Discount Y Platinum vs. Premium cabin Platinum, who is really worth more to Qantas

[iqis60]

With all the discussion going on about the new changes to the frequent flyer program and the feeling from some discount Y WP's that they have been forgotten in the improvements, it's got me wondering who is really worth more to Qantas, discount Y WP's or premium cabin WP's?

On initial analysis, you can compare the cost of reaching platinum by discount Y fares versus a much smaller number of premium fares and show that more money is spent on the premium fares. But I think this is an over simplification of the value of each flyer, as it doesn't look at other factors, such as how much profit is made from each fare, are the discount Y flyers more likely to be making the discretionary choice themselves on who to fly with as it may be their own money, how much realestate in a plane does a business or first seat take up compared to a discount Y and hence many discounts Y fares does that equal in space.

These are just some of the questions I've thought of and I'd like to get a better handle of some of these things.

Do people have answers to any of these questions and are there others I haven't thought of?

Are people interested in trying to figure this out?

 

[Alanslegal]

Re: Discount Y Platinum vs. Premium cabin Platinum, who is really worth more to Qanta

Firstly, I don't think it matters who pays for their ticket, whether it's their employer, the flyer themselves or the taxpayer (if your flying on a tax deductible expense)

Secondly, unless one is an expert in yield management its unlikely we'll be close to the answer.

Thirdly, from my opinion, premium cabins invole alot of costs too .... so revenue generated might seem more than someone in Y, but so does the premium cabin cost involved.

Fourthly, I would be guessing - maybe a ridiculous guess - but say to break even on a a380, I would guess it could fly empty in the premium cabins but not empty in the economy cabins.

 

[whughes3]

Re: Discount Y Platinum vs. Premium cabin Platinum, who is really worth more to Qanta

I strongly suspect that, with a "full-service" airline like Qantas, the economy pax provide the cash flow, but J/F pax provide most of the profits. The profit margin on most J/F fares must surely be quite hefty, whereas on most economy fares it is probably pretty slim (and indeed negative in some cases).

 

[iqis60]

Re: Discount Y Platinum vs. Premium cabin Platinum, who is really worth more to Qanta

I'd be interested to hear what the actual amount some discount Y WP frequent flyers spend in a year. With sale fares going up and down, they probably spend more than we might at first think.

Is there anyone out there who wants to let us know what their yearly budget is? Number of flights flown and SC earn would be interesting to hear too. I'd like to hear form the Premium flyers on this too, so we can make a real spend comparison.

 

[dfcatch]

Firstly, I don't think it matters who pays for their ticket, whether it's their employer, the flyer themselves or the taxpayer (if your flying on a tax deductible expense)

Alan I disagree.

I think who pays the fare is incredibly relevant to loyalty. (but not the only factor).

The self-funded traveller, IMHO is more loyal as they are spending their own coin, and choosing who to spend it with.

The employer-funded traveller may very well be at the airline choice of the employer.

If in whY, then the status benefits of the chosen airline may make the difference between numb-bum with a smile, or numb-bum with no smile.

If premium cabin and employer funded, then I question the same level of loyalty.
I mean really - if someone else is paying for you to fly F or J, you're going to be a happy camper whether on QF or otherwise.

So those earning a gazillion SCs on someone else's dime might think we are whinging... But that doesn't make them more loyal.

 

[Fantic125]

Re: Discount Y Platinum vs. Premium cabin Platinum, who is really worth more to Qanta

The type of job I have involves fairly regular international flights to varying destinations. My employer has a 'cheapest flight' policy which usually means discount economy, although we usually use a fare bucket that allows schedule changes for minimal cost.
We use a corporate company for booking our flights which has a symbol in their letterhead much like the Qantas logo .

Since the start of my current QFF year (1st Aug 2010) I have flown the following;

Total flights: 81 (OW & *A)
QF metal: 34 (flight details in the attached picture)

Total SC's: 1420
SC's on QF metal: 855

Total miles flown: 205,627
Flown on QF metal: 123,846

Flight costs on QF metal only:
(unfortunately only have from Dec 2010 onward due to computer malfunction)

Dec 2010: $2,600
Jan 2011: $3,700
Feb 2011: $2,700
Mar 2011: $2,000

Total spend: $11,000



To get a better understanding of all my flights click on the 'My Flight Memory' link below...

 

[gumpy]

Re: Discount Y Platinum vs. Premium cabin Platinum, who is really worth more to Qanta

I believe the premium cabin passengers are more valuable to QF.

I fly 80% dom Y so this makes me sad but my red-e deal ticket to and from mel, syd and bne can't be making Qf much money... but when I drop 10K into a turn flight from LHR and LAX i'm sure QF are smiling...

 

[Alanslegal]

Re: Discount Y Platinum vs. Premium cabin Platinum, who is really worth more to Qanta

Alan I disagree.

I think who pays the fare is incredibly relevant to loyalty. (but not the only factor).

@dfcatch, I agree to your points regarding loyalty. I think my earlier response was more directed at which cabin is worth more and who pays for it, and that whoever paid for it didn't really matter (to me anyway).

 

[gumpy]

Re: Discount Y Platinum vs. Premium cabin Platinum, who is really worth more to Qanta

I agree with dfcatch that who pays for the ticket is important.

I wouldn't be buying J tickets if it wasn't for work. Full Stop... I buy W and Y tickets for me except when I holiday in Fiji and Auckland.

If I was looking for Y and W tickets cost would be a key factor if I wasn't WP.

The minute I lose WP and I need to fly for leisure I don't think it's going to be QF. Sorry QF but for leisure I don't fly enough to get to WP and you're a bit pricy. Though this could be different if i got LT status with QF... which i'm not too far away from... hmm

 

[Alanslegal]

Re: Discount Y Platinum vs. Premium cabin Platinum, who is really worth more to Qanta

Hypothetical “Sydney to Singapore return” example:

SC earnt:-

Y- 60, Y 120, Y+ 180, J 240 and F 360


To reach WP (1400sc) for the first time, requires how many return flights:-

Y- 23.33, Y 11.67, Y+ 7.78, J 5.83, F 3.89


Rough fare cost:-

Y- $1,000 : Y $2,000 : Y+ 3,000 : J $5,000 : F $7,000


Total spend to earn WP:-

Y- $23,300
Y $23,340
Y+ $23,340
J $29,150
F $27,230

So based on this, the J cabin flyer brings in the most revenue, then F, followed by Y and Y+ cabins bring in similar amounts. However we can’t just rely on the total amount because there is a significant difference between those cabins.

For argument sakes, let’s say an economy seat occupies 1 space. A premium economy occupies 2, a J flight occupies 3 spaces and a F occupies 4 spaces.

Thus the proportion of revenue per space could give an idea how much earn space earns (just like how buildings are worked out by $ per sqm etc).

Thus:

Y- $23,300 per space
Y $23,340 per space
Y+ $11,670 per space
J $9,716 per space
F becomes $6,807 per space.


Based on my scenario, a frequent flyer in Y cabin is worth the most per "space".

The cost of J/F is quite high space wise (naturally it is as they occupy much more aircraft space) but also the cost associated with the servicing of lounge and on-board meals, amenities etc.

The Y and J flyer don’t have access to a lounge (meaning less cost) until they hit 700 sc marks, so this could be up to after their 12th return flight in Y.

I will also take into account that the Y and Y+ flyer must fly more times, meaning more other costs for QF eg. fuel, wages, services etc.


Otherwise, this is too much for me to work out

 

[dfcatch]

Hypothetical “Sydney to Singapore return” example:

SC earnt:-

Y- 60, Y 120, Y+ 180, J 240 and F 360


To reach WP (1400sc) for the first time, requires how many return flights:-

Y- 23.33, Y 11.67, Y+ 7.78, J 5.83, F 3.89


Rough fare cost:-

Y- $1,000 : Y $2,000 : Y+ 3,000 : J $5,000 : F $7,000


Total spend to earn WP:-

Y- $23,300
Y $23,340
Y+ $23,340
J $29,150
F $27,230

So based on this, the J cabin flyer brings in the most revenue, then F, followed by Y and Y+ cabins bring in similar amounts. However we can’t just rely on the total amount because there is a significant difference between those cabins.

For argument sakes, let’s say an economy seat occupies 1 space. A premium economy occupies 2, a J flight occupies 3 spaces and a F occupies 4 spaces.

Thus the proportion of revenue per space could give an idea how much earn space earns (just like how buildings are worked out by $ per sqm etc).

Thus:

Y- $23,300 per space
Y $23,340 per space
Y+ $11,670 per space
J $9,716 per space
F becomes $6,807 per space.


Based on my scenario, a frequent flyer in Y cabin is worth the most per "space".

The cost of J/F is quite high space wise (naturally it is as they occupy much more aircraft space) but also the cost associated with the servicing of lounge and on-board meals, amenities etc.

The Y and J flyer don’t have access to a lounge (meaning less cost) until they hit 700 sc marks, so this could be up to after their 12th return flight in Y.

I will also take into account that the Y and Y+ flyer must fly more times, meaning more other costs for QF eg. fuel, wages, services etc.


Otherwise, this is too much for me to work out

Damn Alan!

You must be bored today.

Your question is an interesting one.
And I would love to spend a month working in Yield Management to see first hand how the QF masters figure it out.

But there does seem to be an agreed view in the industry that premium flyers provide more yield in the long term.

Remember that the calculations aren't just on a per-flight basis (which of course says that the F flyer is providing the most revenue followed by J etc. )

But there are also assumptions based on future flying patterns (and therefore yield) for each flyer type.

Take a 1400SC WP. As your calculations show, it takes less flights for an F flyer than it would take a Y flyer.

That said - the revenue levels are pretty similar. Both flyers are clearly valuable customers to QF.

Now let's assume that both the F and the Y flyer stop flying for the rest of the year..... You now have a situation that both flyers are pretty close to equal value in dollar terms.

Of course it's not that simple - for example a Y flyer is taking more flights, which means more opportunity for a rival to poach them with BFOD offers. Perhaps QF needs to do more to entice them to stay loyal.
Same applies to the F flyer who may not wish to go elsewhere as they like the QF hard product. But naturally, QF would love to keep them flying more often.

So - if dealing only with facts and not assumptions about future flying, it seems to me that both of these flyers should be shown some love and enticed to remain loyal to QF.

 

[Dantine]

Re: Discount Y Platinum vs. Premium cabin Platinum, who is really worth more to Qanta

Now compare to the domestic Y flyer.

BNE-SYD Cost to reach WP
Red edeal @ $110 - $15400
Flexisaver @ $375 - $26250
Business @ $694 - $24290

I found very similar results for BNE-MEL.

Moral of the story - not only does the deep discount Y WP pay 40% less than the premium cabin WP for the same status, Qantas also has to provide them four times the number of seats!

In my mind there is no question that the premium cabin platinum is more valuable despite flying a quarter as much.

 

[connieguy]

Re: Discount Y Platinum vs. Premium cabin Platinum, who is really worth more to Qanta

Last year I sent ~$110k on QF/JQ/OW, non OW flights and gained 3,200 SCs. Flew quite a few AA Q flights in the states until I found out they earn nothing with QF and some non OW flights when the OW flight was not convenient or priced too far over the top (due to needing to fly tomorrow) of a non OW flight. Most of my flights were one ways and at the last monent due to a need to be VERY flexible as I do long haul internationals with 3 - 5 city stops before catching the flight home from LAX / LHR / where ever.

So my cost for 3,200 SCs may not be typical but it was what it was.

 

[medhead]

Re: Discount Y Platinum vs. Premium cabin Platinum, who is really worth more to Qanta

I'm glad you asked this question. Without getting involved in J vs Y I have a couple of thoughts mainly related to 737s flying between ADL and SYD. Really I think the fundamental is how much money is made from putting the aircraft into the air. The slip in classes is less relevant, but is still important.

On a 737 there are 150 Y seats and 12 J seats. Fares for that flight ADL-SYD vv are now $152 for Red-e-deal upto about $600 for a full Flexi fare, J is about $825. This is for fares well in advance when there should be close to full availability across all fare classes. If we make a starting assumption that the Y cabin will sell at the red-e-deal level Considering sale fares and also the higher fare classes, this will probably be a low average for the revenue per seat collected on the flight. (is that fair?) On that assumption Y collects $22,800 and J collects $9,900 (again assuming the base fare is collected per seat)

The question that we need to answer is how much does flying a loaded 737 between ADL and SYD cost. More than $32,700?

I don't know this answer and can only make a estimate based on the A380 being quoted as being as efficient per seat km as a Prius IIRC. Say 7L/100km. ADL-SYD is 725 miles, 1160 km, that means 81.2 L per seat. For 162 pax that is 13,000 L, @ $2 per L? So I have just made a wild guess that the fuel cost is $26,000 for that flight. Obviously, this is all hand waving stuff, and will most likely be completely wrong.

Another thought is to compare replacing the J seats with Y. Again on a 737 I would guess they could get in 4 (maybe 5) rows instead of the 3 J rows. That's going to double the number of Y seats, 24 vs 12. on the same fare base that is $3,648.

So a coupe of conclusions. You need the J pax, they bring in much more than a Y equivalent Y pax. But the Y cabin is bringing in the most money so you need them as well.

Which gets to something we all know, it is not possible to say one type of passenger is more valuable than another. It is also possible to conclude that Y is about numbers not individuals.

 

[JohnK]

Re: Discount Y Platinum vs. Premium cabin Platinum, who is really worth more to Qanta

I am more important than you.

The most basic question one can answer can an airline sell a premium only service? Highly unlikely and the ones doing it or have done it are failures with the exception of SQ on one route.

Economy an airline can survive without premium but not the other way around.

I really do not see the point in this discussion as the people who pay a lot for their airfares are already getting the benefits with better seat, better service, greater lilelihood of op-ups etc.

As for me I am being rewarded for my hard yards in economy and hopefully they do not listen to the vocal minority. If it was not for people like me then the dometic schedules would be poor overall and the so called premium flyers would have less choice for flights.

The reasoning behind my statement? You cannot fly empty aircraft and even if you sold all business class airfares on a 737 SYD-MEL-BNEl then with the 12 seats this will generate an income of ~$7,200 for the flight. The other 150 economy seats are going to generate an income of ~$22,500 (average $150 airfare). Clearly economy are miles in front even taking into consideration fuel and other factors. The other thing to consider is in my limited experience there are very few paid seats in business class on domestic flights. Most are awards and ODUs which really do not cost that much one way or another.

Anyway I feel that I am just as important as any other but at the same time I understand that there will be other Platinums who are more "valuable" to QF and will be ahead of me in the pecking order. But if you are telling me I do not belong in the lounge or that QF shoild not be looking after me at all seriously deluding yourself.

Posted from the lounge that was built for me, us Platinums, not the business lounge. And let me you tell if only business passengers were in this lounge it would be extremely boring.

Perhaps I should head off into the Qantas Lounge next door where there are more friendly people around....

 

[iqis60]

Re: Discount Y Platinum vs. Premium cabin Platinum, who is really worth more to Qanta

Hypothetical “Sydney to Singapore return” example:

SC earnt:-

Y- 60, Y 120, Y+ 180, J 240 and F 360


To reach WP (1400sc) for the first time, requires how many return flights:-

Y- 23.33, Y 11.67, Y+ 7.78, J 5.83, F 3.89


Rough fare cost:-

Y- $1,000 : Y $2,000 : Y+ 3,000 : J $5,000 : F $7,000


Total spend to earn WP:-

Y- $23,300
Y $23,340
Y+ $23,340
J $29,150
F $27,230

So based on this, the J cabin flyer brings in the most revenue, then F, followed by Y and Y+ cabins bring in similar amounts. However we can’t just rely on the total amount because there is a significant difference between those cabins.

For argument sakes, let’s say an economy seat occupies 1 space. A premium economy occupies 2, a J flight occupies 3 spaces and a F occupies 4 spaces.

Thus the proportion of revenue per space could give an idea how much earn space earns (just like how buildings are worked out by $ per sqm etc).

Thus:

Y- $23,300 per space
Y $23,340 per space
Y+ $11,670 per space
J $9,716 per space
F becomes $6,807 per space.


Based on my scenario, a frequent flyer in Y cabin is worth the most per "space".

The cost of J/F is quite high space wise (naturally it is as they occupy much more aircraft space) but also the cost associated with the servicing of lounge and on-board meals, amenities etc.

The Y and J flyer don’t have access to a lounge (meaning less cost) until they hit 700 sc marks, so this could be up to after their 12th return flight in Y.

I will also take into account that the Y and Y+ flyer must fly more times, meaning more other costs for QF eg. fuel, wages, services etc.


Otherwise, this is too much for me to work out

Nice analysis Alanslegal! I know there are lot's of things to consider in terms of working out who is most valuable, but this one of the points I was hoping we would explore.

 

[NM]

Re: Discount Y Platinum vs. Premium cabin Platinum, who is really worth more to Qanta

Anyone who earns 1400 status credits in their membership year has attained the published criteria for Platinum Status and is therefore, by Qantas's definition, worthy of Platinum Status. How the status credits were earned does not come into play when determining worthiness to hold Platinum Status.

 

[dfcatch]

Anyone who earns 1400 status credits in their membership year has attained the published criteria for Platinum Status and is therefore, by Qantas's definition, worthy of Platinum Status. How the status credits were earned does not come into play when determining worthiness to hold Platinum Status.

Well said NM

 

[Fantic125]

Re: Discount Y Platinum vs. Premium cabin Platinum, who is really worth more to Qanta

I suppose the other thing to consider is the corporate bill in the whole equation.

As I detailed in post #6, the company I work for outlays between $2,000 to $4,000 per month for QF flights just for me.

From our Adelaide site we would usually have about 15 to 20 people doing similar travel each month.

 

[medhead]

Re: Discount Y Platinum vs. Premium cabin Platinum, who is really worth more to Qanta

Sorry, I must be missing something. :-| I took this to be a technical analysis of the costs and such. I really hope it isn't another I'm worth more than you thread. :-|

I really don't think any type of passenger is more important. A mix is needed. Not getting the bums of the seats in the back on cheap fares is just as bad as not getting bums up the front.

going back to the ADL-SYD route, I've grab a random date in early November to get the following fares:

Red-e-deal: $152
Super Saver: $274
Flexi Saver: $457
Full Flexi: $635
Business: $827

this is mid week, non school holiday and in advance, factors choose to give the best idea of a base level with influences of peak demand. I think if we look at this base case, we can assume that the peak case is going to bring in more money.

So my question, what is a reasonable break down of sales across the range of economy fares? Do I say 25% in each economy fare group?