Delta claims that revenue spent is how they determine the Medallion Qualifying Miles but they assumed that the high dollar amount spent reflects a higher class of service (ie YBM vs KHQ vs LUT) but this does not work in practice. If you buy a ticket at the last minute, you may be paying $800 for a K class fare vs someone paying $250 for the same K class 30 days in advance.

Would we benefit if they started logging the "rewards/points" as dollars instead of miles also. It would make the value of the "rewards" very easily transferable to other products outside the travel industry that, apart from in the US, seems to be limiting the worth of rewards. This is especially interesting for people who travel so often that the last thing they want is another plane trip/night in a hotel.

Even for people who are after flight rewards, airline Revenue Management Systems already forecast the value of the next seat of an aircraft, called a "bid price", which you can determine roughly by match the fare to the last available booking class. Thus airlines could determine the value of a seat to deduct the dollars from the account, thus technically you could get a seat on any flight if you were willing to "pay" at the price. Or even better use the SouthWest model of get a free flight (or a flight sector for international long haul trips) after x many trips.

Still not sure but an interesting point?

A dollar is a dollar and if I spend it on another airline, it's lost. The rewards keep me coming back.

If you're paying $9k per ticket in F, what exactly do you want airline status for? I believe that was Efrem's point. Status is most valuable to people who have mixed travel patterns, with some discount coach tickets thrown in. People who pay the high premium fares don't get much out of FF program anyways, so why bother with the incentives?

To not be hassled -- ever, for any reason. To ensure that during IrOps, that a seat will be available. It might surprise you, but the US majors generally treat their FFers better than their premium passengers -- not that the US majors treat their FFers all that well. And yes, the miles are nice too. I like being able to give away tickets. I like the option of occasionally flying free.

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"They that can give up essential liberty to obtain a little temporary safety
deserve neither liberty nor safety." -- Benjamin Franklin

I'm in the food business and our frequent shopper cards are based on $$$. Not trips to the store. I agree the FF plans should have been developed based on $$$. Too late now I don't think a change is possible. In the days before official FF plans weren't unwritten plans based on $$$?

BA will be doing it in North America starting 7/1 (well kind of). Basically they won't give any status to anyone paying less than (about) $35000-$4000 for a ticket). Almost no miles either (25% of actual miles flown).

BA couldn't have screwed it up any worse for North American members. Anyone who follows frequent flier programs at all and is aware of what BA has done will run elsewhere.

Cheap economy passengers get nothing.

Status is based on tier points. Even those who fly in F and C are getting whacked. I used to earn 240 tier points when I flew in F from HKG to LHR. Now it will only be 180. Harder to make status.

Even though I would continue to earn miles, the award redemption levels have sky-rocketed. I used to fly LAX-LHR-SYD and return in F for 150,000 miles. Now it's 420,000 miles for the same trip.

I just redeemed my last free ticket (I have 200 miles left in my account). So long BA. You couldn't have done a better job of chasing me away.

How should a program work? Miles and status based on class of service paid. First class tickets earn double miles. Business 1.5. Higher fare tickets 1.0. Cheap economy .5. All count for status.

Welcome to Qantas Frequent Flyer - how you earn status. You can only earn status by flying with the airline on revenue tickets. An upgraded discount Y ticket will only earn status on the fare paid, not the class travelled. If you earn 10,000,000 miles from (say) Kellogg's vouchers, it will be meaningless for status purposes on QF. Only paid travel counts.

Qantas is one of the world's most profitable airlines. http://www.flyertalk.com/forum/smile.gif

This appears to be a particularly American phenomenon. Here, you have to buy a certain amount at Safeway to earn the coupon for the discount and the coupon lasts for a limited time, so you have to keep spending at Safeway. Safeway in the US gives anyone with a Safeway card discount petrol. Why? I don't know. For personal purchases, this makes no sense to me.

I see at least five problems for the airline industry if they tried moving to a pure revenue-based system:

1) How to calculate the price, especially on consolidator tickets. Is it:
A) The price the passenger paid?
B) The price printed on the ticket?
C) The price the travel agent paid to the airline or consolidator?
D) The price the consolidator paid to the airline?

The airline knows B and D and possibly C, but doesn't know A. The passenger knows A and B but not necessarily either of the others. The only one that both sides know is B, yet that may be much, much higher than any of the others and would make some consolidator tickets worth a lot.

2) How do you know how much a ticket on a partner airline cost? All the problems of point (1) are combined with dealing with another company to obtain the value.

3) What conversion rate do you use for foreign currencies? (And, if it's against the passenger's favour, how much customer support budget to you spend resolving complaints about incorrect crediting?)

4) There would be no incentive for mileage runs any more, so lots of seats would simply not be sold.

5) It would be in the interests of employees travelling on company business to delay bookings, etc, to ensure that the most expensive tickets were bought. Currently, employees who want to maximise FF points simply want to travel extra sectors and this doesn't cost their employer. Employers could find a revenue-based FFP extremely expensive for them and would probably avoid an airline which did this.

I'm accumulating FF miles with KLM based on flying the same [all economy] sectors 3 or 4 times [return] a month. Sometimes my ticket is £80, sometimes £380 and other times anywhere in between. But I always get the same miles. Obviously I'd rather pay the £80 but surely KLM would rather I paid £380.

My own opinion is that sectors/miles flown should determine status and that revenue should determine rewards. i.e. If two people both fly the same sectors every week, but one always pays £80 and the other always pays £380, then there is no question that both are 'frequent flyers' and should have the inflight benefits that go with status - lounge access, select seating et c. The things that theoretically cost the airline no more in cold hard cash. But the person who spends should nearly 5 times as much can still only get the same number of free flights or upgrades, which to me doesn't make sense.

From the airlines' point of view, the question is: what type of reward scheme will encourage the most people, who have a choice of airlines in a given situation, to choose us?

Most of the time, in these situations, most major airlines are roughly competitive. If you have a month's notice and a Saturday night stay for one, you have it for all of them; if you want a last-minute F fare on one, you also want that on all of them. So, assuming an airline wants to encourage you to choose it no matter what kind of fare you're buying, it should offer some sort of reward for all of them. The amount of reward (FF credit) should depend on how much it wants you to fly with them rather than with the competition or (in the case of mileage runs) not fly at all. When the fare gets so low that they can honestly say "we don't care," that's where rewards should stop.

Example: I'm flying BOS-SBA (that's Santa Barbara, Calif. for those who don't memorize airport codes) soon. AA's fare was $20 more than United's and its schedule was slightly worse (longer layover in LAX westbound). The benefits of flying AA, in my situation, were worth more than that so I paid the extra $20. Absent an FF program with decent benefits for discount economy passengers, I might have gone the other way. That's incremental revenue to AA, exactly what FF programs (from the business standpoint) are about.

Actually, this is what AA and UA tried from the beginning and the effect was that they lowered the perceived value of the premium cabins to the cost of a cheap ticket + upgrade.

People will pay F fares for say CX and SQ because they know that's what it costs to sit in an F seat. AA and UA can rarely sell F fares because everyone knows that they can buy a cheap fare and upgrade.

So, the trick is to do what Rfrem wrote, but without canibalizing one's premium products.

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"They that can give up essential liberty to obtain a little temporary safety
deserve neither liberty nor safety." -- Benjamin Franklin

TWA used revenue in addition to segments and miles as a method of qualifying for elite status. They did not go bankrupt because of this decision -- they went bankrupt because Cark Icahn pillaged the company between 1986 and 1993.

Greg