Nonsense?

I love the FF programs, despite the difficulties and the devaluation! And I think Joe B is an excellent travel writer.

Yet, as noted, keeping an open mind never hurts!

-Mark

I think you are wrong. These programs offer no competitive edge simply because evry carrier has one. NOT having a program would put a carrier at a disadvantage, but having one doesn't help attract NEW customers. If there were no programs, or if all the major carriers offered reciprocity, then everyone would fly on the most advantageous flight to their intended destination regardless of which affinity program they belonged to. That would lead to less connections, less handling, less runway, airspace and terminal congestion, and more effciency
leading to greater profits. Let each carrier recognize the other's elites! Or let each carrier codeshare on each other!

So long as you don't mess with my SPG status and its perqs, you can take the rest of your programs away. Restricted upgrades, high fares, imposssible to use miles... to hell with them.

Please, SW, PLEASE come to MSP. I pledge 50 segments a year!

I would agree that having a FF program does not help with getting new customers and NOT having a FF program would put a carrier at a disadvantage. However, since "...every carrier has one", the airlines could be considered to be at parity with each other right now. Therefore, some of them SHOULD already be doing the things (like competing on service) that Joe B. mentions in his article. But it sure doesn't seem like they are. Why would eliminating FF programs suddenly change this? Fact is, it wouldn't change one thing.

Further, if the FF programs were such a drag on profits, they would be eliminated by each and every airline almost immediately. That isn't happening either so we can conclude one of two things: 1. That FF programs are profitable in their own right for each and every airline and thus eliminating them would reduce profits (AA is the only airline I am aware of who has made a statement to this affect; the others have been mum)
2. That some airlines run a profitable FF progam (i.e. AA) and others do not. If so, this puts the profitable FF progam and thus the airline with the profitable FF program in a much better competitive position. It suggest that a FF program WOULD be a competitive advantage.

It seems clear to me. Although I like and agree with most of what Joe B. writes, he is dead wrong on this one.

The Economist (not the WSJ) recently ran a stat from Randy that if FF programs ended today, it would take 23 years to burn off the outstanding miles assuming current usage rates.

FF programs are brilliant - the airline creates their own currency, and then sets the rules:
- Mostly non-transferable
- Sets capacity controls
- Sets transfer ratios
- Will sell miles directly, but will not buy
- Charging additional fees to use your own miles

A similar example is a casino. You can get all the chips you want, but you can only use them to play that casino's games, by that casino's rules. Now imagine if you had to pay a $75 fee to use the teller window.

As long as the public thinks that miles are worth 2+ cents, the airlines will keep churning them out. It is becoming more obvious by the day that they are worth increasingly less, as airlines add to the restrictions. I have relatives who call me and ask me why they cannot use the miles that they have been saving up for years for their upcoming vacation. They are learning the hard way - it's a one-way scam.

[This message has been edited by Tino (edited 05-22-2002).]

Slightly off-topic, but just to quibble with your example -- the times I've been at casinos in Lake Tahoe, I've had no problems bringing chips from one casino to another one -- they just change them into their own currency right at the table. (maybe they're really alliance partners and I was doing a codeshare, though )

(of course, this in no way affects the main argument here...)

Dan

The FFPs all pivot on a key assumption...there are a empty seats going unsold.

Pre-9/11, that seemed a reasonable assumption. But with most carriers having cut back schedules up to 30%, all of a sudden,there is much more parity between supply and demand of revenue seats...hence fewer empty seats left unsold.

If you really think about it, what business PURPOSELY would want to operate at undercapacity? The airlines are belatedly figuring this out!! I can't see any incentive in the forseeable future to significantly increase seat capacity. So, the FFPs will be the first to be short changed in this new environment.

I've been using FF awards for years for family travelling with me, and I cannot recall a flight where volunteers were NOT requested. That is to say, FF award seats do not come out of unsold inventory. That is a myth!

The airline has the option of converting the FF liability to an actual seat liability at its own choosing.

A FF mile deferred forever is not a liability to the airline. They know this as they continue to dole out 5 times the number of usable miles every year.

They could hand out 1,000,000 miles to every passenger this year, maintain the current number of available award seats, and the financial liability would not change!

What about this crazy idea... we've established several probable concepts... FIRST, FF programs do not give any one carrier a competitive advantage since they all have one, but not having one would place a carrier at a major disadvantage.
Second, we all at one time or another go out of our way, taking ineffecient routings or unnecessary connections to saty with our chosen carrier(s).

Now I am a Deltamaniac. Suppposed I wanted to go BOS-DEN. I could take DL via SLC,DFW, ATL or CVG. All rather inconvenient compared to a UA nonstop even though DL would upgrade me to FC. What if the majors all "code-shared" with each other? In other words, DL sends me over to UA for that BOS-DEN flight with my Platinum Medallion perks intact and accruing DL base miles. And the UA maniac that wants to fly from BOS-ATL would take a DL nonstop with his elite privileges being recognized by DL.

Advantage for customers: Quicker, more convenient trips with less connection anxiety and missed connections.

Advantage for airlines: More efficient to handle customer once without connection, costs of misconnects, less runway traffic and less airborne congestion. Airlines would be more efficient and make more $$.

In other words, reciprocal agreements amongst some or all majors to recognize each other's elites and their privileges on their nonstop routings. That would allow FFs to find the most logical routing even when their chosen carrier does not provide direct service. Pretty radical... but I think the concept has merit.

[This message has been edited by RobertS975 (edited 05-22-2002).]

There is an upside limit (in some sense) to the number of award seats someone can use in a year. Most of us do not have unlimited time to spend jetting from place to place. We have jobs that generate the income needed for other costs (hotels, rent/mortgage, food, cell phone bill, etc.) that in most cases can't be paid for with miles. People who do have a significant amount of free time and financial resources probably are not that concerned with FF miles. Thus, doling out more miles is probably not going to drastically alter the award seat supply/demand function since the recipients of the additional miles are likely to be people, myself included, who already have more miles than they can use. Just because I suddenly have another 500K miles doesn't help if I don't have the time or financial resources to take additional trips.

To some extent they are a liability.

If I wanted, I could transfer miles to Hilton, then exchange for merchandise. Granted, some of the exchange rates are pretty poor, but this is how they limit the number of miles exchanged for merchandise - by giving poor conversions.

Otherwise, everyone would be getting tvs and bicycles for their miles, which would cost the airline cash.

Wow, talk about anti-trust problems!

There may be some anti-trust problems, but how did CO/NW arrange their cooperation?
And the DL/UA mileage accrual deal is similar except for one vital element... the DL miles that I earn by flying on UA do not count towards status... that's a deal breaker for most of us.

Just curious: then why do you have almost 3,000 posts on a bulletin board that deals mostly with frequent flyer programs?