Asset or liability to UA at $.09/mile? Define low/mid/high?

[Mike Jacoubowsky]

You can't get too far in this forum without reading about how valuable some flyers are compared to others, based on their "spend." But I don't think I've seen anyone define what that "spend" is, for various levels of worth to UA.

For my 64,000 BIS miles (plus 11k PQM coming from other sources, mainly 10k CC and 1k 1.5 Y earnings... nothing in paid C or F), I've spent almost exactly $6,000. $.0937/mile.

Where does $.0973/mile fall in the grand scheme of things? Am I an asset or liability to United?

[mherdeg]

If you're giving United 9 cents per seat mile (and I'm not sure you are — you may have segments shorter than 500 miles), then you're below the 2Q 2012 average of 13.12 PRASM; see writeup at e.g. http://aviationdaily.wordpress.com/2...the-beginning/ . (Not sure where I can find the cpm number of the 3Q 2012 PRASM.)

You're probably not an asset or a liability to United, just a customer.

[exerda]

I'd hazard to the low end of "asset." Recall when UA floated the notion of spend requirements for each tier (they ended up going with just the 4-segment UA metal requirement): they had defined 1k as needing $8k minimum, thus $0.08 / mile. I'd guess they chose a price point which was at the minimal end of "asset" to the airline, as far as they saw it.

We can always debate whether or not they were going the PMUA route of counting total spend, including taxes & fees, or the PMCO one of base fare only, which would move that 8 cents/mile figure a bit in terms of real spend, particularly for those with a lot of international travel where the base fare can be as little as 1/5 the total airfare paid.

I'm around $0.13 / mile for the year and feel I'm an asset to UA, though still toward the low end. I've had a few flights at rock-bottom fares, but plenty at profitable levels, too.

[Mike Jacoubowsky]

Originally Posted by mherdeg

If you're giving United 9 cents per seat mile (and I'm not sure you are — you may have segments shorter than 500 miles), then you're below the 2Q 2012 average of 13.12 PRASM; see writeup at e.g. http://aviationdaily.wordpress.com/2...the-beginning/ . (Not sure where I can find the cpm number of the 3Q 2012 PRASM.)

You're probably not an asset or a liability to United, just a customer.

You're correct; I have a number of 500-mile-mins, primarily ORD-MSN, SFO-LAS, sometimes SFO-LAX-LAS. On average, probably 60% of the BIS on those flights. 10 per year maybe? So I'm "missing" about 2000 PQMs. Still just under $.10/mile. If the average is 13.12, then I'm not worthy.

On the other hand, that 13.12 is across all classes? I'm strictly a Y flyer, so maybe that helps hold down my costs a bit.

[mitchmu]

Originally Posted by Mike Jacoubowsky

You can't get too far in this forum without reading about how valuable some flyers are compared to others, based on their "spend." But I don't think I've seen anyone define what that "spend" is, for various levels of worth to UA.

For my 64,000 BIS miles (plus 11k PQM coming from other sources, mainly 10k CC and 1k 1.5 Y earnings... nothing in paid C or F), I've spent almost exactly $6,000. $.0937/mile.

Where does $.0973/mile fall in the grand scheme of things? Am I an asset or liability to United?

It's really hard to answer this question properly because of the dynamic nature of the industry.

If you are in a seat at 3 CPM that otherwise would have gone empty, you're an asset. If you are in a seat at 3 CPM and you displaced someone who would have paid 13 CPM for the same seat, you're a liability. Who knows?

It is worthwhile to say that your spend is greater or less than the average, that does set an objective benchmark, but I think displacement is also an important consideration (what would have happened if you were not there) when determining what you really contributed.

[PHLGovFlyer]

Originally Posted by Mike Jacoubowsky

On the other hand, that 13.12 is across all classes? I'm strictly a Y flyer, so maybe that helps hold down my costs a bit.

It is across all classes so CASM for a strictly coach flyer is a bit less.

Also consider the loads on the flights you're taking. If your flights aren't full then you're somewhat more of an asset to UA because the incremental cost of adding Mike J to a flight where that seat would otherwise go empty is fairly small (much less than 13cpm). IOW, even though your average RASM is below UA's average CASM you might still be revenue positive for UA depending on the flights you've taken.

Of course you have to factor IM into this equation since depending on when you purchase you might push the price up for later purchasers which might push them away from UA.

[antonius66]

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If the seat was available at 3cpm...UA chose to make it so. You are just a customer no matter what. If all you fly are 3cpm flights, you are just buying what the company offers, and if they offer it, it clearly isn't a liability. Some customers are more profitable than others, but there are no liabilities in my opinion. Just those that are far better at extracting more value onto their half of the equation, and those that are less savvy, more stupid/lazy, business/date dependent or on OPM.

[rankourabu]

I am very happy to be a liability

[Mike Jacoubowsky]

Originally Posted by mitchmu

It's really hard to answer this question properly because of the dynamic nature of the industry.

If you are in a seat at 3 CPM that otherwise would have gone empty, you're an asset. If you are in a seat at 3 CPM and you displaced someone who would have paid 13 CPM for the same seat, you're a liability. Who knows?

It is worthwhile to say that your spend is greater or less than the average, that does set an objective benchmark, but I think displacement is also an important consideration (what would have happened if you were not there) when determining what you really contributed.

Italics & color added for emphasis... I'm trying to keep my "displacement" at average or, if I can, below. But it's tough keeping the weight off as you get older. 172 pounds, 6'. I'd love to weigh about 15 pounds less, but I'm probably still below average.

Which of course brings up another aspect. Cost of flying the individual. Clearly it's going to cost more to fly someone who's 220 pounds and bringing lots of luggage than me flying with only a light carry on. But United doesn't factor that in. Yet.

[mitchmu]

Originally Posted by Mike Jacoubowsky

Italics & color added for emphasis... I'm trying to keep my "displacement" at average or, if I can, below. But it's tough keeping the weight off as you get older. 172 pounds, 6'. I'd love to weigh about 15 pounds less, but I'm probably still below average.

Which of course brings up another aspect. Cost of flying the individual. Clearly it's going to cost more to fly someone who's 220 pounds and bringing lots of luggage than me flying with only a light carry on. But United doesn't factor that in. Yet.

We have some super-smart airline geeks here who might know what it really costs to move a pound of mass.

It is interesting how they control checked luggage count and weight but don't account for passenger weight or carry on weight; there are clearly some huge variances in weight transported between a small person who flies with a light carry-on for a business trip vs. someone who weighs 2x as much, has a heavy carry-on, and is checking 2-3 bags (for free) at the max 70 lb weight (for premiers). Yet, both pay the same price.

How relevant is this? I've got no idea what it costs to fly a given weight.

But, by displacement, I meant - did you fill a seat for cheap that would have gone empty if you had not flown it? Or, did you fill a seat for cheap that someone would have paid 3x for if you were not in it? Ultimately, this should be managed by the revenue algorithms; because they if they predict loads properly, they're only selling cheap seats when they know nobody would fill the plane at higher rates. But, it's an imperfect science.

I get that you were joking but not sure if you captured my main point.

[SAN 1K]

I ended the year at 50 cpm ($100,000 for 200,000 bis approx). On the high end probably? Fair amount of CD YBM but that also incorporates 5 award transcons.

[mitchmu]

Originally Posted by SAN 1K

I ended the year at 50 cpm ($100,000 for 200,000 bis approx). On the high end probably? Fair amount of CD YBM but that also incorporates 5 award transcons.

And, that's why you are GS. ;-)

When you fly on award, you enter that as 0 CPM for the flight?

[antonius66]

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Originally Posted by rankourabu

I am very happy to be a liability

Tell me about it.

[Mike Jacoubowsky]

Originally Posted by mitchmu

We have some super-smart airline geeks here who might know what it really costs to move a pound of mass.

It is interesting how they control checked luggage count and weight but don't account for passenger weight or carry on weight; there are clearly some huge variances in weight transported between a small person who flies with a light carry-on for a business trip vs. someone who weighs 2x as much, has a heavy carry-on, and is checking 2-3 bags (for free) at the max 70 lb weight (for premiers). Yet, both pay the same price.

How relevant is this? I've got no idea what it costs to fly a given weight.

But, by displacement, I meant - did you fill a seat for cheap that would have gone empty if you had not flown it? Or, did you fill a seat for cheap that someone would have paid 3x for if you were not in it? Ultimately, this should be managed by the revenue algorithms; because they if they predict loads properly, they're only selling cheap seats when they know nobody would fill the plane at higher rates. But, it's an imperfect science.

I get that you were joking but not sure if you captured my main point.

Yep, I get your point as well. My joking did bring up a serious issue. Carriage cost vs economic optimization. The two are related and yet very separate. It's obviously more efficient to fly as close to capacity as possible, so you want every seat filled. But at the same time, the lightweight passenger with little luggage is costing less to transport than the person of size (who still fits in a normal seat with only one extension belt and armrest down!) who's an elite with two, maybe three 70 pound bags. These are obviously extremes, but even within the norms there are likely substantial differences in cost of transport from one end to the other.

Originally Posted by SAN 1K

I ended the year at 50 cpm ($100,000 for 200,000 bis approx). On the high end probably? Fair amount of CD YBM but that also incorporates 5 award transcons.

Yes, I'd agree that's on the high end! Thinking about my own fares, and the costs I remember seeing for the same flights in C or F, I can guess that you're not earning GS simply on walk-up fares in coach (along with your YBM instant ugrade fares). A 5-to-1 spend rate over me, and I'm 2-to-1 over many.

I'm not worthy.

[GetSetJetSet]

I flew around 130k BIS across all airlines this year. The vast majority of that was F/J award travel. However, the revenue travel I did on UA was mostly Int'l J and domestic F, so I can't believe they're too upset at still having me to kick around.