First Class Flying: A Solution

[KCFlyer]

Check their annual report. The cost side of the FF plan is all there. It's way less than the revenue. Not that you'll ever acknowledge that...

Here's a question for you -- given that the airlines, in your estimation, sell seats for gobs less than it costs them to fly them why is it that their loss is just a small % of overall cash flow? There must be something offsetting the huge losses in actually flying planes.

If FF programs are such a drag then ditching them ought to make the airlines instantly profitable -- yet nobody has done that... "But the cockroaches will complain" doesn't hold water -- if it really would make them profitable all the complaining in the world wouldn't stop them.

[post="258828"][/post]​

Tom, has the airline industry changed in the last 20 years?

 

[longing4piedmont]

Tom, has the airline industry changed in the last 20 years?

[post="258829"][/post]​

Do you ever answer a direct question? Do you have a clue? How does the above question even relate?

How you being smoking those dead roaches in your avitar? Which BTW is funny in that it has nothing to do with cockroaches, proving once again you don't have a clue. Do you troll in the tidy bowl forum?

Oh and thanks for the link.

 

[KCFlyer]

Do you ever answer a direct question? Do you have a clue? How does the above question even relate?

How you being smoking those dead roaches in your avitar? Which BTW is funny in that it has nothing to do with cockroaches, proving once again you don't have a clue. Do you troll in the tidy bowl forum?

Oh and thanks for the link.

[post="258830"][/post]​

L4P...so are you saying that the environment the airlines are operating in hasn't changed in 20 years? I'll have to look at a historical chart on the "profits" that those FF programs have taken in the past 20 years. But I have a gut feeling that the overall trend will be in a southward direction.

I'll briefly tell you how my question relates. In the late 70's and early 80's, airlines pretty much were competing on service. True, there was "people express", but it was pretty easy to compete, especially for the business traveller who didn't want to pay to check a bag, or pay for a cup of coffee, or pay for a coke. People Express really did cater to the "leisure market". But in the late 80's and early 90's, competion included several "low cost carriers", which appealed to not only leisure, but business travel as well. And the environment shifted over the next decade to where the driving force is now price. The major airlines could not sit back and pretend it was 1984 and just keep up the perks. Travellers (yourself included) began focusing on price. True, most of the airlines screwed up by offering ultra low fares in markets and hoped they could charge an outrageous last minute fare to offset those losses. But corporate travel departments got pretty good at saving a buck. Yet, the FF programs haven't changed in 20 years, and when an attempt is made to change them, an outcry from "those in the know" - the VFF - arose.

Now, I don't claim to know why someone in Canada would find millions in value in the FF program of a bankrupt carrier, but judging from what I see in the US market, "market share" seems to be a major driving force. And a lot of these airlines want to capture that lead in the coveted "market share"....profits be damned. I don't understand it, but it seems to be important. So maybe this buyer of a Canadian FF plan was looking for a sweet bump in market share. But I don't see much in relation to how it helps their profits.

 

[SVQLBA]

To look at the profitability of an FF program, one can't just look at the increase in revenues and the cost of running the FF program (FFP staff, FFP systems, etc.). You have to look at the complexity costs it drives into the rest of the airline's business. From longer times for CSA to handle check-in, to the opportunity costs from seats taken for award travel (FFPs usually estimate the travel liability -- the cost of the seats taken up -- but, often, not the full opportunity cost), which may not be the same), to training and systems costs to provide reciprocal recognition rights (e.g., within Star).

Complexity costs are a beast to get a handle on, and most legacies do not have a good handle on their true cost drivers -- hence their focus on labor-wage rate cutting, rather than productivity.

 

[TomBascom]

SVQLBA makes an excellent point about cost drivers.

But to answer KC... Of course things have changed. The FF programs have changed hugely as well. They are not unchanged in 20 years -- far, far from it. Not only have the programs changed hugely in terms of benefits (pretty much all in the form of reductions and restrictions BTW KC) but they've also changed tremendously in terms of the revenue that they pull in. For instance 20 years ago third party revenue from the sale of miles was just a gleam in someone's eye -- today it's a very significant contributor to the bottom line. Even SWA has a credit card...

These programs started as simple loyalty programs. Profitability was minimal if even measurable. The trend has been very different from what you say KC.

BTW -- you continue to misunderstand the nature of the initial cockroach uprising. There was no reduction in "perks" involved. It was the proposal to tinker with the earning of miles, particularly "tier miles" that spurred most of the outrage. Some additional outrage was vented over changes to policy such as "use it or lose it; dead or alive", standby fees and so forth.

None of which had squat to do with "perks". Our pal BBB probably would have got away with the whole thing if he had any ability at all to communicate with customers. But his dead of the night sneak attack via fine print on the web site and ham fisted handling of communications; "just like a ball game", and "customers we don't want to have" rhetoric -- KC's favorite I'm sure simply added fuel to the fire at every turn. Quite a lot of Black Tuesday's policy still stands -- and almost all of it adds to the complexity that SVQLBA refers to.

The one thing that they've done lately (ok, it's been quite a while...) that reduces complexity also happens to be a nice plus for preferred members -- they simplified the upgrade program by eliminating certificates and giving everyone an unlimited number of them. That's probably the smartest thing they've done in a very long time. Must have been an accident is all I can conclude...

 

[KCFlyer]

BTW -- you continue to misunderstand the nature of the initial cockroach uprising. There was no reduction in "perks" involved. It was the proposal to tinker with the earning of miles, particularly "tier miles" that spurred most of the outrage. Some additional outrage was vented over changes to policy such as "use it or lose it; dead or alive", standby fees and so forth.

[post="258993"][/post]​

Tom, I understand the cockroach uprising...witness my signature.

 

[TomBascom]

Tom, I understand the cockroach uprising...witness my signature.

[post="259004"][/post]​

Like I said...

 

[KCFlyer]

Like I said...

[post="259008"][/post]​

Like you said:

It was the proposal to tinker with the earning of miles, particularly "tier miles" that spurred most of the outrage

And what's my signature say?

 

[TomBascom]

I read it the first time. I'm not impressed. You're just ducking, weaving and waving your hands.

 

[KCFlyer]

He does that well, especially when he has no facts to back his opinion. Folks like him know the price of everything and the value of nothing.

Hmm maybe he works for US Airways?

[post="259053"][/post]​

LOL...your buddy l4p says that I'm not qualified to post because I haven't flown US in a while, now I "maybe work for US Airways".

 

[TomBascom]

... now I "maybe work for US Airways".

Not a chance! Your style is, however, enough to make me think you might work for, or own lots of shares in, SWA They, rather than US Airways, would be the largest beneficiary of your "suggestions".

 

[KCFlyer]

Not a chance! Your style is, however, enough to make me think you might work for, or own lots of shares in, SWA They, rather than US Airways, would be the largest beneficiary of your "suggestions".

[post="259060"][/post]​

Read closer Tom....I even said that the RR program is a drain on Southwest. FWIW, I closed my position in SWA about a year ago. Besides, SWA stands to gain nothing from cockroach defections - they don't assign seats, have airport clubs, or a first class cabin....remember?

But I remember back when I was a kid in the 60's - back then, medicine to make us better wasn't loaded up with tasty flavors - it tasted like bile. But if we had any hope of getting better, we had to grimace and take the medicine that was prescribed. It's the same today with airline FF plans.

 

[TomBascom]

I didn't say that your advice for SWA was good. I said that your advice for US would benefit SWA more than it would US.

BTW -- medicine has changed a lot in 40+ years. Today it not only tastes better but it also does a much better job of keeping people healthy.

 

[Bear96]

BTW -- you continue to misunderstand the nature of the initial cockroach uprising. There was no reduction in "perks" involved. It was the proposal to tinker with the earning of miles, particularly "tier miles" that spurred most of the outrage. Some additional outrage was vented over changes to policy such as "use it or lose it; dead or alive", standby fees and so forth.

[post="258993"][/post]​

What's the diff? "Tinkering with the earning of miles," assuming it resulted in fewer miles (which is a safe assumption, otherwise you wouldn't have been in such an uproar) = fewer miles = reduction in perks, leading to the cockroach uprising.

 

[TomBascom]

It's hard to keep track of all KC's changes of the subject but if you look you'll find that his initial comment on the topic was that the cockroaches supposedly revolted over proposed reductions in perks. "Perks" and miles are in many cases perhaps indirectly related to some degree but that isn't where he started (check his earlier signature lines...)

In any event BBB's play wasn't a direct attack on "perks". He left all of those alone (upgrade policy, club access, preferred lines, 800# etc, etc...) It was, as you say, a change to mileage earning that might have eventually and indirectly led to a reduction in perks if DM members didn't go along with his ideas about what sorts of tickets they should buy. It would have taken almost two years to have that effect though -- the proposed changes were announced in August to take effect in the new year and would have impacted people's preferred status 14 months after that.

He could have had a success if he had coupled it with meaningful fare reform. But he didn't. Instead he spouted his arrogant "the customer is the enemy" rhetoric and bet everything on "the return of the business traveler" -- a possibly mythical beast that airline executives have repeatedly demonstrated they have no understanding whatsoever of.