One of my favorite uses of American AAdvantage miles is for travel in Cathay Pacific first class.
Cathay Pacific first class award availability trends
Cathay Pacific only has six seats in first class on the 777-300ER, making it one of the most exclusive first class products out there.
Back in the recession they released a ton of first class award seats, often two seats when the schedule opened, and then more seats again as the departure date approached. Unfortunately that trend has changed quite a bit, which is hardly surprising — nowadays we’re lucky to see one first class award seat when the schedule opens, and then sometimes more seats as the departure date approaches.
Frequent flyer program arbitrage opportunities
While airlines have all kinds of partnerships and alliances, there’s no denying that the airlines are often working against one another.
For example, in the US, frequent flyer programs are hugely profitable businesses for the airlines. In most other parts of the world, frequent flyer programs are loyalty programs in the true sense of the term — they’re intended to generate incremental business and loyalty to the airline, and not be profit centers in and of themselves.
For years US Airways sold miles at huge discounts, so we endearingly referred to them as the official consolidator of Star Alliance premium cabin seats (or oneworld, once they made the switch).
Presumably Cathay Pacific makes first class awards available in advance not because they have to, but as a way to reward loyal flyers. That’s the only possible justification, given how bad award reimbursement rates are between airlines. But when those seats are filled by people who bought miles for the same they’d pay for an economy ticket, the equation becomes sort of unjustifiable.
And it looks like things might be changing as a result…
Will Cathay Pacific restrict partner first class awards?
It’s rare for the mainstream media to pick up on the subtleties of airline frequent flyer program partnerships, but the South China Morning Post published an interesting article today, entitled “Cathay reviews loyalty scheme to give more free flights to own customers:”
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.
Cathay had been examining the feasibility of shifting its focus to members of the Marco Polo Club and another rewards scheme, Asia Miles, well before the Consumer Council criticised unnamed carriers last month for operating mileage schemes like “a lucky draw”. No decision had been made yet, the airline said.
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.
Cathay Pacific already makes some extra award seats available to their own Marco Polo Club members, though a vast majority of award seats are also available to members of partner airline programs.
So, who are the “unnamed carriers” Cathay Pacific could be referring to? 😉
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.
Now, I detest the use of the term “free miles” and “free flights.” There’s a direct opportunity cost to every mile earned, whether through credit card spend, flying, etc. That being said, they definitely have a valid point that these aren’t necessarily “valuable” customers to Cathay Pacific, and that they don’t really contribute to the airline’s profitability.
Based on the story it seems like the cost of redemptions through Cathay’s program may go up as well:
However, it is understood the number of points needed to redeem a flight will at the same time go up incrementally.
It’s not totally clear whether they’ll potentially be adding different award levels (like the US carriers have been doing for years), or if they’ll basically just be devaluing their award chart.
I think it’s important to emphasize that there’s nothing that will immediately change here. These seem to just be ideas that they’re mulling over.
Cathay Pacific wouldn’t be the first airline to (understandably) give members of partner frequent flyer programs the bird. For example, Singapore Airlines has for a long time made a vast majority of their premium cabin award space available exclusively to members of their own KrisFlyer program.
All that being said, I think this is a trend we’ll continue to see a lot more of across the board over the coming years. Airlines releasing the same amount of award space to members of partner programs as their own members has ultimately been an act of good faith, and arguably even an oversight. And that’s especially true for airlines with not-so-great frequent flyer programs, but great premium cabin products.
Presumably this is only the beginning.
Yet another reason to continuously earn and burn!
What do you make of these potential changes to Cathay Pacific first class awards?
(Tip of the hat to Miles Down Under)