Bearing in mind the chance for unintended consequences and trying to look a step or two ahead, will Delta's 499/599 move, if it sticks, lead to bad news for FF programs as we know them?

The immediate predicted effects are forcing other airlines to match and, perhaps more significantly, implanting in consumers and business travel managers the notion that under no circumstances should they pay more than 499 coach or 599 FC each way in the 48 US or accept a Saturday stay requirement for that kind of money. And that's if everyone matches Delta without upping the ante.

Suddenly all the incentives and targeted awards for the formerly really hefty fares look questionable. Should F get all those bonuses if only $100 more than Y? Will anyone other than Ys have any chance at an upgrade? And with overall revenue expected to take a hit, at least at first, will we hear that that means more belt-tightening on the FF programs? Seems to me it could be used as a pretext for raising elite-qualification requirements and/or raising lowest award levels.

Seems like this will not only shake up the fares, but the way the programs give incentives and rewards for all fares. I think overall it's simpler and fairer, but have a hard time seeing it leading anywhere good for FF benefits. Thoughts?

I don't think that DL is going to raise elite-qualification (better not) or raise award levels, as they've just implemented Skymiles 2005 changes, which were pretty major. They want FF to believe in Skymiles, that it's a fair system, that the benefits are real. That was their goal in changing skymiles, and the same goal in lowering fares-to get more business through good PR. Just my thoughts.

It certainly won't lead to improved benefits for folks who used to pay several thou for an F ticket that they now buy for $599. The margin for freebies just won't be there.

However, I think it also says something else. They're saying that precious few bought those tickets. F cabins are full of people upgraded with points, miles, upgrade credits, or just because they're elite - to say nothing of non-revs. The average revenue per F passenger probably wasn't all that high. For that matter, the average revenue per coach passenger was probably nowhere near full Y, either. They'll lose a bit off the top, because some folks actually did pay full fare for one reason or another, but for an average planeload the revenue drop may not be that big. If they can make it up with a few points of increased market share, they'll be ahead of the game.

If everyone matches DL they won't get more market share, but they won't lose much revenue. And it may increase travel at the margin. Consider the manager who has a last-minute meeting and it's a coin-toss to go or not. For $2K+ transcon, s/he might turn it down. For $500, it might be worth it.

I don't see the reasons for FF programs affected by this. They began in an era when everyone's fares were the same. If they're still about the same, at any price point, the reasons will still exist. Benefits might change, upgrades might be harder to come by if many people put down an extra $100 for paid F, but they'll still be here for us to talk about.

I don't know...perhaps it will slightly modify how F/J promos are run. But overall, I don't think it will change the programs too much. Since we're talking purely domestic US here, the bar is set by Southwest. They've always had "fair" fares and they have a very strong FFP for their market. For Delta to say "We can offer competitive fares, but we have to water down Skymiles to do it" would ring hollow.

Besides, Skymiles is a profit center for DL. It's in their interest for people to consider 1 Skymile to be a comparable currency with 1 AAdvantage mile or 1 MileagePlus mile.

I don't know enough about how DL handles comp upgrades for elites to know if it will have much effect on that. Obviously, the airlines' goal is to sell those F seats. If they succeed in that by offering reasonable fares, then yeah, I can see where it might be harder to upgrade.

It strikes me that most people must still maintain their emotional ties to the style of travel in the 90's, I miss those days too, but today the world and this industry is radically different.

What Delta is doing is something that happens every day at companies around the world, changing products and pricing to reflect the market demands. This is marketing, they are doing what is necessary to stay in business. As mentioned earlier, the other majors will ultimately have to also evolve to stay in business.

What I actually think this will do is moderate the pricing, and bring the ultra-low and the ultra-high pricing in to a reasonable window. From a business persepective, the way legacy carrier pricing was a lot like welfare, the business fare paying passengers were subsidizing the loss leader super saver fare paying passengers tickets. That model was broken and has to change.

Myself I often remember fondly the days of grand travel experiences, but today we have to deal with the reality that airlines can only respond to what the market demands are, low prices, mediocre service. I used to consider my travels, over 3 million miles over the last 10 years, to be a perk, now it is just a long, painful commute to work. After the first year of post 9/11, it finally sank in, this is the future, get used to it.

The emotional ties to the airlines need to fade, my friends. Travel now is just a comodity, like gas or groceries, you can go to Whole Foods and buy the $9.99 brie, or Wal-Mart for the 0.99 Velveeta. Or somewhere in between. that is where the industry is heading. That or re-regulation, I think.

Our problem is, too many Wal-Marts in retail, and too many Wal-Mart airlines... it is not that different from a business persepective.

Regards,

I have got to believe that it will be next to impossible to upgrade in the future if these fares stick. Since the upgrades will cost less than the "stickers" or other coupons required by some carriers to upgrade - why pay more and wait at the gate when you can pay the smaller difference and upgrade in advance?

Not sure I get the "welfare" analogy. Nobody forces the airlines to make super-saver fares available, and nobody forces businesses to buy $2000 seats to "subsidize" the $150 seat.

I don't think it's a problem. If anything, what Delta is doing is what we've all wanted all along. How many threads are there here that grouse about how unfair the legacy airline pricing structures are? Well, here we go: a more-fair structure from what I can tell. Southwest Fans will rave about how easy to understand their structure is. Looks like DL is moving a step closer to that.

Will the cost of a super-saver seat now creep upwards? We'll see what the market will bear...

As for the quality of service, I've had nearly perfect on-time performance over the past 2 years or so, compared to dreadful performance in the late 90's. Their safety record since 2001 has been perfect. (I'm talking major US carriers here.) The fact that we actually are sitting around grumbling about whether or not we get a snack onboard tells me that they must be doing the important things right.

When I think about all of the changes that have hit the airline industry over the past 30 years, one personal experience comes to mind: we once paid $550 in 1977 dollars per seat to go to Italy. At the time, we thought it was a once-in-a-lifetime opportunity to save enough money to go to Europe. I don't remember much about the flight itself, but I'm sure the food was great.

Now, Italy is a nice "long weekend" destination. $325 R/T MCI-MXP shows up every spring on AA, plus you earn almost enough miles for a free domestic ticket after you get home. But the onboard meal probably sucks...oh well, maybe I shouldn't go.

Will those opportunities for cheap Europe tickets go away? I don't know...I have MCI to about 10 different European cities listed on My Yahoo...today, nearly all of them can be had for about $400, after taxes, including the separate MCI-ORD ticket if necessary. And the really good fares won't roll out for another 2-3 weeks. My guess is that changes to the high-end of the structure won't have much effect on demand for seats on the low end. Maybe some "fare creep" as the economy continues to grow, but not a disappearance overnight of opportunities to take sub-$500 R/T trips to Europe or sub-$250 trips in the US.

I look at my fellow FC passengers every week and wonder who could be paying full F. I see most with Plat or EXP bag tags so not them, and a couple i know muse be non-rev.

I fly most weeks from DEN-MIA. Price is not a huge issue, but I buy a week or so in advance when I know my schedule. My tickets are usually in the 250-400 range. Why anyone would pay the full Y of $1400 or $1700 full F is beyond me. Even last minute prices restricted are under $500 usually. If I throw away 2-3 tickets a year, who cares at those prices. Lots of room for that when I Full Fare ticket is over $1000 more.

I agree, who actually pays... when America West changed some time ago, it was cited that 6% of FC passengers paid F fare, and since they went to $50 per segment for FC fare, 15% of passengers now pay F fare.

My guess is that AA might be a little higher, say 10% before purchased F fares. A similar 150% increase would mean 25% of seats in F would be purchased. Hopefully that still leaves room for working stiffs like us looking for a nicer seat,

Regards,

If US went under and (longer shot) UA too, and along with them a bunch of capacity, this pricing wouldn't last. Just a guess.

I doubt the new fares will stick very long. Other airlines have followed and many industry analysts are saying that the new prices are not good for the industry as a whole. If the airlines can't turn a profit with the "old" prices, it's highly doubtful that lowering them will result in any appreciable new total revenue. As to your original question, lower prices in F will result in more people buying F seats in the short-term... hence, more difficult to upgrade. I seriously doubt that elite qualifications or award levels will be raised any time soon.