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US/AA merger- MASTER DISCUSSION THREAD/incl 'when will US leave STAR'

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US/AA merger- MASTER DISCUSSION THREAD/incl 'when will US leave STAR'

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Old Dec 8, 13, 9:45 am   -   Wikipost
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There is an existing thread in the AA forum that may be useful to US and AA Flyertalkers:
US-AA Merger: Just the Facts thread

As facts become posted, that should be the place to look.

Merger discussion, speculation, and other questions can be directed here, or the similar thread in the AA forum:
MERGER: US and AA 9 Dec 2013 and implications for AA flyers (new)

AA - US Merger Agreement / Announcement / DOJ Action Discussion (consolidated, and now closed to new posts)
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Old Nov 16, 13, 8:43 pm
  #2236  
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Originally Posted by dsquared37 View Post
As opposed to modern day management who consistently look out for employees, pax and the long term good of the company. Oh right, they simply look at short term profits and 'what's in if [sic] for me".
As if they're mutually exclusive?
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Old Nov 16, 13, 10:26 pm
  #2237  
 
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Originally Posted by McFlyPHL View Post
... and that's exactly what the idea of qualifying by revenue rewards. So why is that an issue for anyone?

Again, read what I wrote. I said I'd like to see spend as more than just a disqualifier. It shouldn't make a difference to US whether I spend $15k on 50 segments and 60k miles of flying or if I'm spending it on MRs. The whole point is that you want to offer the most benefits to the customers who exhibit the behavior you want to reward. The only losers in a revenue qualifying scheme are the low-spend, high mileage fliers - those who take more out in benefits than they put in in cash.
You said the same as before - qualify on total annual spend - segments/miles don't matter. Which is precisely my point - miles/segments do matter. A low fare purchaser could have more spend than a premium purchaser who doesn't fly as many segments/miles while costing US more. That isn't the behavior US necessarily wants to reward. They'd prefer the high spend few segments/miles customer - spend as little as possible on that customer (few segments/miles) while taking in the most revenue. And that's where trip spend comes in - how much does the customer spend per trip vs how much is spent on that customer per trip. From US' perspective the flyer with the biggest difference is the best customer.

Why the heck wouldn't the airline want to incentivize with a scheme that was 100k/120 seg/ $15k as qualifying thresholds? In that instance, there really aren't any losers.
No losers means ignoring spend per trip - it's just a different twist on what exists now. $15k for 100k miles/120 segments is easy to accomplish - $125/segment is all it takes. It doesn't weed out the low fare/high miles/segments flyer who may be a barely above breakeven customer.

Jim
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Old Nov 16, 13, 10:32 pm
  #2238  
 
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Originally Posted by dsquared37 View Post
As opposed to modern day management who consistently look out for employees, pax and the long term good of the company. Oh right, they simply look at short term profits and 'what's in if [sic] for me".

Rather myopic view you're expressing.
On both sides of the negotiating table...

I merely talked about employees because that's what someone mentioned - why were the employees so strongly for the merger. He/she didn't ask why employees and management were so strongly for the merger.

Jim
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Old Nov 17, 13, 7:10 am
  #2239  
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Originally Posted by BoeingBoy View Post
On both sides of the negotiating table...

I merely talked about employees because that's what someone mentioned - why were the employees so strongly for the merger. He/she didn't ask why employees and management were so strongly for the merger.

Jim
Fair enough in that case. ^
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Old Nov 17, 13, 2:29 pm
  #2240  
 
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I'm thinking about buying a US ticket on 01/09. Any chance they'd still be in *A by then?
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Old Nov 17, 13, 2:51 pm
  #2241  
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If the Jan 7th co-operation date being mentioned is anything to go by, US would still be in *A on the 9th (but you could optionally credit to AAdvantage rather than DM).

Look upthread- reports have them exiting *A in the first ¼ 2014, but "hopefully" by the end of January.
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Old Nov 17, 13, 3:53 pm
  #2242  
 
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Originally Posted by BoeingBoy View Post
$15k for 100k miles/120 segments is easy to accomplish - $125/segment is all it takes. It doesn't weed out the low fare/high miles/segments flyer who may be a barely above breakeven customer.
I doubt there are a ton of low-revenue, high-segment flyers, but there are probably more low-revenue, high-mileage flyers. $15k for 100k miles is 15CPM, which is actually reasonably high. That would be $783 for a BOS-LAX round trip, for example; AA's walkup fare on that route is only $1,050.

That said, DL and UA have both set the 100k revenue bar at $10k -- which seems like a more reasonable threshold. If the airline isn't profiting enough to reward a $10k per year customer, there's probably something structurally wrong with fares.
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Old Nov 17, 13, 4:05 pm
  #2243  
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Originally Posted by dtremit View Post
I doubt there are a ton of low-revenue, high-segment flyers, but there are probably more low-revenue, high-mileage flyers. $15k for 100k miles is 15CPM, which is actually reasonably high. That would be $783 for a BOS-LAX round trip, for example; AA's walkup fare on that route is only $1,050.

That said, DL and UA have both set the 100k revenue bar at $10k -- which seems like a more reasonable threshold. If the airline isn't profiting enough to reward a $10k per year customer, there's probably something structurally wrong with fares.
United used to have a program a while back which gave someone elite status for buying a travel card. The value on the card was only valid for a year. And the status you were given was tagged to how much value was loaded onto the card. I want to say that top status was given to someone who purchased a $20K travel card. But I'm not certain of that figure. The problem I have with what DL and UA are doing (and probably the new AA as well) is that it shoots a hole in the benefits of being in a Global Alliance. Unless your ticket is purchased on UA or DL ticket stock, you don't get any EQD earnings. This is probably because of their IT systems' limitations. But that still doesn't make it any better. They really should just set a minimum spend period (for any elite level). Just as there is a minimum amount of segments (or miles) needed to be flown on the home carrier. Like a miniumum of xxx dollars needs to be on its own carrier in order to attain any elite status. And btw, DL's revenue bar for top status will be $12,500.

Last edited by Fanjet; Nov 17, 13 at 4:13 pm
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Old Nov 17, 13, 5:29 pm
  #2244  
 
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Originally Posted by azepine00

the only nonsense here is suggesting TOD exist in a meaningful way - in all my flights as an elite as well as statusless family/colleagues i have not seen anything resembling TOD. TOD on UA is an urban myth.
I've had several instances of upgrades being offered for $80-$200.
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Old Nov 17, 13, 5:33 pm
  #2245  
 
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Originally Posted by BoeingBoy
No losers means ignoring spend per trip - it's just a different twist on what exists now. $15k for 100k miles/120 segments is easy to accomplish - $125/segment is all it takes. It doesn't weed out the low fare/high miles/segments flyer who may be a barely above breakeven customer.

Jim
I think you're forgetting that taxes, fuel surcharges, incidentals and other fees do NOT count towards EQD/MQD. Add those in and you're looking at a significant jump in prices in order to qualify. Also, partner metal doesn't count.
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Old Nov 17, 13, 5:38 pm
  #2246  
 
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Originally Posted by Fanjet
...

And btw, DL's revenue bar for top status will be $12,500.
That's for Diamond, which has been 125k miles since the 2007 merger. I think some would argue that setting the bar higher at DL for top status helps thin the ranks a bit. I happen to think 100k is good enough (even though I'm a 125k+ per yr flyer). DL is also the only legacy without an unpublished top tier similar to CK/GS.
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Old Nov 17, 13, 5:45 pm
  #2247  
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Originally Posted by flyingmusicianlax View Post
I think you're forgetting that taxes, fuel surcharges, incidentals and other fees do NOT count towards EQD/MQD. Add those in and you're looking at a significant jump in prices in order to qualify. Also, partner metal doesn't count.
Fuel surcharge is part of fare according to the DOT. It's going to count towards MQD/EQD. Both DL and UA confirm carrier-imposed surcharges will count.

Partner metal qualifies when DL-coded, and may count for certain carriers when DL-ticketed.

http://www.delta.com/content/www/en_...n-dollars.html

Everything UA- and Copa-coded counts. Partner flights count when UA ticketed.

http://www.mileageplusupdates.com/faqs.html
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Old Nov 17, 13, 6:21 pm
  #2248  
 
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Originally Posted by flyingmusicianlax View Post
I think you're forgetting that taxes, fuel surcharges, incidentals and other fees do NOT count towards EQD/MQD. Add those in and you're looking at a significant jump in prices in order to qualify. Also, partner metal doesn't count.
Not at all. 15 cents/mile for the fare isn't all that inexpensive these days, especially for the segment flyer who flies mostly/all under 500 mile segments. Mainline yield was 14.61 cents and Express was 30.22 cents in the 3rd quarter so the short haul flyer is paying over 15 cents/mile and the longer haul averages not much below 15 cents/mile.

I've said it several times over the last several years - eventually the legacies will reward the profitability of a passenger. The systems probably can't do it now, but whether miles/segment or spend both are just very rough proxies for profitability.

Jim

Last edited by BoeingBoy; Nov 17, 13 at 6:30 pm
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Old Nov 17, 13, 6:28 pm
  #2249  
 
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Originally Posted by BoeingBoy View Post
You said the same as before - qualify on total annual spend - segments/miles don't matter. Which is precisely my point - miles/segments do matter.
Frankly, the total distance/segments flown really don't matter. What matters is the absolute margin from a given passenger over a given time period (defined by the airline as a year).

If you read back to post 2212 in this thread, I said the following:
Personally, I'd like to see them use spend as a qualifier (not just a dis qualifier). They really want to reward margin over miles or segments flown... if I spend $15-20k/yr, why do they care how many miles or segments I spent it on? It's in their interest to have it be on as few flights as possible.
Nowhere did I say that I'd favor eliminating qualification on miles or segments. To restate for you, my position is that qualification based on miles OR segments OR spend allows them to drive certain behavior. It also opens up the possibility for the status conscious to do "spend runs" vs. traditional MR's or segment runs. A spend run would inherently be more profitable than an MR.


A low fare purchaser could have more spend than a premium purchaser who doesn't fly as many segments/miles while costing US more. That isn't the behavior US necessarily wants to reward. They'd prefer the high spend few segments/miles customer - spend as little as possible on that customer (few segments/miles) while taking in the most revenue.
A higher spend flyer who flies less but spends more actually costs LESS. The lower spend flyer who already qualifies by miles segments is untouched by allowing qualification based on spend.

For example, if someone who's a "low fare purchaser" spends $400 each on 20 transcons (enough, roughly, to qualify for CP) and is upgraded on 80% of those flights, then not only does that passenger provide a low yield but they also "cost" 16 upgrades, not to mention miles/missed bag fees/etc. This passenger winds up spending $8,000 to make CP but comes with the cost of 20 flights and their associated benefits.

Now, take someone who spends $800 a trip, but only flies 10 trips a year on the same routes. They still spend $8,000, but the cost to serve that passenger and provide them benefits is half because they only fly half as often.

The margin on passenger A above is less than half of the margin of passenger B. That's why you'd want to have as many "passenger B's" as you can while minimizing the cost to serve "passenger A's". Finally, even if passenger A flew 25 trips (25% more than passenger B), Passenger B would STILL provide more margin.
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Old Nov 17, 13, 6:34 pm
  #2250  
 
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Originally Posted by Fanjet View Post
United used to have a program a while back which gave someone elite status for buying a travel card. The value on the card was only valid for a year. And the status you were given was tagged to how much value was loaded onto the card. I want to say that top status was given to someone who purchased a $20K travel card.
...back in the day - probably 5-6 years ago, AA offered something similar. The thresholds as I've been able to find them on the google machine were:

$2,500 AAdvantage Gold®
$5,000 AAdvantage Platinum®
$10,000 AAdvantage Executive Platinum®

That essentially made spend a qualifier if you could pay it all up front.
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