Friday, January 18, 2013

Are the dominoes that are falling constructed of carbon composite?

Lately there's been an excessive amount of spleen venting by the participants in travel-related social media over announced changes by Delta to their frequent flyer program and American Airlines announcing that, for the first time in over 40 years, they're going to paint their planes. 

I'm not sure what the hub-bub is regarding the latter item, I happen to like the new AA livery and think that, over time, it will become widely accepted.  If anything (and I've said this before) it illustrates just how serious they are about becoming a "flag" carrier in the vein of British Airways or Air France.  Even when the much anticipated merger with US Airways manifests itself, I believe there are enough US Air design cues within this that it will be pretty close to the final design.  Then there's this: The "New American" livery is sharper than both Delta and United's looks.

The first item is the one that's really got tongues wagging however and I can understand why. In short: Due to the construction of their spend requirements Delta is telling it's customers that a large part of their routing structure will not gain full qualification in their awards program, and I'm not talking about eliminating just tricks and mileage runs either.

Consider this: It's not unusual for airlines to offer up prices to destinations in Asia for five to seven cents per mile.  These are not 'mileage run' fares or fares that need to be tricked using fuel dumps etc. but advertised rates, purchased on their website straight up.  By introducing a minimum spend requirement at ten cents per mile Delta is basically devaluing these routes by 30-50% on their award charts.  Even worse, I expect that when United and American/US Airways eventually release their revenue minimums they're going to be around the same level.  Delta has set the bar, and it's unusual to see airlines try and limbo beneath it, instead they often choose to high-jump the thing altogether. 

Many people are expecting United to be the next airline to introduce revenue minimums to their program, possibly in the next three months.  If they do, given United's history on program changes, I'm guessing the minimum spend requirements will be somewhere around ten cents per mile, possibly even higher.  United also probably won't provide the extended lead time on their program that Delta has, their idea being to spring these changes on customers at the eleventh hour providing very little lead time for planning and reaction. (For example, when United recently devalued Gold and Silver Premiers for 2013 by reducing their early boarding privileges they announced the change in January, after the 2013 year had already begun and many people had part of their travel plans already drawn-up for most of the year)  It's not in the new United's DNA to be overly customer friendly, unless you're flying in BusinessFirst or First.  I still think United will be the next airline to announce something like this, but I think it will be either closer to the end of the year or effective in 2013 for 2014 qualification.  In other words, after people are already invested in the previously announced program and when the opportunity cost for switching airlines is very high. Unlike Delta, United wants to keep a large portion of their Elite members, they just don't want to provide anything to them in the way of benefits.

Being fair though, all of this is just my uneducated guess based not on inside information, but on observation alone.  I could, and am most likely, wrong on at least some counts.  It could be that United is going to do right by the Silver and Gold Premiers that they don't seem to value in the name of customer service.  They could feel that their recent run of negative press has caused the airline to rethink their plan of running off over-entitled elites (to be fair, again, many elites ARE over-entitled in a big way.)  To quote many a blogger: We'll see what happens.

Finally, if you'll permit me a small tangent, I find it funny that some bloggers are stating that there are easy ways to avoid Delta's new revenue requirement. Unfortunately, these "easy ways" involve either moving out of the Country (they only apply to US fliers) or spending $25K per year on a Delta co-branded credit card.  There does come a point that your travel blog offers nothing of interest to the flying public, I believe that some bloggers are snuggling right up close to that line, if they haven't crossed it already.

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