AA, Upgrades and Bankruptcy (not)

[dk4]

The reason the article got my attention was because on my AA flight just before i read the article AA staff(wearing ID but in civvies)were down the back and at least 4 ordinary pax upgraded to F-that was the number on the upgrade list when we got to the gate.soon after they announced all upgrades had cleared.That to me is a better loyalty scheme.

I have been on numerous AA flights and witnessed Pilots, in uniform (I assume heading home after duty), boarding last & moving past me into the main cabin to be seated, all the while every empty First Class seat was filled with complimentary gate upgrades (to high tier frequent fliers, as per the upgrade screen rankings).

Additionally, as staff names get placed with everyone else's - on the standby screens at the gate, it is very clear that they stay at the bottom of that list.

Generally, when I have arrived at an AA gate for an earlier scheduled service, to try my luck with the AA-standby-lottery (its actually quite addictive), my name goes right to the top of the standby screen ranking - just as the look on all the staff faces hanging around goes down. (Of course, due to the way standby is processed; as a non-flexible* First Class ticket holder [i.e. Instant Upgrade] with carry-on only, I always check the likelihood that a First Class seat will be available with the gate agent, before I try my luck. [i.e. The upgrade screen is processed first, then the standby screen, then the upgrade screen is reprocessed allowing confirmed standby passengers to be upgraded only if all First Class seats weren't filled in the first round of upgrades...] all quite complex, but very fun & *flexible enough for me! Obviously flexible First Class ticket holders are confirmed immediately into First Class seats as soon as requested/available.)

I have said it before, and I will say it again, if airline businesses want frequent fliers to fly their airline, they should run it the way AA does. Leave Qantas to their stuffy nosed "fly with empty premium seats" market position, and they will start to haemorrhage (they can only get away with "protecting revenue", while their bread and butter frequent fliers in lower cabins aren't enticed away!)

 

[dk4]

Re: Ruby Rose upgraded as a friend of staff.

The reason the article got my attention was because on my AA flight just before i read the article AA staff(wearing ID but in civvies)were down the back and at least 4 ordinary pax upgraded to F-that was the number on the upgrade list when we got to the gate.soon after they announced all upgrades had cleared.That to me is a better loyalty scheme.

I have been on numerous AA flights and witnessed Pilots, in uniform (I assume heading home after duty), boarding last & moving past me into the main cabin to be seated, all the while every empty First Class seat was filled with complimentary gate upgrades (to high tier frequent fliers, as per the upgrade screen rankings).

Additionally, as staff names get placed with everyone else's - on the standby screens at the gate, it is very clear that they stay at the bottom of that list.

Generally, when I have arrived at an AA gate for an earlier scheduled service, to try my luck with the AA-standby-lottery (its actually quite addictive), my name goes right to the top of the standby screen ranking - just as the look on all the staff faces hanging around goes down. (Of course, due to the way standby is processed; as a non-flexible* First Class ticket holder [i.e. Instant Upgrade] with carry-on only, I always check the likelihood that a First Class seat will be available with the gate agent, before I try my luck. [i.e. The upgrade screen is processed first, then the standby screen, then the upgrade screen is reprocessed allowing confirmed standby passengers to be upgraded only if all First Class seats weren't filled in the first round of upgrades...] all quite complex, but very fun & *flexible enough for me! Obviously flexible First Class ticket holders are confirmed immediately into First Class seats as soon as requested/available.)

I have said it before, and I will say it again, if airline businesses want frequent fliers to fly their airline, they should run it the way AA does. Leave Qantas to their stuffy nosed "fly with empty premium seats" market position, and they will start to haemorrhage (they can only get away with "protecting revenue", while their bread and butter frequent fliers in lower cabins aren't enticed away!)

 

[straitman]

Re: Ruby Rose upgraded as a friend of staff.

I have said it before, and I will say it again, if airline businesses want frequent fliers to fly their airline, they should run it the way AA does. Leave Qantas to their stuffy nosed "fly with empty premium seats" market position, and they will start to haemorrhage (they can only get away with "protecting revenue", while their bread and butter frequent fliers in lower cabins aren't enticed away!)

Oh how I wish it was indeed that simple :!:

 

[NYCguy]

Re: Ruby Rose upgraded as a friend of staff.

I have said it before, and I will say it again, if airline businesses want frequent fliers to fly their airline, they should run it the way AA does. Leave Qantas to their stuffy nosed "fly with empty premium seats" market position, and they will start to haemorrhage (they can only get away with "protecting revenue", while their bread and butter frequent fliers in lower cabins aren't enticed away!)

There will, of course, be a divided camp over this statement, but there's less "stuffy nosed" about an airline protecting the integrity of it's premium product that there is in a frequent flyer who believes they are entitled to an automatic updgrade.

AA lost US$1.2 billion in 2009. QF made (in what was a pretty ordinary year) a profit of about US$100M. Who's haemorrhaging money?

 

[drron]

Re: Ruby Rose upgraded as a friend of staff.

There will, of course, be a divided camp over this statement, but there's less "stuffy nosed" about an airline protecting the integrity of it's premium product that there is in a frequent flyer who believes they are entitled to an automatic updgrade.

AA lost US$1.2 billion in 2009. QF made (in what was a pretty ordinary year) a profit of about US$100M. Who's haemorrhaging money?

To be fair AA faces a bit more competition than QF.
Second the profit from selling QFF points was greater than the gross profit.
The ideal lies somewhere in between I guess.

 

[NM]

Re: Ruby Rose upgraded as a friend of staff.

I have said it before, and I will say it again, if airline businesses want frequent fliers to fly their airline, they should run it the way AA does. Leave Qantas to their stuffy nosed "fly with empty premium seats" market position, and they will start to haemorrhage (they can only get away with "protecting revenue", while their bread and butter frequent fliers in lower cabins aren't enticed away!)

Seem to be working ok for QF so far. A quick comparison of the financial situation of QF and AA indicates QF has an operating model better suited to its business objective at this time. And of course QF and AA operate (and compete) in very different markets.

If is really that simple and obvious, then why is not a very successful airline operating with AA's business model in the Australian market? I know I would not be investing my money in an AA-style airline business model in the Australian market.

 

[dk4]

Re: Ruby Rose upgraded as a friend of staff.

Seem to be working ok for QF so far. A quick comparison of the financial situation of QF and AA indicates QF has an operating model better suited to its business objective at this time. And of course QF and AA operate (and compete) in very different markets.

If is really that simple and obvious, then why is not a very successful airline operating with AA's business model in the Australian market?

Lack of competition/entry barriers-costs, an incumbent which competition authorities/the government has allowed to sit on a 2/3rd market share & one with extensive market power over allied industries (from Terminals to Loyalty Schemes). So of course it's bloody working okay for Qantas, so far!!!

Personally, I don't believe that governments should allow any company (e.g. Qantas Group) to hold more than a 25% market share, in any free market. Quite frankly, once a company hits that threshold, I think that punitive taxes should be applied to it. (We should have learnt by now that big business and concentrated market power is the problem, not the solution. If big business with overwhelming market power were the solution, the logical progression to end game from that position in nationalisation or fascism.)

We live in a country where previous governments, focussed on short term returns, have sold off state enterprises within monopolistic-oligopolistic markets, and expect "the market" to function: well a free market needs real competition to function. (It is no coincidence that many a board room officer, desires quashing competition as a major means to improving their own company's returns. Which is a completely logical strategy from the position they represent.)

So I stick by my assertion, that Qantas would haemorrhage if it was flying with empty premium seats, as well as empty seats in lower cabins (because those frequent fliers were lured away by an AA styled offer).

DJ seems unable to grasp this (and thinks that it can reset up a duopoly), so I am left to hope that we are only a few years away from Tiger getting the picture, and the Ryan family relenting on TT management being forced to rigidly follow the Ryanairway. (And allowing them to evolve strategically, by adapting (& thus expanding) to nonEurpoean local market conditions.)

 

[samh004]

Re: Ruby Rose upgraded as a friend of staff.

Personally, I don't believe that governments should allow any company (e.g. Qantas Group) to hold more than a 25% market share, in any free market. Quite frankly, once a company hits that threshold, I think that punitive taxes should be applied to it. (We should have learnt by now that big business and concentrated market power is the problem, not the solution. If big business with overwhelming market power were the solution, the logical progression to end game from that position in nationalisation or fascism.)

So your solution is that every airline starts at the most of 25%, then for whatever reason, when customers choose to fly one over the other, and the percentages of the other 3 go down while Qantas’ share rises (because the customers made a choice, clearly, as they all start at 25%) the government steps in and takes control, splitting Qantas into little bits again, because lets face it, the government is right here, not the customers

We live in a country where previous governments, focussed on short term returns, have sold off state enterprises within monopolistic-oligopolistic markets, and expect "the market" to function: well a free market needs real competition to function. (It is no coincidence that many a board room officer, desires quashing competition as a major means to improving their own company's returns. Which is a completely logical strategy from the position they represent.)

We live in a small country, that badly needs a bigger population and with that better infrastructure, but wont get it as both sides of the government think a small population on a massive block of land is just perfect. This ideal we live in is where we sell off state enterprises, because we don’t have a population to support it.

I don’t think we’re going to find a government focused on the long term for a while, dare I say it but a recently ousted-PM was a lot closer than anyone is now, and anyone with his views wont survive it again.

 

[odysseus]

Re: Ruby Rose upgraded as a friend of staff.

If is really that simple and obvious, then why is not a very successful airline operating with AA's business model in the Australian market? I know I would not be investing my money in an AA-style airline business model in the Australian market.

Couldn't the same be then said if it's so optimal, about why a QF-like model airline isn't operating in the US then?

I say they're products of the market they operate in. It's not so simple to just profitably transfer them, and not a case of one being the best.

 

[drron]

Re: Ruby Rose upgraded as a friend of staff.

And of course AA is the only US legacy airline that has not been through bankruptcy-so on economic grounds you could say it is the most successful of the US legacies.Of course that is now its problem as it has a higher cost base than its competitors.

 

[docjames]

Re: Ruby Rose upgraded as a friend of staff.

And of course AA is the only US legacy airline that has not been through bankruptcy-so on economic grounds you could say it is the most successful of the US legacies.Of course that is now its problem as it has a higher cost base than its competitors.

This is AA's competitive disadvantage at the moment. Ity also to some extent precludes them doing mergers with any other US carriers, as typically the acquired airline will move to the payscales of the parent, in this case forcing salaries up for incoming staff and losing any benefits of the aquistion.

AA just need to hold their line until the others gain costs - not a good position to be in, and employees get upset with constant lack of (upward) salary review etc.

 

[samh004]

Re: Ruby Rose upgraded as a friend of staff.

This is AA's competitive disadvantage at the moment. Ity also to some extent precludes them doing mergers with any other US carriers, as typically the acquired airline will move to the payscales of the parent, in this case forcing salaries up for incoming staff and losing any benefits of the aquistion.

AA just need to hold their line until the others gain costs - not a good position to be in, and employees get upset with constant lack of (upward) salary review etc.

Or file for chapter 11 and reshuffle things without breaking any laws

 

[docjames]

Re: Ruby Rose upgraded as a friend of staff.

Or file for chapter 11 and reshuffle things without breaking any laws

And screw existing shareholders - not a great option.

Basically they're paying the price for NOT screwing the shareholders some years ago.

 

[QF WP]

Re: Ruby Rose upgraded as a friend of staff.

Hmmm, we seem to have gone off topic here. Has the topic run it's natural course and should be closed? Or perhaps we take the last 10 posts and transfer to a new thread?

 

[markis10]

Re: Ruby Rose upgraded as a friend of staff.

the Ryan family relenting on TT management being forced to rigidly follow the Ryanairway. (And allowing them to evolve strategically, by adapting (& thus expanding) to nonEurpoean local market conditions.)

Why do you think the Ryan family have much influence over Tiger, they recently sold most of their equity and now have 5%, thats not much of an influence at all. I would suggest SQ have significantly more interest in the way things happen:

Currently the largest shareholders (> 5% shareholding) in Tiger Airways Holdings Limited are as follows: Singapore Airlines Limited 33.4% Indigo Singapore Partners L.P. 8.4% RyanAsia Limited 5.5% Dahlia Investments Pte Ltd 7.5%

 

[markis10]

Re: Ruby Rose upgraded as a friend of staff.

No need to be rude, seeing as the thread has been split, and all I was doing was answering a question, it clearly has run it’s course.

Jeez

Sam, that split happened at 2.49PM after the post had been made, not before the post. Tends to change the context a tad when that happens, but agree there is no need to be rude should that have been the case.

 

[dajop]

Re: Ruby Rose upgraded as a friend of staff.

We live in a country where previous governments, focussed on short term returns, have sold off state enterprises within monopolistic-oligopolistic markets, and expect "the market" to function: well a free market needs real competition to function. (It is no coincidence that many a board room officer, desires quashing competition as a major means to improving their own company's returns. Which is a completely logical strategy from the position they represent.)

One thing you talk a lot about is real competition, US while highly competitive is far from a free market. Ansett may not have collapsed had it been in the US (pure speculation I know) where airlines in similar situation to AN found themselves trading out of difficulties through Chapter 11. Secondly, Tiger, being a Singaporean owned company simply could not set up an operations in US, meet safety certifications and start flying around. There needs to be percentage of US control of ownership for their domestic airlines.

Having said that, undoubtedly US is a lot more competitive, but can't help but think that comes at a significant cost. It is just plain ridiculous that you have 90-120 seat planes routinely and frequently flying between centres as large as Chicago and New York. No wonder there are huge ATC delays, which comes at a huge cost to everyone. Over time as the mergers take effect, this may improve, and economies of scale are achieved as the 6 legacy carriers of 2008 get absorbed into 4 (and maybe 3) carriers in the next few years.

 

[Flashback]

Re: Ruby Rose upgraded as a friend of staff.

Hmmm, we seem to have gone off topic here. Has the topic run it's natural course and should be closed? Or perhaps we take the last 10 posts and transfer to a new thread?

I think a new thread is in order

Edit: looks like it's already done!