The Economics of MRs. Do they make sense?
May 4, 2009, 6:16 pm
#76
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who cares if they make sense? It is my money and I spend it on crazy things if I so desire, and the airlines enjoy taking my money. Airlines need the money, therefore it is a winning siutation, I want to spend, they taketh away my money!
May 4, 2009, 10:19 pm
#77
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May 5, 2009, 12:34 am
#78
Original Poster
Join Date: Apr 2009
Location: Melbourne, Australia
Programs: United 1MM
Posts: 318
You understand what an Op-Up is just fine. And yes, we sometimes hope for them too! But if you give me the choice, I'll take the bump over the op-up (almost) everytime. A bump is when you get VDBed (Voluntarily Denied Boarding) off the flight because they need more seats. The airline is very happy to have you do this, because if no one volunteers, they are forced to IDB (Involuntary) people which a.) makes pax mad b.) looks bad to the DOT statistics, c.) may cost them more. United is notorious for overselling flights, as they have a very aggressive yield management policy. Some airlines, not so much. The $300 I refer to is exactly that. The compensation for a bump is frequently a free RT ticket in the US, but can often be negotiated into a $200 - $600 travel credit which spends like cash with the airline. $600 is pretty standard for overnight rebookings, while free RT tickets are pretty common if your delay is an hour or two. I picked $300 as it is sort of an average value for any bump, but it varies. And no, you shouldn't expect much of a bump out of Aus right now, as from what I've heard and seen, UA is not winning the battle on loads there right now! But come to the states, and fly around -- you'll see.
Seat maps are only one predictor. Useful, but only one tool. You can see the exact loads that UA is looking at (nearly) on seatcounter. But like I say, this is mostly useful after you've already got your ticket. On the days up the flight, you can actually watch the fare classes tick down, and hopefully, eventually get to 0. When that happens, I'll be more proactive and start looking for a bump.
Not sure if you ever got an answer, but yes SWU's are transferable. If your parents buy the proper fare class, (typically W and above) you can sponsor them. Just keep in mind that they are never gauranteed to clear, unless there is NC>0 space available when you book. But yes, if they are coming, and they don't mind buying the higher fare class, they will get incredible value out of them! If they don't use them, there are other avenues for you to get value out of them, but you are going to need to get 90 posts and 90 days under your belt before we can start talking about that.....
So I hope that you are becoming convinced here that there is a LOT more than meets the eye in this game. And it's really hard to ramp you from 0 to 60 mph in a few posts, because no one is quite sure what you know and don't know already. Or what you want to learn. But there are a ton of great people here who will help you, as long as you are receptive to it.
Finally, perhaps you should check out the blog of Lucky9876coins, OneMileAtaTime. He is a long time FTer, and MRs almost exclusively on UA. (Suffice it to say that UA is probably the airline of choice for MRs for many of us for many reasons beyond the scope of this post -- you are lucky that this is your preferred airilne!) He's currently wrapping up a run, but is probably about to begin another, as he is working on 40k BIS miles in 2 weeks or something insane like that. By following his posts live you can sort of live vicariously through him and a get a glimpse of the adventure that many of us enjoy (but just don't blog about!), and by reading his past posts, you will learn a TON more tips and tricks, as well as some more valuation rubrics. (And yes, there are many MR bloggers out there and in this thread, I just happen to like Lucky's style!)
Seat maps are only one predictor. Useful, but only one tool. You can see the exact loads that UA is looking at (nearly) on seatcounter. But like I say, this is mostly useful after you've already got your ticket. On the days up the flight, you can actually watch the fare classes tick down, and hopefully, eventually get to 0. When that happens, I'll be more proactive and start looking for a bump.
Not sure if you ever got an answer, but yes SWU's are transferable. If your parents buy the proper fare class, (typically W and above) you can sponsor them. Just keep in mind that they are never gauranteed to clear, unless there is NC>0 space available when you book. But yes, if they are coming, and they don't mind buying the higher fare class, they will get incredible value out of them! If they don't use them, there are other avenues for you to get value out of them, but you are going to need to get 90 posts and 90 days under your belt before we can start talking about that.....
So I hope that you are becoming convinced here that there is a LOT more than meets the eye in this game. And it's really hard to ramp you from 0 to 60 mph in a few posts, because no one is quite sure what you know and don't know already. Or what you want to learn. But there are a ton of great people here who will help you, as long as you are receptive to it.
Finally, perhaps you should check out the blog of Lucky9876coins, OneMileAtaTime. He is a long time FTer, and MRs almost exclusively on UA. (Suffice it to say that UA is probably the airline of choice for MRs for many of us for many reasons beyond the scope of this post -- you are lucky that this is your preferred airilne!) He's currently wrapping up a run, but is probably about to begin another, as he is working on 40k BIS miles in 2 weeks or something insane like that. By following his posts live you can sort of live vicariously through him and a get a glimpse of the adventure that many of us enjoy (but just don't blog about!), and by reading his past posts, you will learn a TON more tips and tricks, as well as some more valuation rubrics. (And yes, there are many MR bloggers out there and in this thread, I just happen to like Lucky's style!)
I actually know of and learned how to use seatcounter and flyaow through my past bookings of RTW trips (I do about 1 or 2 a year). I generally do the legwork for my travel agent, and give him the flights I want that definitely have the right class availability.
I had learned SWUs were transferable by reading the United wiki about a week ago. I heard about the NC>0 thing. I guess you check .bomb for that? I'll have to read up more to understand that and maybe ask if I have questions.
I definitely am convinced there is more than meets they eye (more like, more than what I had a pre-conceived notion of). I'll check out that blog you suggested.
thanks.
May 5, 2009, 12:37 am
#79
Original Poster
Join Date: Apr 2009
Location: Melbourne, Australia
Programs: United 1MM
Posts: 318
I second that, even though it's been a long time since I took economics at Uni.
May 5, 2009, 1:19 am
#80
Join Date: Aug 2001
Location: Portland, OR
Programs: NW Plat (now they call it DL Diamond) 1MM, soon to be DL Plat, Hilton Diamond, SPG Gold, Dusit Gold
Posts: 2,706
I am presently retired so perhaps my time is not as valuable as when I was working.
In a 13 day period over the last 2 weeks, I flew exactly 27142 miles of which 25932 earned miles and 1216 miles earned nothing (Air Asia). Most of it in relative comfort.
The airfare cost totaled $2364. 2476 miles were flown in coach and the remainder in Business and First Class. BTW: the major ticket cost $1903 which is approximately $750 more than I have ever paid for a ticket in 44 years of commercial flying. Air Asia ticket was an additional $US160.
On the face of it, the use of almost $2500 made no sense to me until I really thought about it. This is less than I would pay during a year of flying and at a tremendous time savings. Additionally, I got a mini vacation in Thailand and Singapore. By insuring that I qualify for the top tier on my airline of choice, I received, this year, 6 upgrades to business or first on highly priced tickets anywhere my airline flies. Two were used on the expensive ticket.
Due to a promotion, my 25932 flown miles were more than enough to qualify me at the highest elite level of my airline until February 28, 2011. Additionally almost 75000 redeemable miles were added to my frequent flyer account for use on award tickets. Because of the high status, I have availability to tickets at lower redemption levels than most people desiring to use miles.
Judiciously used, these miles could purchase 3 RT domestic coach tickets valued at more than $300 each or a RT first class ticket from the US/Canada to Hawaii or better yet, half of a standard business class award ticket to Asia or Europe from the US.
In my case, the miles funded one half of the cost of a First Class ticket on a combination of DL and SQ from Portland, OR to Singapore (with a stopover) and on to Columbo, Sri Lanka and return. I did have to pay $653 in fees and fuel surcharges for this ticket so there was a cash cost involved. Never in my lifetime did I expect to be able to fly Singapore Airlines in First Class. Does this have value other than the cost of the ticket which under normal circumstances I would never buy, you bet!
1. ego satisfaction at low relative cost.
2. highest airline status until 2011 with all the associated perks.
3. free baggage allowance (an annoyance, but a cost)
4. much better service and often waiver of fees in the event of irregular operations. Sometimes even a complete rerouting and booking into first class to get me home a full day earlier. (happened during the 13 days)
5. a much better hotel than most passengers receive should there be an overnight mechanical delay.
6. value in dollar terms far in excess of the cost of tickets to achieve status and the time spent seeking it once status is achieved.
7. faster check-in
8. free unlimited First Class upgrades on US, Mexico, Caribbean, Canada and Central American flights (with some exceptions) on my airline and presently 2 others.
9. expedited entry to security
10. free lounge usage day of international travel.
11. dedicated check-in.
12. dedicated telephone agents with no charges for booking over the telephone.
13. access to more and at a lower level reward seats as mentioned above.
14. comfort in limited access seats and upgraded seats.
15. sometimes food and always drinks when upgraded.
16. ability to parlay higher status levels with hotel programs through fast track promotions not available to most fliers.
Do I value all of these in dollar terms? Of course not, but if one is going to look at dollar economics many of the items above have dollar values even if they are only time saving.
In a 13 day period over the last 2 weeks, I flew exactly 27142 miles of which 25932 earned miles and 1216 miles earned nothing (Air Asia). Most of it in relative comfort.
The airfare cost totaled $2364. 2476 miles were flown in coach and the remainder in Business and First Class. BTW: the major ticket cost $1903 which is approximately $750 more than I have ever paid for a ticket in 44 years of commercial flying. Air Asia ticket was an additional $US160.
On the face of it, the use of almost $2500 made no sense to me until I really thought about it. This is less than I would pay during a year of flying and at a tremendous time savings. Additionally, I got a mini vacation in Thailand and Singapore. By insuring that I qualify for the top tier on my airline of choice, I received, this year, 6 upgrades to business or first on highly priced tickets anywhere my airline flies. Two were used on the expensive ticket.
Due to a promotion, my 25932 flown miles were more than enough to qualify me at the highest elite level of my airline until February 28, 2011. Additionally almost 75000 redeemable miles were added to my frequent flyer account for use on award tickets. Because of the high status, I have availability to tickets at lower redemption levels than most people desiring to use miles.
Judiciously used, these miles could purchase 3 RT domestic coach tickets valued at more than $300 each or a RT first class ticket from the US/Canada to Hawaii or better yet, half of a standard business class award ticket to Asia or Europe from the US.
In my case, the miles funded one half of the cost of a First Class ticket on a combination of DL and SQ from Portland, OR to Singapore (with a stopover) and on to Columbo, Sri Lanka and return. I did have to pay $653 in fees and fuel surcharges for this ticket so there was a cash cost involved. Never in my lifetime did I expect to be able to fly Singapore Airlines in First Class. Does this have value other than the cost of the ticket which under normal circumstances I would never buy, you bet!
1. ego satisfaction at low relative cost.
2. highest airline status until 2011 with all the associated perks.
3. free baggage allowance (an annoyance, but a cost)
4. much better service and often waiver of fees in the event of irregular operations. Sometimes even a complete rerouting and booking into first class to get me home a full day earlier. (happened during the 13 days)
5. a much better hotel than most passengers receive should there be an overnight mechanical delay.
6. value in dollar terms far in excess of the cost of tickets to achieve status and the time spent seeking it once status is achieved.
7. faster check-in
8. free unlimited First Class upgrades on US, Mexico, Caribbean, Canada and Central American flights (with some exceptions) on my airline and presently 2 others.
9. expedited entry to security
10. free lounge usage day of international travel.
11. dedicated check-in.
12. dedicated telephone agents with no charges for booking over the telephone.
13. access to more and at a lower level reward seats as mentioned above.
14. comfort in limited access seats and upgraded seats.
15. sometimes food and always drinks when upgraded.
16. ability to parlay higher status levels with hotel programs through fast track promotions not available to most fliers.
Do I value all of these in dollar terms? Of course not, but if one is going to look at dollar economics many of the items above have dollar values even if they are only time saving.
May 5, 2009, 9:17 am
#81
Join Date: May 2007
Location: ORD, DEL
Programs: AA (Plt Pro; 1.5 MM)
Posts: 6,185
May 6, 2009, 12:39 am
#83
Join Date: Mar 2009
Location: Weekdays: LAX; Weekends (when not in a metal tube): LPC
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Posts: 228
We can define words how we wish, but when communicating with others it is good to keep their usual meanings in mind. Economics, as commonly understood, refers to transactions involving money. A beautiful woman's wink may have a great emotional "utility" for me, even social utility if my friends noticed it, but it is not economics until it starts affecting my spending.
The best demonstration of this is to look at the amazing breadth of areas that win the highest award in the field:The Nobel Prize (Ok, actually something more like 'Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel' and they change it's name seemely annually.)
Gary Becker won in part for the study of inetrpersonal and social transactions -- such as marriage. A psychologist won for understanding "decision making under uncertainty" (Kahneman); a mathematician (Nash) was among several to win for contributions to game theory; others for purely econometric work (Engel, Granger) which is in essence pure statistical theory.
The "common understanding" goes awry when folks automatically associate transactions with money. The (narrower) study of transactions involving money is probably better labeled "Finance."
I quote "common understanding" above because I don't believe it is as common as you do. Sure many think of it as you describe. But many also look at the way we discuss "the economy" as an almost organic entity and understand that it is more than measuring cash or financial instruments.
Yes, I have formal education in Economics -- I spent time working towards a PhD in the field. But that ended nearly 20 years ago. Why haven't I commented on this thread? I've been too busy at work and doing my first MR. And, frankly, this is not an easy forum to educate folks on any field in any depth or meaningful way.
"Opportunity cost" and "utility" are powerful ideas -- understanding these concepts (even from a Wikipedia search) will yield some insight into the decisions we make. Even the non-financial ones.
Jim
May 6, 2009, 12:46 am
#84
Join Date: Mar 2009
Location: Weekdays: LAX; Weekends (when not in a metal tube): LPC
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Posts: 228
Jim
May 6, 2009, 6:47 am
#85
Original Poster
Join Date: Apr 2009
Location: Melbourne, Australia
Programs: United 1MM
Posts: 318
I can't decide just yet. There's a lot still to eventuate. In a week or so, I'll know more about the funding of my trip in Sept. I'm going to the US either way to visit family, but if the work trip part eventuates, then I don't have to pay the airfare to get to the US. If not, I'll have to pay for that trip and the MR, which is not something I want to do.
Also, within two weeks or so, I'll know more about my funding situation for next year, which is important. If I get this one grant, I'll go overseas at least twice, likely 3 times, so that I'll be able to use the SWUs! That's the key thing: to use of the SWUs if I'm going to put in the money and effort to earn them. Finally, I still have to discuss my parents coming out in 2010 with them. My parents splurged a lot of cash on vacations in the past few years, but are tightening up now as the retirement fund is not as big due to the recession.
I'll give an update in about a week or two. I can't leave now due to teaching anyways, and earliest is 29th May I can leave. I just need to make sure the run to 1K will give me benefits I can use myself or my parents can. I simply need more data to make an informed decision weighing opportunity cost and utility. Argh...... I really wish I found economics interesting when I was a uni student. It's so intriguing a decade later.
Also, within two weeks or so, I'll know more about my funding situation for next year, which is important. If I get this one grant, I'll go overseas at least twice, likely 3 times, so that I'll be able to use the SWUs! That's the key thing: to use of the SWUs if I'm going to put in the money and effort to earn them. Finally, I still have to discuss my parents coming out in 2010 with them. My parents splurged a lot of cash on vacations in the past few years, but are tightening up now as the retirement fund is not as big due to the recession.
I'll give an update in about a week or two. I can't leave now due to teaching anyways, and earliest is 29th May I can leave. I just need to make sure the run to 1K will give me benefits I can use myself or my parents can. I simply need more data to make an informed decision weighing opportunity cost and utility. Argh...... I really wish I found economics interesting when I was a uni student. It's so intriguing a decade later.
May 6, 2009, 9:25 am
#86
Join Date: Oct 2008
Location: SFO
Programs: UA 1K
Posts: 4,449
I can't decide just yet.
I'll give an update in about a week or two. I can't leave now due to teaching anyways, and earliest is 29th May I can leave. I just need to make sure the run to 1K will give me benefits I can use myself or my parents can. I simply need more data to make an informed decision weighing opportunity cost and utility. Argh...... I really wish I found economics interesting when I was a uni student. It's so intriguing a decade later.
I'll give an update in about a week or two. I can't leave now due to teaching anyways, and earliest is 29th May I can leave. I just need to make sure the run to 1K will give me benefits I can use myself or my parents can. I simply need more data to make an informed decision weighing opportunity cost and utility. Argh...... I really wish I found economics interesting when I was a uni student. It's so intriguing a decade later.
The greatest perk of 1k is for international travelers. When I posed this question (should I go do a MR for 1k?) back in Nov/Dec 2008, the most emphatic response I got was, "This should not even be a question."
Boy, were they right. It was the best thing I ever did.
May 6, 2009, 10:27 pm
#87
Original Poster
Join Date: Apr 2009
Location: Melbourne, Australia
Programs: United 1MM
Posts: 318
If you fly Australia to the USA and you do not like sitting in economy, there is no question you should get 1k. It is truly unbelievable. I got 1k this year, Jan 2009. The only time I've flown coach is because of TED or because I simply did not bother applying for the upgrade. I'm flying to Europe twice in Business and once to Asia in business. I paid only economy tickets. My parents are flying business to Asia on economy tickets, also!
The greatest perk of 1k is for international travelers. When I posed this question (should I go do a MR for 1k?) back in Nov/Dec 2008, the most emphatic response I got was, "This should not even be a question."
Boy, were they right. It was the best thing I ever did.
The greatest perk of 1k is for international travelers. When I posed this question (should I go do a MR for 1k?) back in Nov/Dec 2008, the most emphatic response I got was, "This should not even be a question."
Boy, were they right. It was the best thing I ever did.
Now that you're 1K, I bet you're kind of addicted to it, yes? The only reason I have a chance now is due to the DEQM promotion. I also am lucky that I started a roundtrip in late in '08 where my return trip was in early Jan of '09, so those return 11K EQM miles are counting for this year. Without them, I'd barely make 1P this year! I used to do 3 overseas trips a year (2 or 3 being RTWs), but nowadays, I'm looking at 2 really (for work I mean). Thus, I might be able to make 1K and have it for 2010, but I'll never get it again after that. Even with a MR during a DEQM promotion, I'd still need an additional 2 1/2 or more overseas trips (like this year) to make 1K. Without a half-trip, that means I need at least 4 overseas roundtrips with a DEQM bonus to make 1K. That ain't happening, sad to say
However, one year of 1K status and benefits might work
May 16, 2009, 11:26 am
#88
Join Date: Aug 2006
Posts: 8
Sorry for chiming in a bit late. Being an (PhD) economist, I find thing thread interesting. A large chuck of my research has been on airline economics (and I can't say I'm alone, there are conferences on just airline economics). In any case, I think MRs are a by-product of the airline's network and pricing, more than anything else. The market for an airline is more the origin and destination rather than the route between the origin and destination. (Case in point, for an uncoming trip to Sydney, going SNA-SFO-LAX-SYD instead of just going via SFO or driving to LAX, or the recent award travel ticket SFO-BOI-ORD-DEN-IAD.) Most people would rather choose more direct/non-stops, so the fact that there are people who are willing to take extra hops/more circuitous routes allows the airline to effectively fill more seats over their entire network.
That said, I don't think I've been on a pure-MR, though I do look at maximizing miles on a trip, and have also been induced to go somewhere because of low fares. If I could find a pure-MR that fits my schedule, I would try it for experience, but thats more because I like to travel (and get more research ideas when I sit on a plane).
That said, I don't think I've been on a pure-MR, though I do look at maximizing miles on a trip, and have also been induced to go somewhere because of low fares. If I could find a pure-MR that fits my schedule, I would try it for experience, but thats more because I like to travel (and get more research ideas when I sit on a plane).
May 16, 2009, 12:03 pm
#89
Join Date: Oct 2008
Location: SFO
Programs: UA 1K
Posts: 4,449
Sorry for chiming in a bit late. Being an (PhD) economist, I find thing thread interesting. A large chuck of my research has been on airline economics (and I can't say I'm alone, there are conferences on just airline economics). In any case, I think MRs are a by-product of the airline's network and pricing, more than anything else. The market for an airline is more the origin and destination rather than the route between the origin and destination. (Case in point, for an uncoming trip to Sydney, going SNA-SFO-LAX-SYD instead of just going via SFO or driving to LAX, or the recent award travel ticket SFO-BOI-ORD-DEN-IAD.) Most people would rather choose more direct/non-stops, so the fact that there are people who are willing to take extra hops/more circuitous routes allows the airline to effectively fill more seats over their entire network.
That said, I don't think I've been on a pure-MR, though I do look at maximizing miles on a trip, and have also been induced to go somewhere because of low fares. If I could find a pure-MR that fits my schedule, I would try it for experience, but thats more because I like to travel (and get more research ideas when I sit on a plane).
That said, I don't think I've been on a pure-MR, though I do look at maximizing miles on a trip, and have also been induced to go somewhere because of low fares. If I could find a pure-MR that fits my schedule, I would try it for experience, but thats more because I like to travel (and get more research ideas when I sit on a plane).
May 16, 2009, 12:11 pm
#90
Formerly known as CollegeFlyer
Join Date: Jan 2004
Location: JRA
Programs: UA 1K MM, AA PLT, Hyatt Diamond, Marriott Gold, Hertz 5*
Posts: 6,716
Half the time when I'm sitting in an uncomfortable chair (in a meeting, or at the library, etc.) I find myself daydreaming about being in a C/F seat, with the soft cushions, ergonomic legrest, and deep recline!
UA runs DEQM promos pretty frequently in the past few years (though there were fees required in most years). I first qualified for 1K in ~2005 or so because of a DEQM promo. I thought it was going to be just for a year, but I loved the attentive customer care, priority services, SWUs/CR-1s, fee waivers, etc. so much that I then concentrated all of my personal and business flying on UA to requalify for 1K again and again..including the rare MR where necessary.
Last edited by EsquireFlyer; May 16, 2009 at 12:16 pm