As part of Cathay Pacific’s revamp of its frequent flyer program, there’s discussion of limiting partner airlines from accessing award space on their flights. This would be a huge deal for AAdvantage members. But how likely is it?
Cathay Pacific Is Preparing to Go Revenue-Based, Cut Back Elite Benefits
Cathay Pacific is considering making its frequent flyer program revenue-based.
[P]roviding these offerings is becoming increasingly expensive as the ranks of loyal travellers swell and the airline caters to more needs.
Among the many changes is a new focus on revenue-based spending, rewarding business and first-class customers, who pay much more than economy passengers.
Hong Kong’s leading airline says its existing measures to reward travellers based on the number of flights and distance flown “are not the best measure of value”, and that airlines all over the world are recognising these “anomalies”.
They may also eliminate lounge access for their Silver members.
In an attempt to enhance the premium experience, silver-tier members are likely to lose unlimited lounge access. At a stroke, the change will ease congestion in its lounges, notably at Chek Lap Kok, and save money.
They’ve apparently brought in someone from Qantas to spearhead the revamp of the program. That alone may be telling, as Qantas offers mileage earning everywhere but astronomical redemptions and is anything but generous overall.
Will Cathay Pacific Limit Award Seats to Partners, Making More Inventory Available to Its Own Frequent Flyers?
Cathay Pacific is to set aside more free seats for its seasoned frequent fliers, under the latest proposal to revamp the award- winning airline’s loyalty scheme.
The plan is to slash the number of free air tickets available for partner airlines and to reallocate those to Cathay’s own Marco Polo Club members, sources close to the ongoing review say.
However, it is understood the number of points needed to redeem a flight will at the same time go up incrementally.
In the background they’re perhaps unhappy with the cheap redemptions offered to American AAdvantage members.
At present, Cathay lets clients of partner airlines book flights using air miles accrued through their own flier programmes. But these passengers can redeem Cathay flights at much cheaper rates than Marco Polo Club members, putting its own privileged customers at a disadvantage.
One such partner carrier is American Airlines, which at the same time gives away tens of millions of free miles to flyers each year via credit card schemes.
The sources say Cathay believes it is time to stop allowing external redemptions when the airline is capable of filling aircraft with paid passengers – boosting long-term profitability.
This argument has a couple of fallacies, though.
- The airline is already limiting redemptions, they’re called capacity controls, and availability of Cathay Pacific seats has gotten much tighter over the past year as it is — as the airline fills their aircraft with paid passengers.
- The notion that American Airlines is filling their planes with credit card miles-earning passengers seems strange (while a partner program taking an outsized number of seats could be a concern, the source of the miles seems like it ought not be).
- Cathay Pacific fills seats with credit card points-holders. Leaving aside co-brand card earning, they’re an American Express transfer partner both in the US and around the world.
Cathay Pacific already has inventory discrepancies between their own AsiaMiles program and partner inventory, though there aren’t separate inventory buckets. The issue has often been attributed to technology and syncing challenges.
Although perhaps here they’d create a separate inventory bucket. An open question is whether the inventory would be made available to all AsiaMiles members or whether additional award space would be offered only to elite Marco Polo Club members.
There’s no question though that Cathay Pacific premium cabin awards have been readily available since spring 2009 (before that they were almost non-existent) although in recent months they haven’t been so available far in advance. I’ve certainly flown my share:
- Los Angeles – Hong Kong (2014)
- Hong Kong – New York JFK (2014)
- Hong Kong – New York JFK (2014)
- New York JFK – Hong Kong (2014)
- New York JFK – Hong Kong (2012)
- Hong Kong – Chicago (2012)
- Hong Kong – Singapore (2012)
- San Francisco – Hong Kong (2012)
- Hong Kong – Chicago (2011)
- New York JFK – Hong Kong (2011)
- Hong Kong – London (2010)
- Manila – Hong Kong (2010)
- Hong Kong – Manila (2010)
- Toronto – Hong Kong
For Most Airlines, Award Space is Award Space. Very Few Offer Improved Inventory to Their Own Members
Lufthansa and Swiss offer more award space to Miles & More members than they offer to the rest of the Star Alliance.
Singapore Airlines offes more award space to Krisflyer members than they do to the rest of the Star Alliance. Indeed, premium cabin award space on Singapore Airlines is pretty good if you’re using Singapore’s own miles. Long haul business and first class awards are virtually non-existent using, say, United miles (and that leaves aside that United removed the ability to see Singapore award space from its website).
Swiss restricts access to first class awards to Miles & More elite members. Air France restricts access to first class awards (and even then charges rulebuster pricing) to Flying Blue elite members.
Occasionally some programs appear to have better access to seats on some partners, that’s not always intentional but can stem from point of sale errors where a given partner frequent flyer program starts ‘seeing’ the awards these airlines are offering to their own members.
And of course those airlines which offer expanded award availability for additional miles generally only make that expanded availability on offer to their own members.
Is Restricting Saver Available to Cathay’s Own Members Against oneworld Alliance Rules?
I’ve long understood alliance rules to require that award space be made available to all member programs.
Equal access to award seats across the alliance was publicly articulated to the Wall Street Journal as a contrast to the way United used to block its members from booking partner award space.
Oneworld says its members have agreed to make reward seats equally available—if one carrier offers the seats, all must offer them. The alliance hopes that can be a “competitive advantage,” said spokesman Michael Blunt.
Alliances Don’t Have as Much Strength As They Used To
Alliances have been cracking up.
Delta doesn’t award elite miles for Korean flights.
Etihad and American have expanded both codesharing and mileage earning, despite American’s alliance partnership with Qatar. They codeshare on Dallas – Abu Dhabi despite Qatar competing directly with Dallas – Doha.
And of course Qatar itself is an alliance member, while Qantas left a joint venture with alliance member British Airways in favor of a joint venture with non-alliance member and Qatar competitor Emirates.
So the alliance hasn’t served as a restriction on airline behavior in a meaningful way in recent times.
American Miles Would Be worth Less, While Amex Points Worth More?
If Cathay Pacific restricts award space to its own members (but doesn’t require elite status to access this space) then:
- American miles will become a little less useful, since they won’t be able to get you as many Cathay Pacific premium seats.
- American Express points will become a little more useful, since transfers to AsiaMiles would provide better access to Cathay seats than American miles will.
It’s all speculative at this points, and new program details haven’t yet been announced. It’s something to watch closely.