Upgrades? Pffttt

[Platy]

my question would be this 1) if QF knows there will be availabity in (say) J, why can't they process upgrade request "last minute" at the gates, just prior to boarding??

In other threads the question of catering was raised as a possibility - not enough meals allocated to the flight! Some posters feel that it is nuts to over-cater in anticipation of some passengers requesting last minute upgrade due to costs incurred of wasted meals, others feel it is crazy to allow a catering issue to stand in the way of filling a seat and promoting customer service.

On an international flight there would be a reasonable amount of time between a last minute paying customer and the time of departure to manage to manage ODUs

 

[NM]

Good Grief... in NO way was I implying that the mothers and their children not be allowed on the flight.. I am a mother myself.... I was simply stating that the airline should NOT have sold the seat situated between them.... I will leave it at that.

But as a mother, if travelling with children would you be prepared for the airline to charge you for that seat that now cannot be sold to a paying passenger? I suggest there would be few families willing to pay a surcharge to compensate the airline for the inability to sell the seat next to them.

When I travel in long-haul economy, I go prepared with my Shure e3 in-ear earphones to block out the cabin sounds around me. Some people also like to use eye shades to block out the light and movement around the cabin. And still others find it beneficial to obtain a prescription from their doctor for something like Stillnox to help "isolate" them from their surroundings.

 

[Travel Guru]

I think missanalytical is over dramatizing the situation somewhat.

If you did as you suggested pay extra to upgrade from a non-upgradeable fare to an upgradeable, then at worst, jumping up to a V class fare is going to set you back $168 (based on the current gross difference between the base N class fare and the V class fare) which is not what i'd call a "significant" amount of money, i've lost more in one hand of blackjack, so i'd see it as more of a gamble which in this case didn't pay off.

If Qantas want to fly their plane with empty seats in Business, that's their choice, and I hardly see you've got any grounds to complain simply because you didn't get your upgrade.

I have no issues with regards to Qantas' current upgrade policies, and as someone who flys J regularly (and pays for it myself from my own business) I would prefer to limit the number of people in the cabin rather than seeing a whole heap of "cubbies" who have zero status using their 3 trillion points theyve gained from credit card usage to gain the same benefit i've paid 10k for that they've paid 2k.

TG

 

[dajop]

For all our theoretical squabbling, its Qantas that has regained its title as the most proftable airline in the world.. what does that tell you?

Probably sums the situation up quite well. Contrasts to other parts of the world (one in particular) who do not have particularly profitable airlines (although that is changing) where an upgrade doesn't seem to be just a privilege - instead it seems to be a right.

 

[superchris]

I think missanalytical is over dramatizing the situation somewhat.


If Qantas want to fly their plane with empty seats in Business, that's their choice, and I hardly see you've got any grounds to complain simply because you didn't get your upgrade.

I have no issues with regards to Qantas' current upgrade policies, and as someone who flys J regularly (and pays for it myself from my own business) I would prefer to limit the number of people in the cabin rather than seeing a whole heap of "cubbies" who have zero status using their 3 trillion points theyve gained from credit card usage to gain the same benefit i've paid 10k for that they've paid 2k.

TG

Way to go TG, I agree 100%

 

[Platy]

Contrasts to other parts of the world (one in particular) who do not have particularly profitable airlines (although that is changing) where an upgrade doesn't seem to be just a privilege - instead it seems to be a right.

Yes indeed, but with absolutely no competition for J in the domestic market and extensive government protectionism on the Australia - USA route QF do have a couple of substantial leg ups (although I am not suggesting by any means that is anywhere near the whole story) not to mention the clearing of their debt during the QF/Australian merger. They have also slowly but surely downgraded their service levels (notably domestic J) and put in place a series of price gouging tricks (booking fees, credit card fees, fuel surcharges, fuel surcharges on redemption flights, etc), which may have also contributed to profitability. You even have to pay $10 to change a fully flexible business class domestic fare on the phone these days!!!

Ironically, one of their strengths, the relative lack of debt for an airline, was a key factor making them attractive (or vulnerable depending upon your point of view) to private equity buy out (gear the asset against greater debt and remove a load of cash out of the system).

Are you trying to relate QF's profit to preventing people from upgrading?

Several US airlines historically hit financial bottom under with unused frequent flyer point liability a key factor (eg. Continental).

QF have a HUGE liability in unused frequent flyer points, which apparently is accounted for in such a way that it only becomes a real liability if they sell off their frequent flyer scheme, or, ironically, if people use their points.

Business smart? Yes, of course! But only if you don't piss off a critical number of customers. At the end of ther day, they are the principal source of your revenue.

So the key question is are we witnessing short term profit, which is sustainable, particularly as competition increases (eg Emirates are to extend their flights top Australia considerably including three times a day to major cities and Darwin and Cairns to come).

It will be interesting to see what happens as the story unfolds!

 

[Platy]

at worst, jumping up to a V class fare is going to set you back $168 ...i've lost more in one hand of blackjack...If Qantas want to fly their plane with empty seats in Business, that's their choice...I would prefer to limit..."cubbies" who have zero statusTG

Not everyone can afford to gamble away $168. Of course QF can fly planes with empty seats if they choose. Is that smart business? Opinions differ, but clearly the airline is not providing as many upgrade opportunities as they could (for whatever reason(s)) and that is annoying many customers (but not all).

"Cubbies" on credit cards? Don't forget for some WP is easily achieved (buy one DONE4 ex Narita for $7,500, split the journey into two across the QF anniversary date and thus essentially maintain WP $3,250 per annum) - in my case I travel almost all domestic, up to 100 flights per year, which costs me more like $20,000. To follow your cubbie argument through, maybe QF should make status based on airline spend.

 

[Travel Guru]

I think you might have misinterpreted my meaning of cubbie Platy, I was referring those "Cashed Up Bogans" who earn trillions of points on their credit card without being regular customers of Qantas' yet cough and moan when they can't use their points.

I totally sympathise with regular travellers like yourself who struggle to get upgraded, but I what I don't have is sympathy for those who think they deserve an upgrade over silvers, golds and platinums simply because of their spending habits.

I disagree that $168 is alot of money for anyone who can afford to travel overseas, when compared to a 2k airfare or $500 in taxes, its a drop in the ocean, and whilst I wouldnt spend it in the faint hope of an upgrade, those who are prepared to should see it as it is, a gamble.

TG

 

[dajop]

Are you trying to relate QF's profit to preventing people from upgrading?

Not saying that it is fully correlated, but yes it is related - once you start giving way upgrades in such numbers that they are actually expected, then you start converting $8K fares in to $2K fares as people start aligning their purchase decisions with their expectations around upgrade probabilities. And I suspect QF profits is not entirely unlinked to the revenue they collect from their long haul J cabins.

 

[NM]

Not saying that it is fully correlated, but yes it is related - once you start giving way upgrades in such numbers that they are actually expected, then you start converting $8K fares in to $2K fares as people start aligning their purchase decisions with their expectations around upgrade probabilities. And I suspect QF profits is not entirely unlinked to the revenue they collect from their long haul J cabins.

And of course its a self-fulfilling situation because there are less people paying the $8k fares so there are more empty seats available for upgrades from the $2k fares.

 

[Platy]

I think you might have misinterpreted my meaning of cubbie Platy, I was referring those "Cashed Up Bogans"...I disagree that $168 is alot of money for anyone who can afford to travel overseasTG

OK, apologies, I didn't get the acronym on this occasion! Remember, people's situations differ. Many earn status and points through work travel, thus don't pay for most of their own flights and have families to feed off their salaries - the odd $168 may yet dent the cash flow! In my own case, I am neglecting my business in favour of some study right now so I had the points to go to the UK first class and stay with family in July-August, but the taxes, surcharges, CNS-SYD flight etc still stung on a postgraduate scholarship!!!

 

[Platy]

And of course its a self-fulfilling situation because there are less people paying the $8k fares so there are more empty seats available for upgrades from the $2k fares.

Would not such a scenario be at least partly accentuated by the price differential between economy fares and business fares?

Certainly on many international routes (exceptions being SYD/BNE/MEL-LAX/SFO/JFK/YVR) there are competitive products, pricing and some range in product quality/value, but on domestic, with no competition, J class has increased in price substantially more than CPI, so there is an ever increasing price differential compared to an economy spend. Empty seats in such cases represents a failure to sell, which means, when all is said and done, the price for a paid seat was too high. Get the seat price right and there is less incentive to upgrade, the upgrade is worth less in value, seats get filled so upgrades are less of a temptation. I don't think customers expect to be able to upgrade if seats are taken by paying passengers, it's the sight of empty seats that can cause frisson! Flights in Europe on BA J class (equivalent) are available at disconted rates (with restrictions) and out of season can be substantially discounted (eg 70%) - in such cases there is huge incentive to buy J (D or whatever it is classified as) outright and forget risking the upgrade (do BA have an upgrade system?) or using a redemption.

 

[NM]

Would not such a scenario be at least partly accentuated by the price differential between economy fares and business fares?

Well with the QF International seat factor running at 80.4% for August 2007, and at 82.5% for the financial year to date, I don't think they have a problem with selling seats. And in my experience, they have little problems selling their international business class seats up to and beyond 80% load factors.

By the way, domestic load factors for QF are similar (80.8% for August and 82.9% FY-to-date.

 

[Platy]

By the way, domestic load factors for QF are similar (80.8% for August and 82.9% FY-to-date.

Many thanks for the figures. Yes, I agree, I don't think that there is a problem with selling J on international.

For domestic I'm not so sure, at least for the routes and times I travel. Presumbly those figures are overalll averages and are for ALL cabin classes of travel and not just business class? Are the figures for seats occupied or seats actually sold? (If seats sold, do they include staff discount seats?).

Many (but not all) of my recent domestic flights clearly were experiencing well below 80% odd loadings (seats occupied) in the business class cabin (much may depend on route and time of day - I'm not travellling SYD-MEL on a Friday arvo).

Once again, our perspective may depend on our respective travel profiles.

 

[NM]

For domestic I'm not so sure, at least for the routes and times I travel. Presumbly those figures are overalll averages and are for ALL cabin classes of travel and not just business class? Are the figures for seats occupied or seats actually sold? (If seats sold, do they include staff discount seats?).

These are the official figures, as released to the ASX, for revenue passenger seat factors. The once I quoted are for QF International and QF Domestic. they cover all cabins but only for QF flights, not JQ or QF Link. Those numbers are reported separately.

 

[Platy]

These are the official figures, as released to the ASX, for revenue passenger seat factors. The once I quoted are for QF International and QF Domestic. they cover all cabins but only for QF flights, not JQ or QF Link. Those numbers are reported separately.

Many thanks indeed for the clarification. If we are talking revenue passengers, there is a point of interest (perhaps to some!) - presumably the load factor will represent a break even point at a certain percentage. Loads above that percentage are profit. IF the break even load factor is 70%, then the additional 10% (on an average load of 80%) is the profit. Thus a 5% increase in total load (to 85%) will equal a 50% increase in profit and a 10% increase in total load (to 90%) will represent a 100% increase in profit.

Therefore every 1% increment in the average load of revenue passengers beyond the break even value has a big impact on profitability!

 

[Happy Dude]

There's a fair amount of guessing here that the OP has no status or was implying that she should be upgraded over those with status. It's possible she was unaware of any pecking order, but Dave Noble has rectified that.

What is known is that she had paid for the opportunity to request an upgrade, and requested an upgrade which was denied while there were empty seats in J. Even the Dalai Lama would find that frustrating.

Surely anyone who has the points, regardless of how they are obtained (not going to cast aspersions on anyone there!), should have a reasonable chance to use them. They definitely should get in line behind those with status, but when they do reach the front of the queue, and there are seats available, it is reasonable to expect the upgrade to be granted.

I'm in the camp that believes the theory of preserving the cabin value by not granting upgrades in order to fly with empty seats is either a coughpy theory or, if it is a stated QF practice, a pretty poor business practice.

I fail to see why a full cabin of paying passengers is any different to a full cabin of any other type of passenger.

 

[NM]

Many thanks indeed for the clarification. If we are talking revenue passengers, there is a point of interest (perhaps to some!) - presumably the load factor will represent a break even point at a certain percentage.

The load factor calculations will include all paid tickets (include things like ID90 staff travel tickets) and FF awards.

Loads above that percentage are profit. IF the break even load factor is 70%, then the additional 10% (on an average load of 80%) is the profit. Thus a 5% increase in total load (to 85%) will equal a 50% increase in profit and a 10% increase in total load (to 90%) will represent a 100% increase in profit.

Therefore every 1% increment in the average load of revenue passengers beyond the break even value has a big impact on profitability!

I think its quite a bit more complicated than you make out. The load factor does not take into account the actual fares paid. A Friday afternoon SYD-MEL may be 50% filled, but have more revenue/profit than a midday flight that is 80% filled. The peak time business flights may be filled with K, H, W/B, Y fares, while the midday flight is mostly N, O, V fares.

Yield and revenue management are real sciences in the airline industry.

 

[Travel Guru]

I'm in the camp that believes the theory of preserving the cabin value by not granting upgrades in order to fly with empty seats is either a coughpy theory or, if it is a stated QF practice, a pretty poor business practice.

I fail to see why a full cabin of paying passengers is any different to a full cabin of any other type of passenger.

I'd think that their record profit would suggest otherwise Happy, but that's just my opinion.

I think it's very good business practice to keep seats free both for last minute bookings and to maintain the cabin value....remember, don't confuse what would be in the passengers best interest with good business practice, they are two different things.

TG

 

[JohnK]

Preserving cabin value! I love that statement.

People are accumulating FF points at an alarming rate and yet they are unable to spend them how they want but rather how the airline wants them spent. It is irrelevant that the OP is a low status flyer, they have accumulated FF points and wanted to use them on an upgrade which was not granted while there were empty seats. That is wrong and the reasons why QF, or any other airline for that matter, choose to do that do not interest me. Part of the reason is that there is no money to be made allowing someone to upgrade to business class using their hard earned FF points whereas using 8,000 points on a SYD-MEL flight still requires ~$40 to be paid in taxes and charges.

I refuse to be dictated on how I will spend my FF points. I am not interested in upgrades but I will continue to use them on RTWs and other routes which provide the best value for money. Next time I may even use my FF points on a J RTW where I will get $8000+ value out of my FF points.

On the other point that was made earlier. Can someone please explain why outstanding FF points are not reported as a liability in financial statements?

Just my 2 cents worth....