium Profit)

If we take one step back and look at AY Plat, which perks actually costs AY something? With perfect revenue management in a waitlist system, upgrade vouchers don't cost anything because they only eat up distressed inventory. Given imperfect revenue management, there is some cost to providing it, but not substantial because most of the business inventory "sold" hence is distressed anyway. Sure, the Lumos' tarmac transfers cost something, but I daresay most of the Lumos direct so much business to AY that it far outweighs the cost of providing such a perk, even if you threw in the 2 extra LH vouchers. AY+ doesn't want revenue to come from minting so many OWS/ OWE that the amount other airlines pay it for issuing miles finally becomes significant, but rather from encouraging pax to choose AY metal for corporate travel (i.e. J or last minute Y in the highest booking classes), which can be seen as an intangible revenue contribution. Per member, this contribution is probably pretty significant, but AY+ has far fewer members than BAEC, so AY+ is probably standing at Medium Revenue - Low Cost = Low to Medium Profit. AY+ can only provide more costly perks if it can increase revenue, so either Management is waiting and hoping for more FFP signups as network connectivity increases (I am in the dark as to the current evaluation of this), or it can think of a perk so attractive that it will generate more intangible revenue contribution than its cost (but this is hard without an F product, unequal J seating a la throne seats or MU's first row suites in business, F lounge or other F-ish ground experience like chauffeur/ helicopter service which is clearly not feasible in HEL).

My conjecture is that from the perspective of Management:
- AY+ is profit-generating, but not by so much that Management dares disturb the balance by re-jigging it
- Management doesn't have good ideas for other perks to introduce (more dialogue with frequent flyers and Flyertalk members may help)
- Management may be in the midst of studying how to encourage more signups with or without changing the program, and it has not concluded such studies yet
- It is not Management's priority to squeeze more profit out of AY+ for now, as Management is busy scrutinising potential new destinations, and each addition could significantly impact financial results
- Current members may be disgruntled by the staleness of the program, but Management is willing to take the risk to get them to wait a few more years before presenting solutions

Flying Yazata

Good thinking from @Unionruler!

I've been with BAEC some three years now and I'm mainly following the BA and AA subforums on FT, besides AY. I'm not sure how the economics of the Joint Venture (JV) work, but I think AY should study the options of gaining FFP customers from the JV operations. I'd imagine there would be an incentive to doing so, rather than wooing e.g. QR, QF or CX FFP customers. At least the number of disgruntled AAdvantage and BAEC FFP customers has IMO increased over time, especially as AA is now spending based. I'm not thinking of AY+ doing what BAEC is doing in terms of Avios earnings, but rather reward for flights by the other JV carriers (AA, BA and IB) in a more generous manner. I wouldn't change the tier thresholds in AY+, but instead make it feasible to earn AY+ status also on the expense of other JV carriers. Like I said, I don't grasp well enough the economics of the JV, but I suppose there's some incentive there, taken how the prices are fixed and you have the codeshares. So for instance an AY ticketed trip ARN-HEL-LHR-BOS-NYC-LAX-HNL (doesn't it resemble a lot of certain BAEC TP runs... ) would earn better with its AY and AA mixture.

If feasible, I'd upgrade AA, BA and IB to the same earnings level as AY itself. If deemed necessary from a revenue management viewpoint, then toss in a requirement for some AY metal flights and voilá - you have former AA and BA FFP loyal FT'ers paying for doing NA/UK-Asia tickets with AY, most likely in J. And I'm not just talking about chasing OWE status, but moving your routings at least partially to AY. And if not that, then at least the other JV carriers would have to pay AY for the status and award credits more than they now do, if AY+ would attract more new frequent flyers.

Steve_Hun

Sorry for a basic question, but the last few posts makes me wonder, how do airlines decide how many points they grant for flying on partner airlines? Is it AY, who decides, that if I fly CX in booking class M I get 100% points and CX just coughs the money up for that, or is it a decision from CX that they want AY customers on their network, so they reward those with decent ammount of points? Because if it is the first one, then it is one thing to say that AY should allow better earnings on other OW airlines' J class, but if they don't agree on that, there is little AY can do.

Unionruler

Oneworld has benchmarks that Full Flex Economy should earn approximately 100%. Because the payment comes out of CX's pocket, CX has to agree to it first. CX is not likely to skimp, because if they represent to AY that they're not willing to pay for as much as the Oneworld benchmark advises, then AY would question whether CX really treats it as an equal alliance partner (although this still happens e.g. AA won't credit as much for flying QR as opposed to flying BA). On the other hand, if AY and CX agree to something outlandish (e.g. 200% AY credit for CX M), Oneworld would reach out to them for an explanation.

WilcoRoger

My uneducated guess is that it's the FFP that decides what booking class earns how much - hence the widely different earnings (if any!) for the same flight in different FFPs.

intuition

This might differ from alliance to alliance, but I had the notion (purely guessing) that the carrier decides to pay a certain amount in the alliance interchange currency into a joint pool of "frequent flyer miles". Then the program that gets the credit decides how much points that will actually buy.

The reason for my thinking is that SK slashed earnings to their own program a while ago. But there are still *A programs that credits 200% on a econ plus ticket, ie you can earn more miles crediting a SK flight to a *A program than to EB.

WilcoRoger

*A - take LH group's discount biz ticket, bucket "P". 100% earning* in many FFPs, but in TK's M&S it earns 0 (!) - a revenue business class ticket earning nothing. Obviously TK's choice.

* my main reason of abandoning LH after many-many years of SEN. Not just M&M but the LH group with neat totality.

FlyeBye

intuition

Great! (not that it is a 0 earning but that you confirmed my notion!

ffay005

I have an ancient SK account with some thousands of miles that haven't expired yet. Every now and then I fly *A out of necessity but I know nothing of the programme and choose the cheapest available tickets. They never earn anything (TG, SQ, UA come to mind). For me, it doesn't matter, but what kind of loyalty does it attract if you earn nothing?

Im a new user

I have always assumed that there is an agreement between the airlines saying that fare X on airline Y earns so and so many points to airline Z's FFP, and then the rate stays at that level until it's time to renew the agreement, possibly years later.

ffay005

My assumption is that it's a matter of cooperation where the FFP-host sets guidelines, such as 125% for J and 100/50/25/0 for Y etc, and then partner airlines place their booking classes in each category, perhaps following some loose guidelines set by the FFP-host.