Article: Are passengers abandoning United Airlines?
#16
Join Date: Jun 2005
Posts: 4,645
I don't think this is new, I think there is already a thread on this article, which I presume the mods will merge with this one? Then we can let this rest and wait until the article is posted a 4th time. Then, we can have this exact same conversation again in that thread.
#17
Join Date: Jun 2005
Posts: 4,645
This is another of those situations.
You might have a valid critique of the article, but overall, I thought there was something to it, and I further think it's instructive that the author chose to ask this about UA and not any other airline.
What's the root cause for why the author chose UA and not AA or DL?
#18
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As to your main point, we keep getting into these arguments (the collective "we" not you and me) about "what about this" and "what about that" and then we end up in a grey area where nobody can be right or wrong because none of us have enough facts.
This is another of those situations.
You might have a valid critique of the article, but overall, I thought there was something to it, and I further think it's instructive that the author chose to ask this about UA and not any other airline.
What's the root cause for why the author chose UA and not AA or DL?
This is another of those situations.
You might have a valid critique of the article, but overall, I thought there was something to it, and I further think it's instructive that the author chose to ask this about UA and not any other airline.
What's the root cause for why the author chose UA and not AA or DL?
#21
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#22
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Not to over-simplify, but it's the Chicago Business Journal. If it was Atlanta, I'd expect to see DL.
In case you hadn't noticed, all of the Chicago press tends to armchair-quarterback their hometown airline. I've seen more editorial/opinion-type content come out of Chicago publications than anywhere else. *shrug*
I posted this article in the other thread yesterday, and maintain that it's a fluff piece. There's more insightful analysis in the April performance thread here on FT.
But seriously, I'm not sure why FT'ers constantly confuse shareholders with stakeholders. Shareholders own stock. Stakeholders have some interest in UA being a top airline. They are not the same thing. Right now, the airline industry is consolidating further, and generally, financial numbers are trending upwards. A rising tide raises all ships, and that's how Shareholders vote.
Stakeholders, including all of us, care about UA's day-to-day performance and decisions. Unless we're going to take the $1000s we spend on tickets, sit home, and re-invest that money into voting stock, our opinion doesn't matter for bupkis to a market focused on consolidation and pricing power!
In case you hadn't noticed, all of the Chicago press tends to armchair-quarterback their hometown airline. I've seen more editorial/opinion-type content come out of Chicago publications than anywhere else. *shrug*
I posted this article in the other thread yesterday, and maintain that it's a fluff piece. There's more insightful analysis in the April performance thread here on FT.
But seriously, I'm not sure why FT'ers constantly confuse shareholders with stakeholders. Shareholders own stock. Stakeholders have some interest in UA being a top airline. They are not the same thing. Right now, the airline industry is consolidating further, and generally, financial numbers are trending upwards. A rising tide raises all ships, and that's how Shareholders vote.
Stakeholders, including all of us, care about UA's day-to-day performance and decisions. Unless we're going to take the $1000s we spend on tickets, sit home, and re-invest that money into voting stock, our opinion doesn't matter for bupkis to a market focused on consolidation and pricing power!
#23
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I think the article should say "Are Passengers Abandoning United Airlines for United Express".
I fly every week can't remember the last time I've been on a mainline United Airlines aircraft. It's been RJ RJ RJ RJ all day.
I fly every week can't remember the last time I've been on a mainline United Airlines aircraft. It's been RJ RJ RJ RJ all day.
#24
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The numbers are not supportive of organic revenue growth or value returned from higher spend customers who are going elsewhere. Filling your planes with Kettles who found you on Orbitz, then squeezing an extra $10-$100 on food, TV, bags, seats and line passes is a strategy - but is it the right one, especially when some of the upsells are at the expense of high spend customers?
#25
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I've reworded some of the data presented in this article. You can certainly spin them to fit whatever narrative you intend to tell:
1. WN suffered the biggest decline in average load factor (-2%), versus AA (-1.3%)* and UA (-0.7%). Has WN lost its mojo?
2. AA added more capacity (0.4%)*, but lost traffic (-1.1%)*. AA built it, but the people didn't come. What's going wrong with AA?
3. Chicagoland's three biggest airlines performed poorly in April. Are passengers abandoning Chicago?
The fact is, no airline performed well in April. But let's not go back to that "you can't shrink your way to profitability" argument again.
* AA data are from a separate press release published yesterday.
1. WN suffered the biggest decline in average load factor (-2%), versus AA (-1.3%)* and UA (-0.7%). Has WN lost its mojo?
2. AA added more capacity (0.4%)*, but lost traffic (-1.1%)*. AA built it, but the people didn't come. What's going wrong with AA?
3. Chicagoland's three biggest airlines performed poorly in April. Are passengers abandoning Chicago?
The fact is, no airline performed well in April. But let's not go back to that "you can't shrink your way to profitability" argument again.
* AA data are from a separate press release published yesterday.
Last edited by sinoflyer; May 9, 2013 at 2:02 pm Reason: added #3 "snark"
#26
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I don't buy the argument that all those folks you refer to here buy the upsells to C/F.
#27
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The mere fact that we have a published article with the title: "Are passengers abandoning United Airlines?" ought to be a clue that something is wrong.
I haven't seen an article with the title: "Are passengers abandoning Delta Airlines?"
I haven't seen an article with the title: "Are passengers abandoning Southwest Airlines?"
I haven't seen an article with the title: "Are passengers abandoning American Airlines?" - even as troubled as they've been in the last year.
Are shareholders ever going to wake up and demand change?
I haven't seen an article with the title: "Are passengers abandoning Delta Airlines?"
I haven't seen an article with the title: "Are passengers abandoning Southwest Airlines?"
I haven't seen an article with the title: "Are passengers abandoning American Airlines?" - even as troubled as they've been in the last year.
Are shareholders ever going to wake up and demand change?
#28
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1. market the lowest possible fare to GDS and web
2. sell seats at or near cost
3. recapture revenue through indirect product sells:
a) upgrades to F
b) upgrades to E+
c) DirecTV
d) meals
e) baggage fees
f) Premier Access
so, if 30% of the flight is @cost fare buys who return an extra 40% of the their base fare in the form of fees (and the balance of the flight is mixed between no-fee @cost fares and higher fares), does UA make more money than encouraging loyalty spend from traditional business customers? Is this the new reality of UA - Elite status rewards past revenue with 'when available' benefits while the airline earns current revenue from sales of 'always available' unbundled Elite benefits.
#29
Join Date: Jun 2005
Posts: 4,645
"Delta Air Lines plans $2 billion in upgrades"
http://www.bizjournals.com/dayton/bl...illion-in.html
Isn't the tone of that article just a bit different?
But seriously, I'm not sure why FT'ers constantly confuse shareholders with stakeholders. Shareholders own stock. Stakeholders have some interest in UA being a top airline. They are not the same thing. Right now, the airline industry is consolidating further, and generally, financial numbers are trending upwards. A rising tide raises all ships, and that's how Shareholders vote.
Stakeholders, including all of us, care about UA's day-to-day performance and decisions. Unless we're going to take the $1000s we spend on tickets, sit home, and re-invest that money into voting stock, our opinion doesn't matter for bupkis to a market focused on consolidation and pricing power!
Stakeholders, including all of us, care about UA's day-to-day performance and decisions. Unless we're going to take the $1000s we spend on tickets, sit home, and re-invest that money into voting stock, our opinion doesn't matter for bupkis to a market focused on consolidation and pricing power!
To your point about voting with our wallets, we go back to the article, which claims that UA's flyers are, in fact, leaving.
...
so, if 30% of the flight is @cost fare buys who return an extra 40% of the their base fare in the form of fees (and the balance of the flight is mixed between no-fee @cost fares and higher fares), does UA make more money than encouraging loyalty spend from traditional business customers? Is this the new reality of UA - Elite status rewards past revenue with 'when available' benefits while the airline earns current revenue from sales of 'always available' unbundled Elite benefits.
so, if 30% of the flight is @cost fare buys who return an extra 40% of the their base fare in the form of fees (and the balance of the flight is mixed between no-fee @cost fares and higher fares), does UA make more money than encouraging loyalty spend from traditional business customers? Is this the new reality of UA - Elite status rewards past revenue with 'when available' benefits while the airline earns current revenue from sales of 'always available' unbundled Elite benefits.
Who is accounting for the 50,000 miles worth of flying (worth $8,000 at my average CPM of 16) that I've walked away from?
#30
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No, I don't believe they do - but the question is has UA's sales model transformed from 'take care of the business customer and encourage spend' to the following:
1. market the lowest possible fare to GDS and web
2. sell seats at or near cost
3. recapture revenue through indirect product sells:
a) upgrades to F
b) upgrades to E+
c) DirecTV
d) meals
e) baggage fees
f) Premier Access
so, if 30% of the flight is @cost fare buys who return an extra 40% of the their base fare in the form of fees (and the balance of the flight is mixed between no-fee @cost fares and higher fares), does UA make more money than encouraging loyalty spend from traditional business customers? Is this the new reality of UA - Elite status rewards past revenue with 'when available' benefits while the airline earns current revenue from sales of 'always available' unbundled Elite benefits.
1. market the lowest possible fare to GDS and web
2. sell seats at or near cost
3. recapture revenue through indirect product sells:
a) upgrades to F
b) upgrades to E+
c) DirecTV
d) meals
e) baggage fees
f) Premier Access
so, if 30% of the flight is @cost fare buys who return an extra 40% of the their base fare in the form of fees (and the balance of the flight is mixed between no-fee @cost fares and higher fares), does UA make more money than encouraging loyalty spend from traditional business customers? Is this the new reality of UA - Elite status rewards past revenue with 'when available' benefits while the airline earns current revenue from sales of 'always available' unbundled Elite benefits.
There are many things wrong with UA, but selling seats "at or near cost" isn't one of them that I've experienced. Incidental revenue like you describe is still very much incidental, even if it's growing rapidly. It hasn't had a dramatic change on the UA business model.