[Confirmed] QF removing [cheap] ASAs [from web booking engine Jun 26] was 10April

[Supersonic Swinger]

Re: [Confirmed] QF removing [cheap] ASAs [from web booking engine Jun 26] was 10Apri

I'm not expecting that he will be able to fix the problem, merely be an excellent conduit into QF's middle management in Sydney that this issue and the Priority Boarding issues are important to us and we (AFF members) control a large revenue spend, so ignore at their peril .

I'll bet he had little idea about how important xASA's were to (some of his) corporate and retail clients until he was briefed by samh004. Now that his eyes have been opened, time for me to follow up and continue to keep him briefed. Will have to take my iPad so he can read some of the comments from us all.

Definitely will be interested to hear what they have to say, but somehow I doubt they'll be able to do anything about the juggernaut turning QFF into a frequent shopper program which makes the concession to more regular flyers of slightly higher shopping points. Velocity is no different, it just allows flyers to reach those concessionary levels quicker and provides more shopping points once you've reached them.

 

[Happy Trails]

Re: [Confirmed] QF removing [cheap] ASAs [from web booking engine Jun 26] was 10Apri

QF..........

Worth a try then I would think.

 

[Deleted User]

Re: [Confirmed] QF removing [cheap] ASAs [from web booking engine Jun 26] was 10Apri

looking at burning some points on some MASA's, Flightstats not showing "U" availability, however J Classic award is showing as available on Qantas site..... Am I correct in remembering that Red Roo said if there is a classic available, then a MASA can be requests...?

Or am I missing something...?

I'd go for it. Please post reports here

Might try in the morning... but I was going to do all VA in August because of all this ASA removal rubbish...

If QF give me the run around booking a MASA then I'll just book to VA, after all that's what they want for removing online access for these....don't they Red Roo

 

[JohnK]

Re: [Confirmed] QF removing [cheap] ASAs [from web booking engine Jun 26] was 10Apri

Thank you for that - I look forward to some common sense being shown by QF.

Are QF cutting out DSC offers as well?

 

[Deleted User]

Re: [Confirmed] QF removing [cheap] ASAs [from web booking engine Jun 26] was 10Apri

Are QF cutting out DSC offers as well?

I know you will be disappointed JohnK, however at the moment there has been no mention of this, so best to keep your fingers crossed for a bit longer

Also your posting in the wrong thread, this is the ASA thread not a DSC thread

 

[JohnK]

Re: [Confirmed] QF removing [cheap] ASAs [from web booking engine Jun 26] was 10Apri

Also your posting in the wrong thread, this is the ASA thread not a DSC thread

It must have been the "common sense" comment that threw me off then. :mrgreen:

 

[Deleted User]

Re: [Confirmed] QF removing [cheap] ASAs [from web booking engine Jun 26] was 10Apri

looking at burning some points on some MASA's, Flightstats not showing "U" availability, however J Classic award is showing as available on Qantas site..... Am I correct in remembering that Red Roo said if there is a classic available, then a MASA can be requests...?

Or am I missing something...?

Secured ADL > PER JASA 36k with ~$240 co-payment....

Tanya was very nice and helpful and knew exactly what I wanted without too much prompting

 

[Newk]

Re: [Confirmed] QF removing [cheap] ASAs [from web booking engine Jun 26] was 10Apri

Secured ADL > PER JASA 36k with ~$240 co-payment....

Tanya was very nice and helpful and knew exactly what I wanted without too much prompting

Well done. Now you have to work out your "legroom indicator"

 

[medhead]

Re: [Confirmed] QF removing [cheap] ASAs [from web booking engine Jun 26] was 10Apri

Further update: meeting organised and confirmed for Thursday at 2.30pm

Will post update Thursday night

A thought I had today about this relates to the cost of providing SC and points. I realised that Qantas/Jetstar already provide SC and points for a cost as per the Jetstar bundles. All of the ASA that I've booked have involved a margin over the classic award rate that was more than more than the cost of a bundle on Jetstar. When I say a margin I mean the cash co-payment was more than the classic award cash amount with points set at the same level as classic awards.

I mention this because the cost of providing SC and points was suggested as a reason for this change. If qantas management think cost is an issue, I think it is worthwhile reminding them that ASA already cost more for at least as much as what SC and points cost on Jetstar. If they really think this is a problem then the answer has got to be pricing to deal with that, in the context of what SC and points cost on Jetstar.

 

[Supersonic Swinger]

Re: [Confirmed] QF removing [cheap] ASAs [from web booking engine Jun 26] was 10Apri

A thought I had today about this relates to the cost of providing SC and points. I realised that Qantas/Jetstar already provide SC and points for a cost as per the Jetstar bundles. All of the ASA that I've booked have involved a margin over the classic award rate that was more than more than the cost of a bundle on Jetstar. When I say a margin I mean the cash co-payment was more than the classic award cash amount with points set at the same level as classic awards.

I mention this because the cost of providing SC and points was suggested as a reason for this change. If qantas management think cost is an issue, I think it is worthwhile reminding them that ASA already cost more for at least as much as what SC and points cost on Jetstar. If they really think this is a problem then the answer has got to be pricing to deal with that, in the context of what SC and points cost on Jetstar.

Interesting point, but I think they would view the base Jetstar fare as being what they were prepared to accept to cover all of their operating costs plus profit margin. Charging for a bundle is cream on top. Classic awards as originally designed when AA invented them were to enable unfilled seats to be given away to loyal flyers, not as revenue seats seats covering operating costs plus margin. Allowing xASA's at Classic rates to earn points and SC is probably viewed by Revenue Management as providing the 'benefits' of loyalty without the passenger paying the equivalent fare, which is why they've moved offline and who knows, by the end of the year will have disappeared completely.

 

[medhead]

Re: [Confirmed] QF removing [cheap] ASAs [from web booking engine Jun 26] was 10Apri

Interesting point, but I think they would view the base Jetstar fare as being what they were prepared to accept to cover all of their operating costs plus profit margin. Charging for a bundle is cream on top. Classic awards as originally designed when AA invented them were to enable unfilled seats to be given away to loyal flyers, not as revenue seats seats covering operating costs plus margin. Allowing xASA's at Classic rates to earn points and SC is probably viewed by Revenue Management as providing the 'benefits' of loyalty without the passenger paying the equivalent fare, which is why they've moved offline and who knows, by the end of the year will have disappeared completely.

Ok just have a think about this for a second. I'm also struggling to understand how Jetstar having lower fares is relevant. Jetstar charge extra above the fare to provide the bundle benefits, which basically boils down to SC and points. The bundle fee, the cream, is paying for the extras. So that tells us something about the cost of the extras, and that is the point. As I said my ASA have always involved an extra cost, the cream, above classic cost.

In a similar vein Classic Awards on Qantas are what Qantas is prepared to accept to cover the operating costs plus profit margin of a seat in the relevant class on a qantas flight. The classic award is analogous to the base fare. As I said, my ASA have always cost more, they have not been at classic rates even if the base points cost is the same. I am not suggesting getting ASA at classic rates, that is clearly stated in my previous post. I seriously do not know why you would even suggest that I'm talking about ASA at classic award rates. As I already said, ASA already involve an extra cost that is more than the cost of the bundle on Jetstar. As such ASA already involve extra to earn SC and points and they are not getting the benefits of loyalty without paying for it.

Getting back to the point of my post if revenue management think there is a problem, they really do not understand what people are paying and I'm suggesting that they should be reminded of that fact if the cost of SC and points are raised in the meeting on Thursday. Then as per my last sentence, if they still think there is a problem then the first step should be a reasonable review of the pricing in the context of the cost of jetstar bundle. Rather than throwing the baby out with the bathwater and re-pricing ASA to a million points.

 

[Newk]

Re: [Confirmed] QF removing [cheap] ASAs [from web booking engine Jun 26] was 10Apri

Medhead---> I get where you are coming from. I like your argument. Makes perfect sense to me.

 

[Supersonic Swinger]

Re: [Confirmed] QF removing [cheap] ASAs [from web booking engine Jun 26] was 10Apri

medhead, unfortunately Classic awards aren't analogous to the base fare.

Airlines place an internal accounting $ value on each outstanding point. Some US airlines publish this in their financial statements. I looked at Delta's accounts in 2010 which stated their value at the time of the Northwest acquisition in 2008, and what they were valuing them in 2010 (of course it was less in 2010). With “View in Points”, Qantas effectively does – one-way SYD-MEL I just searched for Friday came up at:

Red e-deal = $169, 21,100 points – 0.8 cents per point
Flexi Saver = $289. 36,100 points – 0.8 cents per point
Fully Flexible = $561, 70,900 points – 0.79 cents per point
Business = $580, 73,400 points – 0.79 cents per point.

SYD-LAX one-way in J for this Friday is $10,378 (wow), 1,176,000 points – 0.88 cents per point. So roughly 0.8 cents per QFF point.

Using SYD-MEL. Revenue Management is fairly certain that on average a least 5% (guessing) of seats will go unsold. So they make 5% of seats available to Frequent Flyer as Classic Awards. For an Economy Classic redemption, Revenue Management would get $64 from Frequent Flyer for that seat to that flight's revenue (8,000 x 0.8 cents) or $128 for a Business Classic (16,000 x 0.8 cents), plus taxes / fuel surcharges paid by the redeemer. Compared to the paid fares of say $250 Economy or $670 Business.

ASAs open up to Frequent Flyer the other 95% of seats Revenue Management tries to sell for cash. Using 'View in Points” ASA, revenue for the flight on those 95% of seats will not differ whether sold for cash or to Frequent Flyer for ASA redemptions.

Using SYD-LAX in J, if a J seat was still available at Classic award rates of 96,000, the old website may have shown an ASA seat for (guessing here) 200,000. A seat Revenue Management may have been able to sell for $10,378 would now get revenue from Frequent Flyer of $1,600. You could argue that if the seat was available as a Classic Award, they should be happy to be getting the higher rate but it still affects the reporting of how well the flight did financially (plus one seat no longer available for anyone trying to redeem a Classic Award). $1,600 would be well below the cost of production for a seat which could have sold for $10,378.

I'm not sure what Qantas' flight operating margins are, but let's say 10%. So for an ASA to cover the costs of the revenue seat, the points required would need to be worth at least 90% of the revenue fare.

I suspect since the cheap ASA's have been around, Revenue Management would have been pressuring for this change, saying if flyers wanted to redeem their points, redeem at Classic rates for the 5% of seats made available for that, otherwise pay at rates which equate to the cash value of the seat. If you didn't want to book the J seat at 96,000 Classic award rates (for which Frequent Flyer would pay Revenue management $768), either pay the $10,378 for J, or $1,500+ for a Y seat.

I wish as much as anyone cheap ASAs weren't going away, my easy 80 status credits towards requalification on SYD-BNE-SYD in J for 48,000 are gone, now they are to be had for 130,000. They were the only real positive other than lifetime status I could see in QFF, but sadly I don't think any negative reaction on here will be significant enough to stop them withering away. Bundles only work with Jetstar because you've already paid a fare which should cover 100% of the operating expenses plus providing a 10% margin before you add on the bundle.

 

[Newk]

Re: [Confirmed] QF removing [cheap] ASAs [from web booking engine Jun 26] was 10Apri

I don't want to take up medhead's "fight" but

"Using SYD-LAX in J, if a J seat was still available at Classic award rates of 96,000, the old website may have shown an ASA seat for (guessing here) 200,000. A seat Revenue Management may have been able to sell for $10,378 would now get revenue from Frequent Flyer of $1,600. You could argue that if the seat was available as a Classic Award, they should be happy to be getting the higher rate but it still affects the reporting of how well the flight did financially (plus one seat no longer available for anyone trying to redeem a Classic Award). $1,600 would be well below the cost of production for a seat which could have sold for $10,378."

Ok, you accept that there are some circumstances where they are happy to sell at "classic rates". So there is no argument there?
What I think Medhead is saying is, ok, let's take it from there, rebundle it as an ASA and you sell us some status credits to go with it. To me this doesn't seem incompatible with your fine reasoning.

It is likely that I'll now bow out of this discussion as it can go on forever with neither side giving ground

 

[medhead]

Re: [Confirmed] QF removing [cheap] ASAs [from web booking engine Jun 26] was 10Apri

medhead, unfortunately Classic awards aren't analogous to the base fare.

Airlines place an internal accounting $ value on each outstanding point. Some US airlines publish this in their financial statements. I looked at Delta's accounts in 2010 which stated their value at the time of the Northwest acquisition in 2008, and what they were valuing them in 2010 (of course it was less in 2010). With “View in Points”, Qantas effectively does – one-way SYD-MEL I just searched for Friday came up at:

Red e-deal = $169, 21,100 points – 0.8 cents per point
Flexi Saver = $289. 36,100 points – 0.8 cents per point
Fully Flexible = $561, 70,900 points – 0.79 cents per point
Business = $580, 73,400 points – 0.79 cents per point.

I'm not sure how hard this has to be. It really is a very simple concept. We are talking about 2 options:

1. Buy a classic award
2. Buy an asa in a classic award fare bucket.

Qantas set the price of the classic award, they determine how many they sell. Presumably they are happy to sell the number of seats that they release for the price they set. That's option one.

Under option 2 the classic award inventory is depleted when the ASA is purchased. So you're buying a classic award fundamental, just that it earns sc and points. Therefore it is analogous to the base fare. The extra cost involved in purchasing an ASA is then the same as buying a bundle on JQ. As I said in the case if JQ it doesn't matter what the base fare costs, the bundle is purchased extra on top of the base fare. It is the bundle that pays or the SC and points.

So it is a simple matter of setting the extra cost for ASA to cover the cost of the SC and points.

Outside of that the analysis of return on classic awards is irrelevant. I will say that the value per point that qantas will give in buying a flight is not a good indicator of the nominal cost they set. But that is another discussion that has no bearing on my point. We are talking about buying a classic award as an ASA here. The classic award is equivalent to the base fare.

 

[MYT105]

Re: [Confirmed] QF removing [cheap] ASAs [from web booking engine Jun 26] was 10Apri

From my view point the simplest thing would be to have a classic award seat with the option to tick a box to add a bundle that would offer SC earn on the flight, say at a 5-10% additional cost on the cash component on long haul, or $40-50 dollars for short haul (i.e. small cash component fares). Lets be honest the majority are not flying ASA's to earn points we are doing it to earn the SC's to keep, or earn, status.

FOr example, a MEL-SYD JASA costs 16K points and about $88, at least last November it did, and only earns 1,250 points and 40SC's. Yes it would be nice to recoup some of the points cost but it is mainly the SC's earn, as a classic seat this would have been 16K points and about $30-40 cash. So for a $40-50 extra in cash I would pay to earn the SC's.

 

[Supersonic Swinger]

Re: [Confirmed] QF removing [cheap] ASAs [from web booking engine Jun 26] was 10Apri

NewK and medhead – You’re missing the interplay of classic award seat availability and the cash prices offered on the other seats on a particular flight.

Revenue management make those (say) 5% of classic award seats available because their analysis and yield management means they don’t expect to sell them as revenue fares. The prices for the 95% of cash seats are set to cover flight costs and margin on this ‘unsold inventory’ assumption. The revenue they get from selling classic award seats to FF is marginal revenue for the flight if someone chooses to redeem a classic award.

If some is prepared to book those seats under a cheap ASA at rates above a classic award, it says to revenue management that their yield management isn’t as good as it could be and they probably could have sold 96 or 97% of seats for cash – and maybe even adjusted downwards slightly the prices for the 95% of revenue seats to stimulate demand.

If they were to sell it with a bundle that bought the overall points cost to say half way between a Classic and cash price, assuming 10% operating margins they are still losing 40% of their unit cost on the seat, versus a 10% profit margin on cash paid seats – yet still rewarding that flyer with the same number of status credits and points as someone who paid the cash price (effectively cash payers on a flight subsidizing the cheap ASA users).

The difference with the Jetstar bundles is that you have already paid a price which provides the 10% profit margin for the seat – asking a flyer for an extra $50 for status credits and $8 worth of FF points doesn’t change the economics of the underlying seat.

Yield management (ensuring the average seat price on a flight is enough to cover operating costs and margin) is one of the most complex aspects of running an airline and each airline has an army of yield management analysts poring over this data. I’m not aware of any other airline in the world which allows cheap ASAs and their impact on overall flight yields, and they would have been on yield management’s radar from Day 1 when looking at overall flight yields. I’ve discussed cheap ASAs with people who work at other airlines around the world and they’ve expressed surprise that a commercially savvy airline as Qantas has allowed them to depress yields for so long. Our loss unfortunately.

 

[amaroo]

Re: [Confirmed] QF removing [cheap] ASAs [from web booking engine Jun 26] was 10Apri

I’m not aware of any other airline in the world which allows cheap ASAs and their impact on overall flight yields, and they would have been on yield management’s radar from Day 1 when looking at overall flight yields. I’ve discussed cheap ASAs with people who work at other airlines around the world and they’ve expressed surprise that a commercially savvy airline as Qantas has allowed them to depress yields for so long. Our loss unfortunately.

Summed up perfectly.

 

[Deleted User]

Re: [Confirmed] QF removing [cheap] ASAs [from web booking engine Jun 26] was 10Apri

another angle is that these MASA's also add value to the QFF program, this is not easy to measure but it must count for some of the memberships who do these types of bookings, the removal of such will affect the program, but only by small numbers...?

QFF is the most profitable FF program in the world, and is in that position for some people due to the fact that they collect points in the program to be used on ASA's

 

[asg29e]

Re: [Confirmed] QF removing [cheap] ASAs [from web booking engine Jun 26] was 10Apri

NewK and medhead – You’re missing the interplay of classic award seat availability and the cash prices offered on the other seats on a particular flight.

Revenue management make those (say) 5% of classic award seats available because their analysis and yield management means they don’t expect to sell them as revenue fares. The prices for the 95% of cash seats are set to cover flight costs and margin on this ‘unsold inventory’ assumption. The revenue they get from selling classic award seats to FF is marginal revenue for the flight if someone chooses to redeem a classic award..

Supersonic Swinger, your argument is persuasive, but one thing the yield management gurus may not have considered is that virtually NOBODY treats QFF points as a cash equivalent. (At least nobody properly engaged with this forum.) And I don't think quadrupling the price of a xASA will change that. I know of nobody on this forum who would be silly enough to burn a million points or so for a so called "any seat award" flight that can be booked on-line, one way to Europe.

So how are our points all going to be burned, if its not on toasters, gift cards and on-line points + pay flights? Clearly the answer is classic awards and upgrades. So, if there is an decrease in xASAs (and I mean the proper pre June ones here) there may well be an increase in classic award redemption, all out of the same fare bucket. So I think Medhead's argument does hold a little bit of water at least.

I just cannot see a major upswing in full cost point + pay type redemption because of these changes. I think it is more likely people will simply direct their credit card spend to FF programs which provide better availability and cheaper redemption than Qantas. ie just about anywhere else.

Mind you, I'm not a yield management expert so what would I know?