Originally Posted by
UA-NYC
Sounds like you work for UA! Focus on ancillary revenue (Premier Access, E+ upsells, TODs) over the most valuable flyers yielding most of your profit...that seems to be the crux of their strategy these days
Nope - but look at the economics of N. American flying. Businesses are not really paying for premium cabins (domestically). Generally domestic premium product is crap around the board, outside of select high-competition routes. Margins on seat revenue is tight enough without adding in fuel variability and wage escalations.
Therefore, if you could generate cash flow from a high margin product that requires few "touches" from your hourly staff or sell something (E+, for example) that you previously did not, why wouldn't you?
Not to start this argument again, but we actually don't know who are UA's most valuable flyers. Outside of GS, none of the "status" levels attained are linked to either revenue or contribution margin.
Take a 1K customer with, say, 130 PQS last year. If 95% of those flights are on AC and are generating, for exampls, 200K redeemable miles, that customer is actually not valuable to UA at all. He's just generated a liability on the balance sheet, no ancillary revenue b/c of status, and lost revenue opportunities on award changes, SDC, etc.