walkerci

They sure do.

1. They will sell them at a loss to prevent them from rotting on the shelf.
2. They will sell them at a loss to get you in the store knowing that most people will buy other things while they are there.

jjmoore

Here is my 2 cents: Mileage running for the sake of getting status will be done and gone come next year, but the endgame (for some of us) is lifetime status (I still have a ways to go, but have this firmly in mind)... I still see value in mileage running for that purpose combined with going somewhere that I could spend a couple days.

Spending $10,000 next year is a non-issue with my business travel that is coming up, but I am still very much open to running miles in combination with visiting destinations that I would enjoy spending time (SEA, BOS, DXB, SFO.... the list goes on and on).

With that said.... when next year comes, I will still be watching these forums as intently as I have been this year.... but will change my strategy a bit. Keep in mind lifetime status and making sure to incorporate some vacation time when good MR deals come up! Don't forget that accruing award miles is valuable as well, especially with 100% bonus being 1K / GS! These go a long way for family and friends.

By the way, I think the PQD requirements are a great thing for all of us big-time travelers... this will weed out some of the masses of people that have status after next year and will hopefully increase the chances of domestic / int'l upgrades. Happy travels, everyone!

J

OMAguy

i guess i have been doing it wrong all these years - i spend well over $10K on my own dime each year for my travel - it isnt in pursuit of 1K - i spend the money because i want to go places. all along i have not been concerned with this spend requirement - my normal patterns would qualify me.

and yes, if for some reason at the end of the year i was short $50 - i would buy a higher fare (doing a dollar run) - it is plain dumb to pass up the GPUs because you were $50 short...

DaviddesJ

Thanks! And feel free to be all wrong, yourself. Problem solved.

This contradicts your claim that they only sell oranges at a loss when they would otherwise rot and go unsold.

LarkSFO

Buying a higher fare fits my definition of a Dollar Run.

And, I agree with you. I'd do the same if I found myself in this situation.

LaserSailor

I dont think MR will pony up 10k for 1K status - that would be criminally insane. The problem for MR will be that, without 1K status, they will have a big fat puffy bag of ReichDMiles that will be crashing in value as the 10ks will reap the good bennies.

Thats a bit alarmist, but if I were MR that is what I would worry about.

OMAguy

oops - i expressed myself incorrectly before - going back and editing that post

DaviddesJ

What does this mean? UA gives out and redeems billions and billions of RDMs. The MRs are a tiny drop in that bucket, as are the 1Kers. None of these changes seem likely to affect the value of RDMs, at all.

LaserSailor

Pure speculation on my part but I think miles will be highly deflated over the next 5 years moving forward. The top tiers in all airlines will still get bennies, but plat and below will be buying magazines and little else.

DaviddesJ

Why? UA award availability has been usually the same regardless of status. I think most people find that UA value for RDMs is high.

LaserSailor

Just one jerks opinion. If RDM were a commodity, I woud put "strong sell" on them. I don't let either of my balances get over 300k now

flyersky1

There's repeated confusion here on the role of cheap fares, Safeway coupons, etc. so let me clarify. Companies don't (or at least shouldn't if it's done properly) lose money on coupons, sales, discounts, etc. The goal of coupons (low fares) is to incentivize a purchase by a certain group of buyers that have a low valuation of the product and wouldn't buy otherwise. These types of sales are profitable (and would therefore be made) provided that the industry is not perfectly competitive, and that the resale rate (to buyers with high valuations) is not high. When the industry is oligopolistic, the price point is always above the marginal cost if there is a single price. Therefore, there are always buyers that value the product higher than the marginal cost and are not buying. If the company can sell to those buyers at a lower price, it will make a profit, which maybe even higher than the profit made on sales to buyers with higher valuations, depending on the marginal cost for that unit sold. Thus, even if demand changes, there are always opportunities to make money on low fares to buyers who have lower valuations as long as the market is not perfectly competitive (demand is downward sloping). The trick is to provide a hurdle - an obstacle that would make it less likely for high value buyers to purchase low fares and attract only low value buyers. Such hurdles are for example the time spent to look for low fares, the time spent to fly routes with low cpm, the inflexibility of such fares, etc. To repeat, such fares are (or should) always be profitable. That's why they existed for so many years in the airline industry. In other words, Mrunners (low value buyers that wouldn't take the trip otherwise) are a boon for UA, and chasing them away is a mistake. If UA is losing money on these fares, they should not offer them, period. If the above explanation is unclear, google "third degree price discrimination" for more detail.

jpezaris

I'm pretty sure there was an implied OR between those two conditions, not an AND. It doesn't make sense otherwise. But I also didn't see any use of the word "only" as you suggest.

The second condition (selling items at a loss to get customers in the store) is a standard selling strategy called a loss leader in the retail industry. The sales flyers in Sunday newspapers are full of them because it turns out they work quite well.

Syzygies

Well, we all have different motivations, so it's hard to speculate successfully on what other people will do.

As 1K/MM, I've been spending 8k or 9k a year to qualify. While I wish benefits were greater, I work hard to wring the benefits I can out of the current environment. For example, my family is in first each way on our vacation now, which took some exception finagling (*), an ExpertFlyer subscription, status and lots of reading of this board. I want to maintain status.

I can usual only fly to Europe summers, and while I can find the money, in the past I've had sticker shock. The need to make a 10k spend will cancel that sticker shock. So of course I'll be making a dollar run.

I wouldn't presume that anyone else's situation matches mine, but that's how it goes.

(*) NEVER book round trip awards unless you need the allowed stopover, and know all the change rules cold. One way awards are generally more flexible.

DaviddesJ

Can you two fight this out in the ring and let us know who wins?

My money is on jpezaris.

By the way, if you think a bit you can come up with several other reasons why companies often do sell items at a loss. Some of them even apply to UA.