AMA "Closing Keynote: Transforming the MileagePlus Program at United Airlines"
Feb 18, 2013, 3:48 pm
#136
Join Date: Oct 2008
Location: COS
Posts: 253
My succinct point is this: all full fare transactions are not equal.
Feb 18, 2013, 4:04 pm
#137
Join Date: Jun 2005
Posts: 4,645
Typically large customers get volume discounts. That can lead to unprofitable large customers. The discussion about this in the airline industry would be around the corporate discounts that United or any airline gives. No doubt in some cases United prices those discounts wrong and winds up with large unprofitable customers.
For GS there are some GSers who get the status because they control a large travel spend. And they as an individual may in fact be unprofitable.
For the GS who earn their status by flying full fare miles (this is most GS) that count towards some unknown revenue threshold it is tough to fathom them being unprofitable throughout the course of the year on a consistant basis. They may be unprofitable on any given flight but in that situation all of the fare classes below B would also be unprofitable on that flight. The airline would just rather cancel the flight.
If United can't make a profit on a full fare customer how can they make a profit on any customer?
For GS there are some GSers who get the status because they control a large travel spend. And they as an individual may in fact be unprofitable.
For the GS who earn their status by flying full fare miles (this is most GS) that count towards some unknown revenue threshold it is tough to fathom them being unprofitable throughout the course of the year on a consistant basis. They may be unprofitable on any given flight but in that situation all of the fare classes below B would also be unprofitable on that flight. The airline would just rather cancel the flight.
If United can't make a profit on a full fare customer how can they make a profit on any customer?
Feb 18, 2013, 5:27 pm
#138
Join Date: Nov 2005
Location: SFO and OAK
Programs: FAF, Hyatt <>, SPG PLT
Posts: 2,240
United regularly publishes fares that are below full fare that are available right up until the flight. Usually they are right below full like M or U but sometimes when they really want to dump inventory they put out an S or something that is quite discounted. That's a much easier way to make large shifts in pricing right up until flight time. Not by tweaking a full fare by $25 bucks here or there.
Keep in mind that full fares are usually given the highest level of discount under corporate programs which last for a year. So moving around the full fares by large amounts would need to be factored into the discount given at the start of the contract. Then you are really making a prediction for prices over a 12 month period which isn't usually a good idea. Especially if you are confident in your ability to change prices hourly.
Feb 18, 2013, 7:08 pm
#140
Join Date: Jun 2011
Location: Colorado
Programs: United MM (formerly 1K), Marriott Lifetime Gold
Posts: 551
