Pay Or Complimentary Upgrades When US Merges With AA?

Discussion in 'US Airways | Dividend Miles' started by Gulfstream 550, Mar 16, 2013.  |  Print Topic

  1. Gulfstream 550

    Gulfstream 550 Silver Member

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    I truly enjoy the complimentary upgrades on USAirways, it is what keeps me loyal to them. A few months ago returning to Phoenix from a non US served city in Texas I flew home on AA. At DFW I asked about upgrading and my AA Advantage account has almost nothing in it because I fly US and UA for everything. Anyway, I paid to upgrade to First and on a DFW-PHX flight on AA metal I had warm nuts, salad, full entree, cookies, snacks and actually was called by my name. I could justify an AA paid upgrade. But when the merger begins to happen with the programs, will we US elites be paying for upgrades on AA metal or having to use miles for the upgrade, or will complimentary upgrades remain domestically?
     
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  2. Mapsmith
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    Mapsmith Gold Member

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    Expect double the number of people trying for upgrades and you can probably figure out the answer. I really expect the difficulties that showed up when Northwest was merged with Delta and when United and Continental "tied" the not. (not so obvious pun intended)

    I am glad that I am a lowly plywood on AA. But I am worried that I may have to start connecting thru PHX on any flight from TUS.
     
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  3. Mike Reed

    Mike Reed Gold Member

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    Same number of people on the same number of flights. It's not like planes and routes are going to disappear overnight.

    Also, AA hubs at LAX and DFW, so I wouldn't expect them to drop non-stop service from there.

    Sent from my iPhone using milepoint
     
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  4. DeacFlyer1
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    DeacFlyer1 Silver Member

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    It's not that simple. I live in CLT, and I've been taking a lot of trips to LAS lately. The nonstop fares on US are sometimes more than my client allows me to spend, so I often end up connecting in PHX. However, with a merged airline, connecting through DFW now becomes a viable option. In that future scenario, I'm now competing with a whole different set of elites for upgrades to get me to the same destination, despite the net overall number of elites/flights being the same.
     
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  5. John777

    John777 Silver Member

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    And in the same way, PHX connections now become viable for some who were previously connecting at DFW...so it will even out to a certain extent.
     
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  6. Canadi>n
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    Canadi>n Gold Member

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    I like the AA upgrade system of NAmerican flights. Only top tier elites (ExecPlat) get unlimited comp'd upgrades to F (or C if transborder to Canada, Mexico and the Caribbean) and this must be applied for proactively when making a reservation, everyone else must use an instrument: 500s, miles or $s. Having experienced the UA version as a 1K where every elite is eligible for upgrades (same as US I understand), I dislike the crowded F cabins and disappointment it leads to among lower tier elites who have no hope of getting their upgrade most of the time unless they try to use miles when they book their flights.

    This is one of the reasons AA can provide what I feel is a superior front cabin experience, both in catering and personal contact. More often than not, F/C cabins are not always full so there's a more relaxed atmosphere in the cabin.

    However since US uses the same unlimited upgrade policy for all elite tier members as UA, I can see US members being upset if the AA approach is kept.
     
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  7. Mike Reed

    Mike Reed Gold Member

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    Empty F seats is bad. It's either lost revenue or lost opportunity.

    Sent from my iPhone using milepoint
     
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  8. mattsteg
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    mattsteg Gold Member

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    You do get people who had previously split between AA and US now having higher status on the combined airline, and with the combined flight network a better chance for more people to stay on their carrier. For example someone who had previously split between US and UA to stay in-alliance may now have options on AA.
     
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  9. austin_res

    austin_res Silver Member

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    +1. AA system limits the number times lower tier elites request upgrades, limiting competition and thus, boosting my upgrade odds when I do request them. With unlimited upgrades for all elites, there is much more competition.

    The first class cabin is always full on my AA flights so the upgrade system works well for AA.
     
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  10. gleff
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    gleff Co-founder

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    I expect the US Airways system of complimentary unlimited upgrades, American is the last remaining holdout with the older system of earning 2000 miles of upgrades for every 10,000 flown (requiring passengers to buy 'stickers' if they want more). It's a loss of revenue to the airline to drop the system, but it's hard to imagine 'free' upgrades being 'taken away from' US Airways elites. Still, I have always believed the American system is better for lower tier elites because they aren't competing against every other elite every time for an upgrade -- meaning the chances of actually getting the upgrade are better whenever choosing to request it.

    I don't think it's as simple as 'twice as many elites' so upgrades will be harder. It's also not as simple as "same number of elites, same number of planes" either. Some routes will be easier for some elites, some will be harder.

    American has more first class seats, a greater percentage of the plane as first class seats, on similar aircraft. US Airways elites flying on what ultimately are operated by legacy American aircraft will have an easier time of the upgrade. American elites flying on what ultimately are operated by legacy US Airways aircraft will have a tougher time of the upgrade. That assumes the fleets aren't altered to match each other, I wouldn't expect that they would be. Worth noting that US Airways is increasing the size of the first class cabin on some planes, but will still have smaller cabins than American.

    Some routes will shift, some flights won't make it, other flights will be added, the world will be different.. some winners, some losers, based on what we know now.

    And of course there will be changes to the programs, some wins and losses there too, and some changes that might have happened anyway without the merger but accelerated by it or happening concomitantly with it so will be blamed on the merger.
     
  11. mattsteg
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    mattsteg Gold Member

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    Overall probability depends heavily on other factors - size of cabin, day/time of flight, routes flown, etc.

    If someone is flying almost exclusively domestic leisure travel with flexible schedules, and the cabins aren't tiny, it's pretty easy to far surpass the ~20% upgrade rate the AA system gives. 25k fliers are more likely to do somewhat better with the AA system, or people always on business routes/times, but even flying out of DL's MSP fortress my Gold colleagues seem to average around 50% on business travel to a wide variety of destinations and as a Plat I tend to clear about 75% or so, with the non-upgrades overwhelmingly involving specific markets. The second half of 2011 I avoided those markets and as a Gold/Plat cleared 23 straight upgrades. If you're mostly clear of the mega-hubs and major destinations like LAX/SFO/NYC and not always traveling at peak times, you'll clear more times with the "unlimited" system if you're doing 50k+ a year, at least in my experience. Where the AA (or UA for that matter) system is better is that you get actual usable instruments to upgrade companions.
     
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  12. JetsettingEric
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    JetsettingEric Silver Member

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    My guess is that the new American will keep the sticker system. At US, many of the major decisions were about being cost neutral. You replace the snack basket on super short and on meal flights, but you get upgrade meals and glassware. I believe it was pitched as cost neutral but overall benefiting the passenger. The new system will be American's, so adopting a lot of their policies would be easier.

    Top tier elites will still get their unlimited upgrades, and I would imagine mid-tier to bottom tier elites will have to pay for them. This is similar to the situation at UA, where upgrade rates are low for mid-tier and lowest tier elites, and to secure an upgrade, miles, tens-of-dollars, or a certificate was needed. I've been on many transcons where my regional cleared the waitlist and the complementaries did not. To be profitable, the F cabin needs to bring in additional revenue to cover the incremental costs and the lost half a seat. Charging for stickers will increase the upgrade rate for lower tier elites and bring in more revenue for the company. Currently, US elites get to upgrade their companions for free, i wouldn't be surprised if i need stickers for that in the future.

    Hopefully, if stickers are kept, I hope the meal standards of AA are kept. I'm fine with a full meal for flights 3.5 hours or longer (basically transcons and close to transcons) and a substantial snack for flights 2.0-3.5 hours long. That snack in my opinion should be hot (there are ovens on all the planes except the Embrarers) but could be a smaller portion, think soup & salad, pizza, sandwich. The scale of the combined AA should make it easier to offer. With the current US structure, there are many midwestern, south and east coast cities where no catering is necessary (just load up 2 snack baskets at the hub, think anywhere where you don't fly to PHX). But with more flights and more hubs, the economics for more catering just might make sense.
     
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  13. Luvmyyacht

    Luvmyyacht Member

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    Hopefully the fact that American Airlines won two categories of the Freddie Awards will convince the new AA to keep advantage!
     
  14. Luvmyyacht

    Luvmyyacht Member

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    I have been executive Platinum from 1999to 2013 on AA Now, I am Chairman on US Airways. I got to that level in November of 2012. The airline use change took place because of a move from Tulsa to Florence South Carolina. The Advantage program took the Freddie Awards because it truly is a better program. I have first hand experience with both programs.
     
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  15. rrgg
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    rrgg Silver Member

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    That's interesting. If you think AA's system produces more revenue than maybe new management will see dollar signs and want to keep it. After all they have the perfect excuse to drop the US approach (US name is gone. DM name is gone.).

    To me the strongest argument for adopting US rules is simply that US management will be in charge. They will have a bias to sticking to what they know.
     
  16. mattsteg
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    mattsteg Gold Member

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    Well, there are a lot of ways to derive revenue from those seats:
    1) Sell them
    2) Sell upgrades
    3) Give away upgrades to incentivize customers to book consistently with AA, even when fares are higher

    At the end of the day, you're dealing with complex revenue models. Selling upgrade instruments and upgrades certainly provides a revenue stream, but the relationship to total revenue is complex. As loyalty programs become less lucrative and competition decreases, the contribution of 3 to total revenue likely becomes less valuable...
     
  17. Pizzaman
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    Pizzaman Co-founder

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    I definitely think the new AA will get better at selling F seats as upgrades. From a business perspective this is an area they don't do a great job of now. While I'm happy as a customer to have an empty F seat beside me it is a truly missed opportunity.
     
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  18. Newscience

    Newscience Gold Member

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    I very much agree with your outlook. I fly internationally for business on full fare coach class tickets. When travelling on United, I almost never have been upgraded to business class, and can plainly see the empty business class seats from my coach class view. When travelling on Lufthansa and other "United partner airlines" in this same fare class, I've been upgraded, and shared seating with similarly upgraded coach class passengers.

    It's become rather clear which airlines are willing to not have empty business class seats on it's flights, and what airline clearly doesn't much care. If AA merges with US, being known as more customer-friendly will help them with their competition!
     
  19. Seacarl
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    Seacarl Gold Member

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    There are no airlines offering complimentary upgrades on intercontinental business class flights. All require you to use instruments, mileage awards or cash. The only exception is operational upgrades when Economy is overbooked and premium cabins have empty seats. The occurs most often at Christmas and the summer holidays when business travel is light. Lufthansa is relatively stingy with upgrades as are most European and Asian carriers. Among U.S. carriers, DL is very tought with its system-wide upgrades only valid with Y & B fares (maybe M, not sure) which are very high coach fares and there are often discounted business class fares that are cheaper. UA allows use of their GPUs with fare classes from W and up, which are reasonably discounted fares, but not the cheapest. AA is alone in not having fare class restrictions on their SWUs, I'm not sure about US. All the U.S. airlines charge co-pays when using mileage awards for upgrades on intercontinental routings.

    The belief that foreign airlines are more generous on intercontinental upgrades is wrong, and none of the U.S airlines do them complimentary as a matter of course.

    It is likely that initially AA won't change their SWU policies, but once they have overcome any merger pains, I would not be surprised to see them follow the model of at least UA and set minimum fare categories for use of SWUs.

    Regarding domestic upgrades, AA could follow either the US model (complimentary) or the AA model (500-mile certificates). In either event I expect that the new airline will be more aggressive about selling upgrades before giving them away.
     
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  20. Newscience

    Newscience Gold Member

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    Nevertheless, it has happened to me, during non-holiday travel, more than once. Perhaps economy class was overbooked each time, who knows? Nevertheless, the business class seats were subsequently filled with pleasantly surprised economy travelers. And I never expect this to occur on United, and am never disappointed, while I view those empty business class seats from my vantage point in steerage class! :(
     
  21. Art234
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    Art234 Milepoint Guide

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    Doug Parker is all about the money. He could care less about customers or employees. He considers most elites freeloaders, so I think the sticker program will "stick".

    The truly sad part will be when he ruins AA like he did US by stepping over dollars to pick up pennies. He sold a bill of goods to the employees which will come back to roost not long after the merger as well.
     
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  22. Seacarl
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    Seacarl Gold Member

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    You got an op-up. All airlines will do op-UPS to resolve overbookings. This is most likely at times of low business travel. Holidays. Most international airlines are less generous with upgrades than UA and other U.S. airlines and all will fly with empty C seats if not sold out
     
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  23. Newscience

    Newscience Gold Member

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    Absolutely! UA only loses when it does not treat it's frequent flyer customers in the same manner. Does the airline really save by keeping those business seats empty? Or could they perhaps then create a more avid (and much happier) customers of their airline, when they upgrade in this manner?

    BTW, Milepoint member MeFIRST explains in detail about the "toxic" atmosphere created by UA at certain airports in the following posting, that I've also experienced first-hand:

    http://milepoint.com/forums/threads...siness-intervention.73813/page-3#post-2208291
     
  24. DeacFlyer1
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    DeacFlyer1 Silver Member

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    Ahhhh, there's some of that good 'ole Art234 neutrality and sunshine I haven't seen around here in a few months! I honestly don't know which way this decision will go...but if they keep the sticker system because it's more profitable (gasp!), how can you fault that decision? A CEO trying to run a profitable business and be accountable to shareholders? The horror!

    As for your second sentence, I had no idea US was in ruins. In fact, from my ~80 flight a year customer perspective, things are better than they've ever been in the five years I've been consistently flying the airline.
     
  25. Pizzaman
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    Pizzaman Co-founder

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    The interesting thing to consider here is I don't think there's s compelling business reason for AA to institute a minimum fare class for SWUs. Sure, they could copy their competitors. But I don't know that you can count to significantly higher revenue because of SWUs. For starters, there aren't a ton of SWUs out there with only essentially top elites receiving them. Second, I'm sure I'm not the only one who doesn't buy higher class fares to use my UA SWUs. Either I burn them on domestic flights or give them away if I can't use them internationally at the ticket price I want to buy.

    Bottom line. My AA SWUs get used every year for the most part on international travel. I could book those tickets on UA but choose to give that business to AA due to their as away policy.
     
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