Armchair CEO: Your plan to fix UA

[Renard]

I don't know what needs to be done to fix UA...but I do know this--merging with US is NOT the answer.

[MarkXS]

Originally Posted by cepheid

The website is poor not because of the fees, but because of the mediocrity of its programmers. The business model isn't all that complex, and any number of competent programmers could turn it into a world-class website even with the existing business model. The problem is that UA hasn't hired such programmers. That is the problem.

Not to derail this - but as a former programmer and software engineering manager, I seriously doubt than any of the problems are due to the competency of the programmers. Programmers do not design systems, at least not in anything bigger than maybe a 10-person company - they build them according to the specifications written by systems analysts. Systems analysts get quality requirements for their specifications when they are given enough time, budget, and access to key business people who own the business processes being automated (think marketing, MP, inventory control, partner relations, etc.) Those business people provide good requirements to the systems analysts when they have a good vision for what their departments want to do, and when they are supported by project sponsorship, strategic vision, funding and competent leadership from executive management.

Which is exactly what is lacking at United. Don't blame the programmers for .bomb.

[fnothaft]

Originally Posted by mre5765

I doubt pax will put up with the noise for that long.

They're not all that loud. Pax definitely put up with sitting at the back of an MD-80 to fly 3 hours on AA and DL, and they're next to 2 turbofans which aren't exactly quiet either.

Props can also take off from shorter fields, and are just more efficient then RJ's. How many people do you know of who take a good, hard look at the plane they're flying on (besides us weirdo's).

In any case, I'd bet that the amount of people who find props awful is similar to the amount that find flying on a prop plane novel. It's not exactly like people like flying in an RJ anyways.

[carl92103]

I met some great business heads flying UA. Maybe we should volunteer to be a focus group for them. I would honestly hate for something to happen to them. Look at how bad US and NW is and DL is not much better. The one thing they desperately need to do is leave a more positive customer experience for the non-elite traveler. Several friends flew UA for the first time and were totally turned off by India and all the extra fees.

[COSPILOT]

Originally Posted by fnothaft

They're not all that loud. Pax definitely put up with sitting at the back of an MD-80 to fly 3 hours on AA and DL, and they're next to 2 turbofans which aren't exactly quiet either.

Props can also take off from shorter fields, and are just more efficient then RJ's. How many people do you know of who take a good, hard look at the plane they're flying on (besides us weirdo's).

In any case, I'd bet that the amount of people who find props awful is similar to the amount that find flying on a prop plane novel. It's not exactly like people like flying in an RJ anyways.

I will have to disagree....

I'm a pilot and enjoy just about any airplane. But many family members and friends assume that a prop is somehow not as good, nor as safe as a jet. Despite my efforts, they prefer a jet, not just based on the noise. My wife dreads the turbo props while sitting next to me smiling from ear to ear. She gets ill when I'm the PIC, and gets ill on the flights into Kapalua West. I'm convinced it must be the harmonics that occur with a twin engine prop that she doesn't like, even if the prop sync is working. I believe the general public doesn't understand the economics of flying, and assumes a prop is low class.

I even took a Mesa flight from DEN to COS a few weeks ago on my return from Boston just so I could enjoy the noise; and the view flying a highwing. Dont' worry, I took a shower after flying Mesa....

[tom tulpe]

Originally Posted by ExCrew

Royalty. Royalty? We are talking about United Airlines in-flight service, are we not? Royalty? Not Singapore or ANA...United Airlines First.
I cannot remember in the last 4 years ever feeling like royalty on a United flight. Much more like a commoner.

So true
That would have to change big time if First was for paying (as in "paying first class fares") pax only. Wouldn't be a bad thing.

[FCfree]

I quit flying with United because of change fees. I suspect many other people do so as well. There are some that are loyal to United and there are others that fly United because it is the only option on a particular city pair (e.g. DEN-MSY non-stop). That still leaves a lot of people that have choices and don't choose United because of the change fees. I continue to believe that the number of sales lost because of change fees far exceeds the value of change fees. More people than United believes have figured out the change fee scam. One airline doesn't have change fees. It makes a profit. The other airlines have change fees and they lose money. Need I say more?

Fuel hedging has to be done smart. If in fact oil prices are about to drop, then those airlines flying using spot fuel prices should have the edge on those airlines who are currently buying fuel in the future at today's prices.

UA will make more money by having fewer types of airplanes. This will offset the cost of leasing. Surely the leases they have expire at some point? As they expire, don't renew on those planes. Simplify the number of airplanes. This is a long term project.


>> UA cannot control its costs in the same way as WN.

I thought they went into bankruptcy to get their costs in line with other airlines? Are they really paying their pilots, flight attendents and other union workers that much more than similar personnel over at Southwest? If so, they really screwed up in bankruptcy. That was their opportunity to get their costs in-line. If they are still paying significantly more, they are doomed to failure.

UA can still fly people to Chicago, Washington DC, LAX, etc. to put them on overseas flights. But, if UA wants to make a profit domestically, they need to identify routes that are money makers and fly them. Who is going to fly from A to B through ORD when Southwest flies a non-stop?

The website is poor because of poor programmers, poor systems analysis AND because the business model is too complex. Do a flight change on Southwest, then do one on United. The recalulation of the fare and the adding of the change fees all contributes to the complexity of the web site. Southwest thinks of each flight individually. You can buy two one way tickets for the same price as the combined round trip. Yet, the flights are separate. Each flight can be a separate sale without penalty. It is those simple business processes that make selling flights on the Internet simplier and therefore simplier to program.

When I was a 2P at United, the upgrades were few and far between. I had 95% upgrade success as a SILVER on Northwest in 1999-2002. Once I saw how much better Northwest treated me, for about the same on DEN-DTW. People are out there sampling how each airline treats them. You do have a limited number of choices on most routes. Usually only 1-3 flight non-stop between point A and point B. If you sample all 1-3 airlines, you pretty quick figure out who has the best value. If United doesn't have the best value, they won't have the most business.

How would giving 2P status to a person who flies 30/32 segments on ANY airline benefit United? Well, if the person is out there flying at that level, at least United would have a *chance* at some of that business. If a person is Southwest A-list, but just barely, why should he give even one flight to United? For example, I went out of my way to fly Southwest when United had a better flight, because I wanted to ensure my A-list for 2009. If I could have had E+ for that flight, I might have selected United and hoped to pick up one extra flight on Southwest in the next 9 months. That was another opportunity lost to United.

United price matches? Not very often. Maybe they are getting people to pay the higher fares. Or maybe it is just wishful thinking over at United. Keep the prices high and *hopefully* someone will fly with United.

> UA cannot operate like WN, as it is bound by many different
> restrictions. UA also has to balance its domestic operations with its int'l
> operations, something which WN does not have to do. They are vastly
> different beasts.

One beast makes money and the other doesn't.

[SFOtoORD]

Originally Posted by FCfree

One airline doesn't have change fees. It makes a profit. The other airlines have change fees and they lose money. Need I say more?

While I understand the point about change fees, I believe this argument to be a bit of a red herring. The point is probably better made by saying one airline is the best run airline and the rest are not.

As an aside, WN does not have free standby and others do. To me this is more valuable than no change fees. Depends on the type of travel you do.

[the_happiness_store]

Originally Posted by MarkXS

Not to derail this - but as a former programmer and software engineering manager, I seriously doubt than any of the problems are due to the competency of the programmers. Programmers do not design systems, at least not in anything bigger than maybe a 10-person company - they build them according to the specifications written by systems analysts. Systems analysts get quality requirements for their specifications when they are given enough time, budget, and access to key business people who own the business processes being automated (think marketing, MP, inventory control, partner relations, etc.) Those business people provide good requirements to the systems analysts when they have a good vision for what their departments want to do, and when they are supported by project sponsorship, strategic vision, funding and competent leadership from executive management.

Which is exactly what is lacking at United. Don't blame the programmers for .bomb.

Unfortunately, I have to disagree with this. Competent programmers are also in the design business. There are many times that I have received specs that would result in the product being far too cumbersome for the end user. I have never have any problem convincing those that wrote the specifications that there was a better way.

This does not mean to say that my ideas are always better but I refuse to write for a bad cause.

[NickP 1K]

We were talking about current fleets of the US carriers.

His comments: They (Most US airlines) invested nothing in more efficient aircraft, engines and retrofits to existing aircraft as oil prices started to rise and they had the ability to invest. They were in utter denial that fuel prices would continue to rise, they have nothing to show for their last minute fuel savings measures as they have already bleed billions of reserve dollars from their balance sheets paying for fuel rises they hadn't planned for

It's too late for most carriers to invest in new fleets, so to survive they need to cut aircraft usage across the board and raise fares and focus solely on running leaner profitable carriers.

[fnothaft]

Originally Posted by COSPILOT

I will have to disagree....

I'm a pilot and enjoy just about any airplane. But many family members and friends assume that a prop is somehow not as good, nor as safe as a jet. Despite my efforts, they prefer a jet, not just based on the noise. My wife dreads the turbo props while sitting next to me smiling from ear to ear. She gets ill when I'm the PIC, and gets ill on the flights into Kapalua West. I'm convinced it must be the harmonics that occur with a twin engine prop that she doesn't like, even if the prop sync is working. I believe the general public doesn't understand the economics of flying, and assumes a prop is low class.

I even took a Mesa flight from DEN to COS a few weeks ago on my return from Boston just so I could enjoy the noise; and the view flying a highwing. Dont' worry, I took a shower after flying Mesa....

Thats interesting. My family really likes turboprops, and I have a few friends who prefer them highly to RJ's. Don't know what the difference comes from. It'd be interesting to see if anyone has actually done a big survey about it all.

[FCfree]

Another thing I would do is hire a person like Southwest's SWABrian, over on the Southwest Board here at Flyer Talk who:

1) Reads our posts
2) Responds to our posts
3) Takes the ideas from our posts back to management for further consideration.

I suspect that SWABrian also scans posts on the FT Boards of other airlines, looking for what they are doing right and wrong and making sure that Southwest learns from others successes and failures.

[cepheid]

Originally Posted by FCfree

I continue to believe that the number of sales lost because of change fees far exceeds the value of change fees.

What you believe and what is reality are unlikely to equate, nor does your belief make it reality. Until you can show some numbers, one must operate under the assumption that having a change fee is somehow profitable. Yes, that does assume that management is competent, but I'd be hard-pressed to believe that BK court would release them from BK without a competent accounting method and financial plan, and the change fee has been in effect since long before BK.

Originally Posted by FCfree

One airline doesn't have change fees. It makes a profit. The other airlines have change fees and they lose money.

Correlation does not causation make, nor even imply. There are thousands of other variables that are entirely ignored in your glib statement.

Originally Posted by FCfree

I thought they went into bankruptcy to get their costs in line with other airlines?

In line with other legacies, not all other airlines.

Originally Posted by FCfree

If so, they really screwed up in bankruptcy. That was their opportunity to get their costs in-line.

There is a limit to how low you can cut costs and still retain your labor force. BK allowed UA to severely cut labor costs, but they still had to keep the unions (and hence employees) on board. It's not pragmatic (or perhaps even possible) to replace your entire labor force in BK so you can trim costs even further... there is a limit to what UA could negotiate. BK is not a panacea that allows you to magically redo your entire business model without consequence. It may be a mulligan of sorts, but with restrictions.

Originally Posted by FCfree

Who is going to fly from A to B through ORD when Southwest flies a non-stop?

All the people who currently do it because, for whatever reason, they prefer UA (or don't shop around).

Originally Posted by FCfree

The website is poor because of poor programmers, poor systems analysis AND because the business model is too complex.

The business model has nothing to do with it. If the website has access to the fare database, it should be no more effort to program UA's business model than WN's. Recalculating a fare is trivial, as is adding a change fee. Trying to change a flight on UA is one of the few things that works quite well, actually. The primary issues that people experience have to do with e-certs, promotions, and upgrades... not with changing flights.

Originally Posted by FCfree

I had 95% upgrade success as a SILVER on Northwest in 1999-2002.

It is now 2008. The airline industry, its elite perks programs, its elite ranks, and especially its load factors and capacities have changed dramatically since 2002. It's not too much of a surprise that low-tier elites could get upgraded frequently during those years, when airlines flew half-empty planes because gas was cheap and VC money flew into their coffers like water. Life is different now.

Originally Posted by FCfree

Well, if the person is out there flying at that level, at least United would have a *chance* at some of that business.

UA isn't interested in giving out elite perks for a chance at a one-off ticket from someone looking for the absolute lowest fare. UA gives elite perks to people who consistently bring in business. It still welcomes one-off cheapo tickets, but trying to market to that crowd with elite perks would seriously devalue the benefits given to actually loyal customers, and does nothing to encourage the loyalty of that one-off customer (i.e. there is no future return on investment).

WN doesn't give automatic A-list or free drink coupons to other airlines' elites... what makes you think this is a good model for UA? Just because it benefits you does not mean it's a good business model for UA.

Originally Posted by FCfree

Maybe they are getting people to pay the higher fares.

Considering that loads are at near record highs, I'd say, yes, people are paying the higher fares (or low fares when offered). If people weren't paying the fares, the planes wouldn't be full.

[FCfree]

Originally Posted by cepheid

Considering that loads are at near record highs, I'd say, yes, people are paying the higher fares (or low fares when offered). If people weren't paying the fares, the planes wouldn't be full.

If the planes are full and United is charging more per ticket than Southwest, then why is Southwest making money while United is losing money?

If United can fill the planes and charge more per ticket and STILL lose money, that sounds like a bad business model.

[cepheid]

Originally Posted by FCfree

If the planes are full and United is charging more per ticket than Southwest, then why is Southwest making money while United is losing money?

Because "making money" = income minus expenses. Very clearly, UA's expenses are quite high. You are absolutely correct that UA needs to trim its expenses significantly, although there are obviously limits to what can be accomplished without pretty much just liquidating the company and starting over. My point is that lowering airfare and removing fees will reduce UA's income, not increase it, and therefore will make UA's problems even worse.

UA's problem isn't that planes aren't full, it's that even with full planes, expenses are too high. The answer lies not in reducing airfare, which is apparently not necessary given the load factors, but rather in cutting expenses (not just by cutting costs blatantly, but also by reworking various expense items to streamline them and make them more cost-efficient rather than simply trimming them). But, there's a limit to what can be done. Most of your suggestions can be boiled down to, "Turn it into WN." That's just not possible without essentially liquidating the company first, and this thread is about fixing UA without liquidating the company.

(I should also point out that, IIRC, UA actually made a profit during a few quarters last year. The fact that it lost money in Q1 is no surprise, as it is traditionally a bad quarter for legacies.)