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Proposal: A New Award Redemption Methodology For FFPs

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Old Feb 14, 2006 | 9:58 am
  #31  
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OK, go ahead and educate me on your expertise with the reality tour thing.

The point I was making and apparently not to your satisfaction, was that I've been doing this for 20 years now and (full-blown member for the full 25 years of these programs) perhaps that is the difference in perspective. Perhaps you'd at least acknowledge that. When these programs were introduced nearly 25 years ago, there was no such thing as a 20K or 25K award. That was introduced nearly 8 years after their introduction and only as a balance against introducing expiring miles - miles which interesting enough with the larger programs, expired in three years no matter what kind of activity you had. Thus, the no-capacity award I was referring to was the original and "standard" award.

The confusion might be because of my historian view of changes, rather than a snapshot on "right now."

I'm sorry I do not know as much as you. Guess I've got a lot to learn. And it just may be a matter of semantics since some airlines use the term "standard" at the 40/50K level and others use it at the 20/25K level. But whatever it is, I'll look forward to learning a lot more from your posts.

Originally Posted by MileKing
Randy, please, enough is enough with the "double miles award is not really double miles" and that double miles awards are "the standard award". You seem to be sounding this refrain more and more lately and this doesn't play well in Peoria or even here on FlyerTalk. The vast majority of FlyerTalkers will not pay 2X miles for awards, whether capacity controlled or not, except in the most extreme conditions such as last minute, have to get there travel.

The airlines have a very long road ahead of them if they intend to make 2X miles the "standard". And the biggest problem isn't even the perception that 2X miles is too much. The biggest problem is that almost no one values miles at 2.0+ cents any more.....that is "old thinking" that even most novices here on FlyerTalk realize is outdated. With credit card and other non-BIS miles making up more than 50% of mileage earned, 2X miles translates to value of less than 1.0 cent per mile. At those rates, the mileage house of cards comes tumbling down as I suspect most people will move from a mileage earning credit card to the now ubiquitous 1% cash back cards. That will put a permanent dent in the revenue and profits the airlines now enjoy from mileage sales, leading to additional cutbacks in award seats, basically the beginning of a never-ending death spiral.
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Old Feb 14, 2006 | 10:55 am
  #32  
 
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Randy,

Will you look at a 1985 AA award chart and tell me how many miles were required for two unrestricted coach class domestic awards (award code 50A), and how many miles were required for two first class unrestricted domestic awards (award code 75A).

You are correct that ther wasn't a 25K award, but you could get two unrestricted coach tickets for 50K. Today those same two unrestricted coach tickets would require 100K.

And you are correct that there wasn't a 45K first class domestic award. But you could get two unrestricted first class tickets for 75K. And now those same two tickets would require 180K.

I don't think we're all looking at this as a snapshot or "right now". And many members of this board have been members of the AA program since the early 80's.

If I'm wrong please educate me. Because I' ve seen several articles and posts where you state that awards are now at the same level they were when the programs first started.
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Old Feb 14, 2006 | 10:59 am
  #33  
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How about a twist of the original idea that will make it much simpler.

Have "stand-by" award tickets.

If you redeem one of these awards and there is a empty seat in the cabin for which you have a stand-by ticket you get to fly, otherwise you get to keep your stand-by ticket for a use at a later time.

The concept and the risks are known to most of the flying public and this can give both the Airline and the traveler additional flexibility.
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Old Feb 14, 2006 | 11:31 am
  #34  
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Originally Posted by Randy Petersen
...Guess I've got a lot to learn....I'll look forward to learning a lot more from your posts.
That's what makes FT so great, Randy. Several FTers have achieved travel omniscience (just ask 'em). They're on call, ready to share that knowledge with you.
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Old Feb 14, 2006 | 12:51 pm
  #35  
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Originally Posted by Sagy
How about a twist of the original idea that will make it much simpler.

Have "stand-by" award tickets.

If you redeem one of these awards and there is a empty seat in the cabin for which you have a stand-by ticket you get to fly, otherwise you get to keep your stand-by ticket for a use at a later time.

The concept and the risks are known to most of the flying public and this can give both the Airline and the traveler additional flexibility.
Now, that makes sense.
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Old Feb 14, 2006 | 12:56 pm
  #36  
 
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If you had a "stand by" award, what would stop Mr Smith from
making a reservation via the phone for John Doe and his three
friends. Then Mr Smith shows up at the airport, knowing Mr Doe
and his friends aren't going to show up.

I'm sure no one here on FlyerTalk would do such a thing, but
it's the reason the airlines IMHO will never offer a stand-by award.
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Old Feb 14, 2006 | 1:36 pm
  #37  
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I'm certainly not arguing with you at all and in my view, it might be fairly unwise to draw the comparison you seek here.

A few reasons why:
- miles expired after three years no matter what your activity was.
- there was no elite level during 1985, which means that frequent flyers (defining elite members now) did not enjoy the current 25-125% bonus they enjoy today.
- there was no credit card partner, meaning that the miles required for the awards you note - and you are correct - were truly BIS miles.
- restrictions on awards such as the fact that once a ticket was issued, you could not return it to your account for re-credit.
- I think they only served about 70+ cities in the U.S. in 1985.

My point is that i think once one factors in these and other things - that perhaps we're better off with the system today. I know i appreciate the elite bonuses, the credit card miles and the idea that my miles don't expire. I really appreciate the alliances and the fact that AA now flies to Colorado Springs which it did not do in 1985. And of course, while it may cost me a few dollars, i do like the idea that i don't have to eat an award if i had to change my mind about going on an award trip.

Let's say you are a Gold member earning 100% bonus for elite flights. Does not that mean that the two unrestricted coach seats 50K vs. 100K are even in what it would take to "earn" them? As well, since we do now have a chance to redeem those two coach tickets at Saver levels (some 83% of awards redeemed are at the Saver level) it would seem that the difference between Saver and unrestricted is nil.

But as i was trying to point out, you really can't compare these two periods and today i think that i am better off with the current situation (see above notes) than i would have been in 1985. But that's just my own personal situation.

Again, no argument from me and i will continue to urge the airlines to adopt some sort of base for even Saver awards.


Originally Posted by jmoreita
Randy,

Will you look at a 1985 AA award chart and tell me how many miles were required for two unrestricted coach class domestic awards (award code 50A), and how many miles were required for two first class unrestricted domestic awards (award code 75A).

You are correct that ther wasn't a 25K award, but you could get two unrestricted coach tickets for 50K. Today those same two unrestricted coach tickets would require 100K.

And you are correct that there wasn't a 45K first class domestic award. But you could get two unrestricted first class tickets for 75K. And now those same two tickets would require 180K.

I don't think we're all looking at this as a snapshot or "right now". And many members of this board have been members of the AA program since the early 80's.

If I'm wrong please educate me. Because I' ve seen several articles and posts where you state that awards are now at the same level they were when the programs first started.
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Old Feb 14, 2006 | 2:35 pm
  #38  
 
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Randy,

I guess I'm just missing the point here.

Are you saying that because we now receive bonuses miles for being an elite member that 50K in 1985 is the same as 100K today? Because in 1985 I do believe that I received a 100K "threshold" bonus upon reaching 100K BIS miles.

If you want to tell eveyone that there are more ways to earn miles today - you are 100% correct. But when you say that two unrestricted domestic coach tickets awarded for 50K in 1985 are the same as two unrestricted coach tickets issued today for 100K IMHO you are 100% wrong.

Two unrestricted domestic first class awards in 1985 required 75K, and today those same two tickets would require 180,000 miles. How is that the same?

Are there different rules for the tickets - yes! Some better, and some worse.
In 1985 you had the certificate in your hand, and if you wanted to leave tomorrow there was no expedite fee. There was no phone booking fee. And chances are depending upon the award that you redeemed you also had a hotel and car rental voucher in you pocket.

In 1985 two Business Class tickets on TWA to Europe required 90K, whereas today most airlines would require 200K for their saver awards, and some (DL) would require as many as 500K for two unrestricted Business Class seats to Europe.

How can you keep saying that award tickets today require the same mileage as in the early days of the programs?

You are correct that there was no 25K award, as you had to redeem 50K for two tickets (they did not have to travel together though).

Were the programs too generous in the eary days YES, as I flew from Houston to Oklahoma City twice and received a First Class ticket to Hawaii (during the Ultimate Special offered by AA) in addition to my mileage and bonuses. But IMHO it's wrong to say the awards today require the same mileage as in the past.
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Old Feb 14, 2006 | 3:22 pm
  #39  
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Originally Posted by dhuey
From the airlines' perspective, the Maverick awards (have you registered this trademark?) stand a good chance of affecting high revenue customer behavior. If you are at the margins of whether to pay for J, as many businesses are, then any new program that promises to increase the likelihood of getting into J on an award or a mileage upgrade tilts the decision away from paid J
Precisely. The airlines don't care about how many J seats will go out empty: they care bout whether YOU will buy a J seat. One thing's for sure: if you redeem the miles you won't buy the seat.

This same reason explains why standby awards won't work.
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Old Feb 14, 2006 | 3:25 pm
  #40  
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What MIGHT work, however, is a Priceline model. You bid a number of miles, and the airline says yes or no and tells you what lousy flights they picked out for you. Unsuitable for most business travel, but OK for leisure tickets. Doesn't displace J revenue. This last point is the sine qua non of any new model.
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Old Feb 15, 2006 | 7:26 am
  #41  
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Originally Posted by nsx
Precisely. The airlines don't care about how many J seats will go out empty: they care bout whether YOU will buy a J seat. One thing's for sure: if you redeem the miles you won't buy the seat.

This same reason explains why standby awards won't work.
While a straightforward standby award ticket would be wonderful for members, I agree that it is a major revenue threat to the airlines, hence a non-starter.

Ironically, it is precisely the conditionality (or as some keep insisting here, the complexity) of the 'Maverick Award' that would make it reasonable for a FFP to roll out as a test.

* limited to top-tier members
* limited to flights where J cabin has only 50-75% sold by 7 days prior to departure
* limited to 3 or 6 J seats being released
* limited re-accomodation options, if flight ends up overselling on day of departure

* For those concerned about members foregoing buying J seats to play the 'Maverick award' lotto and hurting airline revenues, then I suppose (very reluctantly) that this type of award could be limited to 2-3 redemptions per year per member. By capping the number of 'Maverick award' redemptions, therefore caps the airlines potential revenue loss.

This is a niche award; its not meant to appeal to large consitituency. FFPs keep talking about how to better customize their programs.

I don't see this award appealing to a member who already buys J seats; those folks demand the certainty of flight schedules and COS and don;t have the time to be checking on load factors as the 7 day 'Maverick award' window looms.

Rather, this award is for the more 'experiential' crowd; dare I say FTers, who are willing to forego nonstop (or even onestop!!) routing to snag a J seat; who really look forward to and savor being in the front of the bus; who have the chops to assess the chances of that 'Maverick award' remaining available until day of departure; who frankly are not typically qualified or interested in paying for J class (even Z fares!!).

In short, it's for the folks who, if they redeem a 'Maverick award' and hopefully can use it or have a pleasant re-accomodation, they will tell plenty of others about. Quasi-opinion leaders. I think the FFPs could desperately use these types of ambassadors out there to quell the general cynicism and mistrust about FFPs.

Last edited by beaubo; Feb 15, 2006 at 7:55 am
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Old Feb 15, 2006 | 3:05 pm
  #42  
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I think that the most crucial point that Randy and some others brought up is the idea of having a "base" for saver awards. The way the current system works, you basically ask the airline for a "saver" seat and they (like that infamous commercial) often (seemingly always) say "NO". Because the capacity control system is entirely closed, for all we know, they may have the whole plane closed to awards until they feel like opening them. For example, if Ford sold cars for $20,000 on most days but other days they would cost $10,000 - why would anyone ever pay the $20,000? Something interesting that I heard about airfares which is equally applicable to these awards is that because the fares and determined by a system that to an outsider is either random or manipulated, that dilutes the value of the product and customers are only willing to pay prices that are considered at least reasonable. It also is not cool when you have to book on a day like a Tues or Wed to get the ticket. It simply is not worth it to me to travel on that day and not be able to take advantage of my weekend to maximize my travel time. I do value my vacation time more than money.

The result of all of this is that while I have and maintain accounts with the airlines, I focus my most of my earning in SPG because I know that I can always use the points easily. It is nice to know that I can get a room if one is available, and not only that, but I can cancel the award rez up to the day of or before WITHOUT penalty. The airlines give me a penalty for talking to a rep to make the reservation, give me hassle to use the miles, many of them give me a small window to confirm the flight, and then give me a penalty should I cancel.

That being said, I did secure tickets to Hawaii with only 4 months notice. I was lucky, but it took many phone calls and several hours on the phone and was quite stressful. For all of the aggravation to do this, I can see why some people have already thrown in the towel.
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Old Feb 15, 2006 | 7:54 pm
  #43  
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Originally Posted by beaubo
Ironically, it is precisely the conditionality (or as some keep insisting here, the complexity) of the 'Maverick Award' that would make it reasonable for a FFP to roll out as a test.
The name of the game to avoid revenue displacement is to destroy the value to the business traveler. Weekend stayover requirements are the classic example. Priceline's opacity as to time of day is another.

Your proposal destroys value by not guaranteeing a J seat (something I know you are particularly fond of), but it does guarantee coach accommodation. The fact that the coach accommodation is at double the normal mileage makes this acceptable to the airlines.

All in all, it's a reasonable approach for J awards. But the real nut is what to do about coach awards? There an opacity-based approach might be viable.
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Old Feb 16, 2006 | 8:34 am
  #44  
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Originally Posted by Randy Petersen
OK, go ahead and educate me on your expertise with the reality tour thing.

The point I was making and apparently not to your satisfaction, was that I've been doing this for 20 years now and (full-blown member for the full 25 years of these programs) perhaps that is the difference in perspective. Perhaps you'd at least acknowledge that. When these programs were introduced nearly 25 years ago, there was no such thing as a 20K or 25K award. That was introduced nearly 8 years after their introduction and only as a balance against introducing expiring miles - miles which interesting enough with the larger programs, expired in three years no matter what kind of activity you had. Thus, the no-capacity award I was referring to was the original and "standard" award.

The confusion might be because of my historian view of changes, rather than a snapshot on "right now."

I'm sorry I do not know as much as you. Guess I've got a lot to learn. And it just may be a matter of semantics since some airlines use the term "standard" at the 40/50K level and others use it at the 20/25K level. But whatever it is, I'll look forward to learning a lot more from your posts.
Randy, with all due respect, I dont believe my earlier post mentioned (or even implied) anything about your expertise or your experience with FF programs, nor did I make any statements claiming I know more than you. In fact, in the course of racking up some 4000+ posts on FlyerTalk over the past seven years, Im fairly certain there are at least several posts where I extolled your expertise / experience. I would be foolish not to acknowledge the expertise / experience of someone whose businesses are built on all things miles and points, and who deals with frequent flyer topics on a daily basis.

With regard to the issue at hand, it isnt that Im not satisfied with your response. I just disagree with the view, all semantics aside, that double miles awards are the standard award. I certainly appreciate your input on the historical changes in award costs as well as other program changes, although Im not sure that newer members to FF programs are concerned with anything other than current (or future) award costs. When I look at awards, I see the airlines actively advertising award travel at 25K miles (U.S. domestic coach), not 50K miles. The credit cards firms that offer miles tied to the FF programs do the same. When people discuss awards here on FlyerTalk, the almost universal starting point of the discussions is the 25K award (or other capacity controlled award levels), not the 2X miles awards.

By the way, I think your idea on a base for saver awards is excellent. Hopefully, some of the programs will embrace and move forward with this concept.
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Old Feb 16, 2006 | 9:53 am
  #45  
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Originally Posted by MileKing
I think your idea on a base for saver awards is excellent. Hopefully, some of the programs will embrace and move forward with this concept.
With the advent of capacity controls for Southwest awards, someone on the Southwest forum suggested that award availability be made equal to availability in one of the lower fare classes. Southwest has only a handful of fare classes, all of which are shown simultaneously when you make a paid reservation. Availability of discount fares is familiar and reasonably predictable for frequent travelers.

The current situation on most airlines, in which saver award availability is far lower than even the lowest paid fare class, makes saver awards a bad joke, IMHO. Redeeming a summer saver award to Europe was once merely a matter of timing, but now it's virtually impossible.

I vote for whatever inflation of award levels is needed to restore award availability equivalent to that of deeply discounted coach fares.
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