The Most Blunt Devaluation Explanation I’ve Ever Seen from an Airline

If you thought I was being hyperbolic when I explained Air Canada’s major devaluation of elite status as the airline thinking their elites were over-entitled and they were determined to do something about it…

Thread Tripping highlights PR comments from the airline that make my point for me.

Truly, I don’t recall ever seeing such revealing honesty from an airline. We should simultaneously applaud the lack of spin, and avoid the airline.

Unfortunately for our friends up North, their options for a network carrier are quite limited.

I’m going to be blunt: we are not a charity. …It’s not a secret that we would prefer our customers sitting in the [business class] cabin to have paid for it.

And the reason why they don’t want elites sitting in empty premium cabin seats:

1) It cheapens the [business class] product – I will again reference our European and Asian competitors who have very tight access policies to their premium cabins, and point out how highly valued they are, especially compared to our American competition – ever wonder why F fares are so cheap on US carriers?

2) It sets an expectation. If there’s an expectation that for >50% of the time you can sit there without paying for it, why would you ever be incentivised to do so?

An airline is decidely not a charity. The reason to offer upgrades is to incentivize loyal business — choosing your otherwise-commodity product over someone else’s, and capturing an increasing portion of your customers’ wallet share.

Even Delta has recently added a meaningful international upgrade benefit for their top elites.

Air Canada is candid in saying they don’t believe they need to do that. If their customers are going to buy their tickets and fly them anyway, they want to train their customers to buy the more expensive tickets rather than hoping to get upgraded for free.

I suspect, however, that the universe of people choosing to buy international economy rather than business class tickets who could have bought business class but decided to roll the dice in hopes of sitting there for less money is rather small.

Folks who buy business class do so to guarantee themselves a seat in business class. Either they’re spending someone else’s money, or the amount of money doesn’t much matter.

I don’t deny that this hypothetical customer exists, just that it’s hard to imagine basing policy around such a person.

Usually calling your customers the problem is a gaffe, not a strategy. Air Canada should be applauded for their honesty, at least.


About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. I applaud them indeed but will likely not every fly them as long as I live.
    Their business behavior and arrogance towards customers have long been documented.
    And their hard product is nothing to write home about
    Are they on drugs or do they really think their product is BA/Lufthansa, Cathay or Singapore? And even they manage their programs more generously overall even for non elites let alone elites
    Ever try finding a revenue seat in Business on Air Canada? My policy don’t buy any revenue tickets ever on a carrier that’s sting on awards
    Hello Delta and Air Canada! Best Wishes
    Cheers

  2. So, does AC not permit off-duty employees and pass riders to sit in their premium cabins if space is available? It would certainly be a sad outcome if they deny their customers the upgrades and then fill the premium cabins with non-revs. That won’t cheapen the product, right?

  3. IME, AC typically has cheaper business class tickets from DC to Asia than any other carrier. So I buy them whether I am using my own or my employer’s money. So their strategy is working on me!

    Selfishly, having gone airline agnostic, I hope that’s the future of flying: fewer upgraders and more ‘reasonably’ priced business class fares.

  4. That’s what happens when you don’t have any competition in Canada for premium class seats. After all, AC offers the only premium class option within the country. The US is unusual in that it has (now) 3 major carriers that compete with each other, not to mention JetBlue, Alaska, Virgin America, and Hawaiian which regionally offer competition. Only China is likely to have even close to comparable competition at some point in the distant future.

    Without competition, AC is incentivized to not offer its premium class seats so easily–since there’s no other option in Canada. In the USA, the bigger carriers have far more incentive to offer premium class seats for less in order to garner the business overall and even the premium class business overall.

  5. Sounds like they are trying to model Singapore Airlines policy: SQ does not offer complimentary upgrades and frequently flies with half empty premium class. It works for THEIR target audience – plenty of wealthy locals view it as a status symbol that would be diminished by free upgrades. Not sure it will work for a North American airline with different customer base…

  6. It’s difficult to fault their reasoning. In fact, Gary, you’ve used the exact same reasoning when you’ve argued in favor of American’s current sticker/upgrade system.

  7. They can think and act like there because they have no real competition, especially since Canadian Airlines folded back in 2000.

    Even in the US, we merged down from the big six to the big three, we still have Alaska and Southwest with an almost-good-enough domestic network, and Virgin / jetBlue covering the west and east cost. There is no #2 airline in Canada that comes close to Air Canada in terms of the network.

    Canadian telecom is almost as bad, and just as arrogant.

  8. A meaningful part of a luxurious experience in a forward cabin is not having the forward cabin actually be full.

  9. So, do AC’s unions not have the right to non-rev in the premium cabin if seats are available? If so, it defeats the exclusive, empty cabin

  10. @Carl,
    Right on. As a low level elite, I’ve never been upgraded for free. Annoying, but what really bothers me is that non revs consistently get the same seats I covet. It’s a bit ironic that you show the worth of your customers by offering benefits to people that never paid a cent, rather than loyal revenue passengers.

  11. Why would US travelers go thru Toronto to go anywhere? There are plenty of options for us here to not consider that airline. Just not convenient. And Canadians can always drive to Seattle or fly to NY to get to the huge American market ( including Asian and European airlines).

    LH maybe a great product, but the airline is getting a beating from the Gulf airlines. Not to mention that imbecil 8kg mini-carry on policy. All that luxury is not paying off in a market (EU) that is bordering recession and dissolution.

  12. @Carl

    Many AC union employees do not have non-rev rights in J. The will OpUp Elite flyers and put those non-revs in the back if required.

  13. Pathetic attitude, AC. Really pathetic. We can (and should) fault AA for some of their policies, but they get my money more often than not because they offer me plenty of opportunities to fly in F (or J) for a fare I’m willing to pay. Whether it is a sticker upgrade (I’m lifetime PLT), a mileage upgrade, or a K-UP fare that is $200-300 more than economy, I’m happy with the variety of options at reasonable cost in miles, time, money, or dice rolling.

  14. After a decade I’m quitting AC.
    Not worth it and many other carriers to choose from.
    Arrogant. Yes. It’s a mess of an airline.
    And YES on many flights I have sat by FAs coming back from vacation etc sitting in biz class tacking with other FAs. Family members and friends op-ups. So, yes AC you do put staff in biz and family members. I know some of them personally.
    Good-bye as I’m moving to WestJet and CX.

  15. Oh, and if it’s not a negotiated benefit but defacto the gate agents will do op-ups for staff, that has the same net effect.

    Taking away elite upgrades only makes sense for exclusivity if you don’t then fill the cabins with non-revs. And if that’s the outcome, that’s a tremendous snub for the elites

  16. @Ryan – Sure they move their non-revs to the back…do you actually fly them? As @Matteo says, there are plenty of flights with company folk in J on AC…

  17. All airlines are trying to maximize their revenue. I applaud any company that is honest about that, even if I believe they are wrong about how to maximize revenue. It’s their survival on the line, so it’s their decision to make.

  18. I don’t understand Air Canada. I used to chase elite status and you know what…. it’s not all that great anyhow.

    I hate to tell Air Canada, but their competitors, the US airlines have not only equal, but better products in business class then them. Take American’s business class on the new 777’s MUCH better then Air Canada’s 777 seats/service and guess what. American Airline allows their elites to upgrade, even on the absolute cheapest fare. Don’t think it cheapens their product?

    I guess Air Canada would rather have those seats taken by non-revs? rather then paying loyal customers who probably pay way more to keep themselves loyal.

    As a Canadian myself, I do have a choice in loyalty programs, and guess what, I choose American and other programs to be my top loyalty programs.

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