BigMotorToter
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Frequent Fliers Worry: Is Elite Status Worth It? "I might as well fly jetBlue"
NYT - Is Elite Worth It?
1/31/2005Frequent Fliers Worry: Is Elite Status Worth It?
By JOE SHARKEY
Published: January 30, 2005
LIKE many other travel agents and frequent fliers who know how much most people actually pay for flights, Blake Fleetwood was unimpressed with the recent ballyhooed initiative by Delta Air Lines to reduce domestic walk-up fares to a maximum of $998 round-trip.
In its announcement, Delta, which reported losses of $5.2 billion in 2004, said that last-minute travelers would no longer be stuck paying sky-high published walk-up fares that in some cases were six or seven times higher than advance-purchase fares.
"It's insane. Nobody was paying $1,500 for a walk-up fare to California," said Mr. Fleetwood, who is the president of Planetarium Travel, a group of travel agencies in the New York area. Those fares have been "unrealistic" for years, he added. "The fact that they're lowering them is more in line with the reality out there," he said, adding that discount carriers like JetBlue and Southwest still offer lower fares on most routes than the revised ones on Delta and its competitors among major airlines, which quickly matched Delta's new fares on competitive routes.
But there was some compelling news in the fare reductions. Along with slashing coach fares, major airlines also sharply reduced first-class fares - and that got the rapt attention of elite-status members of airline frequent-flier programs. Delta, for example, capped domestic round-trip first-class fares at $1,198 - and a lot of elite-status fliers quickly calculated that cheaper first-class seats would mean fewer free upgrades.
As a consequence, many high-level fliers are rethinking their commitment to attaining elite status each year. On most airlines, there are three elite-status levels: Platinum (for those who fly 75,000 or on some airlines 100,000 miles a year); Gold (50,000 annual miles), and Silver (25,000 miles). So strong is the pull to retain elite-level status that some members actually take unnecessary and often complicated year-end trips, called mileage runs, just to rack up enough miles to hit the annual mark.
"Usually, I get toward the end of the year and I think, is it worth it?" said Mark Schubin, a television engineering consultant who has been a member of American Airlines' AAdvantage mileage program since 1981, when American was the first to introduce frequent-flier programs. A main reason he kept going for elite status each year, said Mr. Schubin, was that elite-level fliers often receive free upgrades for their travel companions as well. The upgrades "let me take my wife along in first class" on vacations and other leisure trips, he said. That has become far more difficult to accomplish, he added.
As the airline industry has stumbled in the last four years, upgrade fever intensified while domestic fares fell to levels not seen in a generation. Internet booking engines for the first time made airline fares transparent, and diverted millions of customers to the rapidly growing low-cost carriers.
Meanwhile, business travelers - and corporate travel managers flexing their muscles in a fiercely competitive environment - virtually abandoned the sky-high walk-up fares that once accounted for as much as 40 percent of a major airline's revenue.
Desperate to stay competitive while low-cost competitors assaulted their core markets, the majors cut back on service, such as free meals. Suddenly, flying coach on most major carriers offered few advantages, yet remained more expensive than flying coach on a discount carrier.
Thus the upgrade became a crucial marketing tool. Elite-level travelers on major airlines came to expect a regular upgrade, even when flying on the cheapest coach fare.
Of the 120 million members enrolled in airline frequent-flier programs, only a small fraction are in the elite-status categories. Still, that fraction is usually easy to spot. They're the ones milling around the departure counter, desperate to hear their name called for that increasingly elusive upgrade.
Terry Trippler, who publishes a Web site that tracks air fares, TerryTrippler.com <http://terrytrippler.com/> , said he was recently speaking to a friend who has Gold status on a major carrier. "He was waiting to board a 6 a.m. flight from Seattle to Minneapolis, a plane with 22 first-class seats, and he told me, 'you're not going to believe this, but the gate agent said there were 86 Platinum and Gold members standing by for upgrades.' "
For years on most domestic flights, most first-class seats have been occupied by elite-status fliers upgraded from coach. Elite status fliers worry that those days are drawing to a close.
"Right now, I'm not sure what the value of elite status is," said Bruce M. Jakosky, a professor at the University of Colorado's Laboratory for Atmospheric and Space Physics who travels frequently on business. Mr. Jakosky said he has been a member of Premier, United's top elite level, for about 12 years. In 2004, he said, he fell short of flying the 100,000 miles required to renew that status.
"I've been seeing less and less value in upgrading," he said. "The seats are feeling more and more squeezed to me. Plus if you know the plane, you can figure out where the best seats are in coach, the ones with enough legroom."
Airlines concede that lowering first-class and business fares - domestically and internationally - is reducing upgrade availability. Airlines evidently feel that the extra revenue generated by attracting more paying first-class passengers is worth the risk of alienating some loyal fliers.
Delta said it spent months testing its new program called Simplifares in Cincinnati, looking carefully at its effect on the elite-status Medallion members of its SkyMiles frequent-flier program.
"We very carefully monitored the first-class demand, and we did sell more first-class seats, no question. And it did take away slightly from the available first-class seats to our Medallion customers. It reduced to some extent the number of seats for upgrades, but it still left an acceptable number," said Jeff Robertson, the director of Delta's SkyMiles program.
But from the experience in Cincinnati, he said that Delta expects that while many more first-class seats will be sold, "on the average flight the majority of seats will still be upgrades."
The diminished availability of domestic upgrades is not the only complaint voiced by elite-status and other high-mileage airline customers. Increasingly, as international fares decline amid intense competition from foreign carriers, especially on trans-Atlantic routes, it is far more difficult to use miles to secure an upgrade to international business or first class.
That's a perk cherished by many frequent fliers with mileage bank accounts fattened not just from actual flying but from acquiring miles awarded by vendors, like credit card companies, who award them for purchases.
Mr. Robertson says that Delta has as good a record as any airline in awarding mileage upgrades on international flights, but he added that it has also reduced the number of seats in its international business-class cabins.
"We had some pretty sizable cabins in business class up to about a year ago on our international aircraft," he said. "On average we had 48 seats on our 767's, but we've reduced that down to 36. That would have an impact on the ability of a customer to upgrade." At the same time, Delta - like some of its competitors - has introduced new sharply discounted international business-class fares with advance purchase requirements.
Among the major carriers, Northwest Airlines, which matched Delta's fare reductions in some markets, says it will continue to stress the value of upgrades for loyal customers. Northwest said its fleet has more first-class seats available than any other major airline.
"If you tell your customers that you have a loyalty benefit, you'd better plan on delivering it if you want loyalty," said Beth Shultis, the airline's vice president of marketing and loyalty programs. "The domestic first-class upgrade is highly sought after, and we manage that process very, very closely. We have exceedingly high success rates in our upgrades."
Mr. Schubin, however, says the upgrade allure is disappearing, especially as many low-cost carriers add comforts that make flying coach an enticing alternative.
For example, he said JetBlue has cheap fares, coach seats with 34 inches of legroom, good service and in-seat video. "Tell me again, " he said, "why are we supposed to continue flying the majors?"
NYT - Is Elite Worth It?
1/31/2005Frequent Fliers Worry: Is Elite Status Worth It?
By JOE SHARKEY
Published: January 30, 2005
LIKE many other travel agents and frequent fliers who know how much most people actually pay for flights, Blake Fleetwood was unimpressed with the recent ballyhooed initiative by Delta Air Lines to reduce domestic walk-up fares to a maximum of $998 round-trip.
In its announcement, Delta, which reported losses of $5.2 billion in 2004, said that last-minute travelers would no longer be stuck paying sky-high published walk-up fares that in some cases were six or seven times higher than advance-purchase fares.
"It's insane. Nobody was paying $1,500 for a walk-up fare to California," said Mr. Fleetwood, who is the president of Planetarium Travel, a group of travel agencies in the New York area. Those fares have been "unrealistic" for years, he added. "The fact that they're lowering them is more in line with the reality out there," he said, adding that discount carriers like JetBlue and Southwest still offer lower fares on most routes than the revised ones on Delta and its competitors among major airlines, which quickly matched Delta's new fares on competitive routes.
But there was some compelling news in the fare reductions. Along with slashing coach fares, major airlines also sharply reduced first-class fares - and that got the rapt attention of elite-status members of airline frequent-flier programs. Delta, for example, capped domestic round-trip first-class fares at $1,198 - and a lot of elite-status fliers quickly calculated that cheaper first-class seats would mean fewer free upgrades.
As a consequence, many high-level fliers are rethinking their commitment to attaining elite status each year. On most airlines, there are three elite-status levels: Platinum (for those who fly 75,000 or on some airlines 100,000 miles a year); Gold (50,000 annual miles), and Silver (25,000 miles). So strong is the pull to retain elite-level status that some members actually take unnecessary and often complicated year-end trips, called mileage runs, just to rack up enough miles to hit the annual mark.
"Usually, I get toward the end of the year and I think, is it worth it?" said Mark Schubin, a television engineering consultant who has been a member of American Airlines' AAdvantage mileage program since 1981, when American was the first to introduce frequent-flier programs. A main reason he kept going for elite status each year, said Mr. Schubin, was that elite-level fliers often receive free upgrades for their travel companions as well. The upgrades "let me take my wife along in first class" on vacations and other leisure trips, he said. That has become far more difficult to accomplish, he added.
As the airline industry has stumbled in the last four years, upgrade fever intensified while domestic fares fell to levels not seen in a generation. Internet booking engines for the first time made airline fares transparent, and diverted millions of customers to the rapidly growing low-cost carriers.
Meanwhile, business travelers - and corporate travel managers flexing their muscles in a fiercely competitive environment - virtually abandoned the sky-high walk-up fares that once accounted for as much as 40 percent of a major airline's revenue.
Desperate to stay competitive while low-cost competitors assaulted their core markets, the majors cut back on service, such as free meals. Suddenly, flying coach on most major carriers offered few advantages, yet remained more expensive than flying coach on a discount carrier.
Thus the upgrade became a crucial marketing tool. Elite-level travelers on major airlines came to expect a regular upgrade, even when flying on the cheapest coach fare.
Of the 120 million members enrolled in airline frequent-flier programs, only a small fraction are in the elite-status categories. Still, that fraction is usually easy to spot. They're the ones milling around the departure counter, desperate to hear their name called for that increasingly elusive upgrade.
Terry Trippler, who publishes a Web site that tracks air fares, TerryTrippler.com <http://terrytrippler.com/> , said he was recently speaking to a friend who has Gold status on a major carrier. "He was waiting to board a 6 a.m. flight from Seattle to Minneapolis, a plane with 22 first-class seats, and he told me, 'you're not going to believe this, but the gate agent said there were 86 Platinum and Gold members standing by for upgrades.' "
For years on most domestic flights, most first-class seats have been occupied by elite-status fliers upgraded from coach. Elite status fliers worry that those days are drawing to a close.
"Right now, I'm not sure what the value of elite status is," said Bruce M. Jakosky, a professor at the University of Colorado's Laboratory for Atmospheric and Space Physics who travels frequently on business. Mr. Jakosky said he has been a member of Premier, United's top elite level, for about 12 years. In 2004, he said, he fell short of flying the 100,000 miles required to renew that status.
"I've been seeing less and less value in upgrading," he said. "The seats are feeling more and more squeezed to me. Plus if you know the plane, you can figure out where the best seats are in coach, the ones with enough legroom."
Airlines concede that lowering first-class and business fares - domestically and internationally - is reducing upgrade availability. Airlines evidently feel that the extra revenue generated by attracting more paying first-class passengers is worth the risk of alienating some loyal fliers.
Delta said it spent months testing its new program called Simplifares in Cincinnati, looking carefully at its effect on the elite-status Medallion members of its SkyMiles frequent-flier program.
"We very carefully monitored the first-class demand, and we did sell more first-class seats, no question. And it did take away slightly from the available first-class seats to our Medallion customers. It reduced to some extent the number of seats for upgrades, but it still left an acceptable number," said Jeff Robertson, the director of Delta's SkyMiles program.
But from the experience in Cincinnati, he said that Delta expects that while many more first-class seats will be sold, "on the average flight the majority of seats will still be upgrades."
The diminished availability of domestic upgrades is not the only complaint voiced by elite-status and other high-mileage airline customers. Increasingly, as international fares decline amid intense competition from foreign carriers, especially on trans-Atlantic routes, it is far more difficult to use miles to secure an upgrade to international business or first class.
That's a perk cherished by many frequent fliers with mileage bank accounts fattened not just from actual flying but from acquiring miles awarded by vendors, like credit card companies, who award them for purchases.
Mr. Robertson says that Delta has as good a record as any airline in awarding mileage upgrades on international flights, but he added that it has also reduced the number of seats in its international business-class cabins.
"We had some pretty sizable cabins in business class up to about a year ago on our international aircraft," he said. "On average we had 48 seats on our 767's, but we've reduced that down to 36. That would have an impact on the ability of a customer to upgrade." At the same time, Delta - like some of its competitors - has introduced new sharply discounted international business-class fares with advance purchase requirements.
Among the major carriers, Northwest Airlines, which matched Delta's fare reductions in some markets, says it will continue to stress the value of upgrades for loyal customers. Northwest said its fleet has more first-class seats available than any other major airline.
"If you tell your customers that you have a loyalty benefit, you'd better plan on delivering it if you want loyalty," said Beth Shultis, the airline's vice president of marketing and loyalty programs. "The domestic first-class upgrade is highly sought after, and we manage that process very, very closely. We have exceedingly high success rates in our upgrades."
Mr. Schubin, however, says the upgrade allure is disappearing, especially as many low-cost carriers add comforts that make flying coach an enticing alternative.
For example, he said JetBlue has cheap fares, coach seats with 34 inches of legroom, good service and in-seat video. "Tell me again, " he said, "why are we supposed to continue flying the majors?"
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